HOW TO INCREASE FOOD AND AGRICULTURAL PRODUCTION: INVESTMENT

OPPORTUNITIES

Elena Voloshina Head of IFC operations in Ukraine

October 2012

Global food demand increasing

2

1,700

1,800

1,900

2,000

2,100

2,200

2,300

2,400

Glo

ba

l Gra

ins

(m

mt)

Production ConsumptionFood demand is to grow by 70% by 2050: Population increase and urbanizations trends Rising incomes

Change in consumption patterns:less cerealsmore vegetables, oils, dairy and meatSource: USDA/John DeereThreat: increasing volatility on food markets due to shrinking global stocks, market speculation, govt interventions (export bans)

FAO estimates the world would need to boost agricultural investment to USD$ 83 billion a year by 2050, a 50% increase over the last decade’s average investments.

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Where is the growth potential?

Black Sea Belt

Land and water are scarce resources

High gaps between current production and potential in Latin America, Black Sea Region and Africa

Natural conditions are favorable in Latin America and Eastern Europe

IFC Business Solutions for Ukraine Agribusiness

Financial Products

• Loans

• Equity and quasi-equity

• Syndications

• Structured and securitized products

• Risk management products

• Trade finance

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IFC Business Solutions for Ukraine Agribusiness

Advisory ProgramsPolicy: Investment Climate for Agribusiness in UkraineImproving access to finance: Agri-Insurance and Agri-Finance programs

Improving efficiencies and increasing production: Food Safety, Cleaner Production and Supply Chain Development programsAlso a joint initiative with EBRD: crop receipts

• A new instrument based on Brazil pre-harvest finance experience

• The law on the agrarian receipts passed in the 1st reading

Case study: MHP

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MHP – one of the first IFC investment clients in Ukraine:First deal – 2003 ($30 mln loan to expand production)

Repeat deals: 2005 and 2010 (in 2010: $50 mln loan for expansion and $11.25 mln credit sharing facility to lease agri machinery with ING Lease)

Also advisory involvement: resource efficiency and food safety

Case study: Mriya Agroholding

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• IFC financing in 2010, 2011 and 2012: a total of $90 mln

• Advisory support:

Energy audits at sugar plants, also Ukraine’s first loan under IFC’s Cleaner Production Lending Facility

Feasibility study: straw to cellulose

Case study: Bayer/Raiffeisen Bank Aval and Credit Agricole - an innovation on Ukraine’s financial market

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50/50RSF

Promissory note

FarmerFarmerFarmerFarmerFarmerFarmer

50/50RSF

Bayer-IFC cooperation

Promissory note

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In 2011 IFC partnered with Bayer and Raiffeisen Bank Aval to develop a risk-sharing facility to make high-quality crop protection products more affordable for independent farmers and smaller agricultural companies

In 2012 a new bank Credit Agricole was added to the financing scheme with Bayer