Ukraine’s agriculture sector is an important source of livelihoods for the roughly 13 million Ukrainians living in rural areas. It is also a major provider of food for both domestic and international markets. Prior to Russia’s full-scale invasion in February 2022, Ukraine’s agriculture sector accounted for 11 percent of the country’s GDP, nearly 20 percent of its labor force, and nearly 40 percent of total exports, with Ukraine being the world’s fifth-largest exporter of wheat, fourth-largest exporter of corn, and third-largest exporter of rapeseed. A strong and stable agriculture sector in Ukraine is thus critical for global food security. According to a report by the UN Food and Agriculture Organization (FAO), global food prices increased by 12.6 percent during roughly the first month of the war, a clear indicator of Ukraine’s status as a global breadbasket.
Prior to Russia’s full-scale invasion, USAID assistance focused on modernizing production methods, creating more job opportunities in rural communities, and helping Ukraine build and strengthen market links with the European Union. Amid Russia’s invasion, USAID is helping Ukraine’s farmers deliver a sufficient harvest to ease domestic food insecurity and maintain the productive capacity necessary to drive a strong post-war economic recovery.
USAID partners with Ukraine’s farmers, the private sector, and policymakers to upgrade productive capacity and employment opportunities and, amid Russia’s full-scale invasion, provide farmers with the critical supplies and services they need to continue operating. In the longer term, USAID promotes critical reforms including the introduction of a full-fledged and transparent agricultural land market, improved irrigation policies, better access to finance for farmers, and broader implementation of international food safety standards to diversify Ukraine’s export opportunities.
USAID’s Agriculture Growing Rural Opportunities (AGRO) is a five year, $35 million activity (ending in 2024) designed to strengthen agriculture in Ukraine’s rural communities with the greatest need. The activity has a particular focus on Dnipropetrovsk, Zaporizhzhia, Mykolaiv, Kherson, Kharkiv, Poltava, Odesa, and Cherkasy Oblasts. The activity works in three main directions: 1) increase revenues for agricultural small- and medium-sized enterprises (SMEs) through greater productivity and market access; 2) increase access to critical support services (financing, irrigation, advisory support) for agricultural SMEs; and 3) create a better enabling environment through fair and transparent policies and regulations in the agricultural sector. In July 2021, the Verkhovna Rada of Ukraine, with USAID support, passed legislation to lift a two-decade-old moratorium on agricultural land sales. This reform opens the land market, unlocking private investment, which will economically revitalize rural communities, primarily through the growth of agricultural-focused SMEs. The reform will benefit the 30 percent of Ukrainians who live in rural communities.
Amid Russia’s invasion, USAID redirected the activity to provide roughly 5,000 farmers (10 percent of Ukraine’s total small farmers) with inputs and services needed to deliver a successful harvest. Notably, the activity is providing high quality seed potatoes along with agronomic support to 3,000 farmers in 13 oblasts, including in the hard-hit regions of Kharkiv, Chernihiv, Sumy, Kyiv, and Zaporizhzhia. The seed potatoes are enough to produce food for 25,000 people. The activity also supports three mobile match-making applications that make it easier for farmers to obtain bank loans and state subsidies.
Credit for Agricultural Producers (CAP) is a seven-year, $8.9 million activity ending in 2023 to help Ukraine build a strong network of credit unions capable of financing growth in the country’s agricultural SME sector. The activity improves the regulatory and legislative environment surrounding credit unions, including by building the National Bank of Ukraine’s capacity to effectively regulate the country’s credit unions. By promoting greater and more efficient agricultural lending, USAID assistance is helping increase employment and income opportunities in Ukraine’s rural communities.
Seven out of 22 partner credit unions are either based in areas temporarily occupied by Russia or in active combat zones, making credit union operations virtually impossible in many areas amid Russia’s full-scale invasion. Amid the war, however, CAP has helped 15 credit union partners issue 341 new loans to small farmers for a total of UAH 27.73 million (approximately USD 942,000). Also amid Russia’s invasion, CAP has lobbied the National Bank of Ukraine to launch temporary regulatory relief for credit unions. As a result of CAP support, the regulator deferred some of the more stringent regulations. Additionally, CAP is helping partner credit unions back up and store data outside of Ukraine to prevent the loss of data amid infrastructure damage caused by Russia’s invasion. This is helping preserve critical credit union data that can later be used to restore operations.
CREDIT UNION LIQUIDITY ACTIVITY launched in 2021 as a partnership between USAID and the Worldwide Foundation for Credit Unions (WOCCU Foundation, USA) to establish a Liquidity Fund for Credit Unions. Since February 24, thanks to this Activity, 115 small Ukrainian agribusinesses received loans from credit unions totaling UAH 12,6 million ($430,770). More than half of these loans have gone to implementing Ukraine’s current sowing campaign.