“The Ministry of Agrarian Policy and the Ministry of Economy have made calculations. About USD 1 billion is needed to insure war risks in grain and commodity exports. We took 5 million tons as a basis at USD 200 per ton, which ultimately gave us this amount”, Vitaliy Koval explained. He also acknowledged that the Ukrainian agricultural sector is experiencing significant difficulties in accessing cheap financial resources.
"The level of lending to the agricultural sector remains extremely low. Given that Ukraine produces agricultural products for UAH 1.2 trillion, total amount of attracted loans is only about 9%, that is, slightly more than UAH 100 billion. This means serious underfunding of enterprises engaged in production and trade", the minister noted. He emphasized that in the world, the normal level of lending is 50%, and in the United States it reaches 202% of GDP. The minister noted the need to draw attention to this problem at all levels - in negotiations with international financial institutions, banks, as well as through the development of pre-export financing and insurance of agricultural products.
In December, the minister cited successful examples of insuring real estate of small and medium-sized agricultural businesses. At the same time, there are restrictions: property must be located 100 km from the front line, and insurance rates remain high. Vitaliy Koval suggested that insurance companies reduce this distance and revise their rates. One of the solutions is reinsurance. The Agricultural Loan Guarantee Fund, which can insure property and crops, can help with this.
The Minister also noted that insuring war risks is being discussed with international partners. Their participation in insurance will create additional guarantees for investors and attract capital.
The Cabinet of Ministers of Ukraine will create the State Agency for Insurance and Reinsurance of War Risks. This is provided for by the draft law registered in the Verkhovna Rada on December 30, 2024. The State Agency will be established in the form of a joint-stock company operating on a commercial basis. International financial organizations may be among the founders, subject to prior approval by the National Bank of Ukraine.
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