Agribusiness Investment Forum was held in Kyiv

Ukrainian Agribusiness Club, Kyiv, Ukraine
Tuesday, April 22, 2014
Published by U.S.-Ukraine Business Council
                            Washington D.C., Wednesday, May 7, 2014 

On April 17^th, 2014, Agribusiness InvestmentForum was held in Kyiv, organized by the Association "UkrainianAgribusiness Club" and AgriEvent Agency. The main purpose of the event wasto provide information about opportunities of attracting foreign investments toUkrainian agricultural companies and alternative forms of financing. The forumwas attended by representatives of agribusiness, investment, legal andconsulting companies.

During the event current issues and problems ofinvestment and financial markets in the agricultural sector were discussed,namely the economic policy of the new government, the investment climate inUkraine, the investments directions in Ukrainian agribusiness, the role oftransnational corporations in Ukrainian agribusiness, agricultural receipts asan alternative form of financing, forward procurements as a tool for agriculturalproduction financing, agricultural chemistry and seed procurement financing.

"Theexpected high attention of representatives of different sectors to the eventwas confirmed by the large number of participants, indeed, according to theeconomical results of the previous period, agriculture is the only sector ofthe national economy, which shows positive dynamics and is extremely attractivefor potential investors. But we have to take into account the fact that todayUkrainian agricultural sector, like the rest of our country, is facing anobvious and only choice - consistent and decisive regulatory reorganizationwhich should be also aimed at deregulation and consequently at creation of afavorable business climate. If effective reforms and improvements of businessclimate in the sector will not be implemented, the amount of investments willbe further reduced. Undoubtedly, current year will be extremely difficult, butI hope that active interaction and cooperation of business representatives,government authorities and international investors will allow agriculturalcompanies to stand the trial", - UCABDirector Executive Oleksandr Verzhykhovskyi says.

Igor Verkhogliad,Vice President, Investment Banking Department, Concorde Capital, during his speech highlighted theproblems that Ukrainian companies faced in their attempts to attract foreigninvestments.

"Over thepast 2 years in fact there were no IPO, Ukrainian agribusiness companies startqueuing up to the international financial institutions (IFC, EBRD, BSTDB) atleast a year or a year and a half in advance. Preparation of reportingaccording to IFRS standards does not guarantee success. It is important to havea clear strategy and to demonstrate the way of its realization. In addition,now investors understand the climatic features of different regions of Ukrainebetter and prefer companies with densely arranged land bank. Inconsistentgovernment policy, particularly in the tax area, the lack of a clear strategyfor the development of agriculture, bureaucratic difficulties of the leasedland market functioning and land reform delay, together with the lack of actualability to attract low-cost financing – these are key internal barriers toinvestment attraction", - IgorVerkhogliad says.

During the forum experts also discussed financing ofimports to Ukraine for guarantees of export credit agencies and the mosteffective and convenient financial instruments of machinery purchasing, whichare popular nowadays.

"Paymentguarantee programs at export financing are the part of government exportsupport and are implemented with the help of the export companies. As a result,the foreign exporter, Ukrainian importer and corresponding foreign exportcredit agency are equally interested in the development of the transaction, andUkrainian importer due to such guarantees gets the most favorable conditionsfor prolongation of payment. At thesame time, as an additional bonus, the importer gets an indirect guarantee ofthe quality of supplied machinery, and there is no need to pledge any otherproperty, except the provided one. That’s why, under the conditions offinancial crisis, imports of agricultural machinery with prolongation ofpayment on a security of western export credit agencies is the alternative wayof financing that is able to replace the classic credit", - CMS Cameron McKenna Senior Lawyer VictoriaKaplan says.

"Today,special financing programs prepared by the importer of machinery alongside withthe leasing company make machinery purchasing more comfortable. Financialleasing is a handy tool and its advantage in terms of tax and accounting is thatmachinery is not put in pledge by a leasing company. Our financing program hasmany advantages: low rate financing, the possibility of financing limit establishmentup to 6 months, quick decision making, quick preparation of documentation andassignment of machinery for use. Thus, the client gets registered and insured machineryin the short term", - New HollandAgriculture Retail Financial Country Manager Ekaterina Bezsudna says.