Wartime Wheat: Supporting Farmers and Food Security in Ukraine

While his sons are serving in the Ukrainian Army to defend their country, Volodymyr Tsikhotskyi, a farmer with 35 years of agribusiness experience, is doing his part to contribute to the country’s food security. Local authorities in Lviv Oblast in western Ukraine asked farmers there to expand production to more hectares, including land that was not arable before the war.

Volodymyr was on board immediately, decisive in his support of this initiative. “Our fellow farmers in the east [of Ukraine] cannot sow. So, we must do that here. We must support Ukraine’s economy,” he explained.

But to sow more land, Volodymyr needed more financing. As a client of Credit Union Anisia for six years, he was able to turn to them again, this time for a $10,600 loan available through the USAID/Worldwide Foundation for Credit Unions Liquidity Fund. Thanks to the financing he received, Volodymyr farmed 145 hectares and harvested 136 tons of wheat and 120 tons of corn.

Credit unions provide affordable financing for farmers in Ukraine

Affordable finance is key for every agribusiness’s operations and growth. Micro-, small- and medium-sized agricultural enterprises (MSMEs) in Ukraine are rarely the target audience for commercial banks, as their needs are too small-scale. So, their choice of a financial partner is often a credit union. Cooperative finance is also more beneficial for agricultural MSMEs, as they receive better and more loyal customer service, individualized attention and less bureaucratic lending procedures.

In 2016, USAID launched the Credit for Agriculture Producers (CAP) Project, implemented by World Council of Credit Unions (WOCCU). This project aims to increase access to finance for rural and agricultural micro- and small businesses through credit unions and to boost rural and community-based economic growth and resilience in Ukraine.

Five years later, in 2021, USAID and Worldwide Foundation for Credit Unions launched a $1 million Liquidity Fund to provide additional liquidity to the Ukrainian credit union sector to ensure sufficient resources for agricultural micro and small business lending through credit unions. The CAP Project is able to leverage this fund to ensure the availability of financing for Ukrainian farmers like Volodymyr Tsikhotskyi. Since Russia’s full-scale invasion on 24 February 2022, this Liquidity Fund has helped 504 farmers from different regions of Ukraine receive loans totaling over $1 million.

In solidarity with those on the front lines

Nazariy Boliachok and Vasyl Markovych are two more of the 504 farmers who have benefitted from the CAP Project and the Liquidity Fund since the war began. Both have made significant donations to the Ukrainian Army and were in need of financing to continue producing.

Nazariy has been running a 255-hectare grain farm in Lviv Oblast with his brother since he was 18 years old. When the war began, Nazariy’s brother joined the Ukrainian Armed Forces, while Nazariy was left to manage their agribusiness alone. But he never hesitated on whether to sow the land in wartime. “Taking a risk is a farmer’s second nature,” he said, explaining his decision to take an $8,000 loan after the war started. “How could we imagine that a third country would feed us? I was confident we needed to sow. Because, who but us?”

Nazariy’s reliable financial partner, Credit Union Anisia, has been cooperating with the CAP Project since 2017 and has access to the best agricultural lending practices and external finance through the Liquidity Fund. With the lower-interest loan he received, Nazariy purchased mineral fertilizers to sow his land and harvested 400 tons of wheat and 87 tons of colza (rapeseed).

Also a member of Credit Union Anisia for many years, Vasyl took out a $10,600 low-interest agricultural loan through the Liquidity Fund in 2022. The loan helped him purchase high-quality certified fertilizers which increased the farm’s yield to 10 tons of wheat per hectare, twice the average yield. He donated 13 tons to the Ukrainian Army. Despite the war, the farmer continues to improve his agribusiness by bringing in modern approaches to his 210-hectare farm in Lviv Oblast. Vasyl hopes to scale up this agribusiness after the war ends and will seek more financing from his credit union.

Crucial financing for agribusinesses

Volodymyr, Nazariy and Vasyl are just three examples out of hundreds. Since Russia launched its full-scale invasion, the USAID/WOCCU CAP Project has been responsive to market needs, working with credit unions, their national associations and the market regulator to ensure that credit unions can remain open and continue to serve their communities, especially through access to agricultural loans. This financing has been crucial to allow them to continue their agribusinesses and support local food security. The CAP Project has recently been extended through September 2024 to further amplify the impact.