On the eve of 100 days of the land market, the last legislative cornerstone is making affordable loans available to small and medium-size farmers. To ensure that the benefits of land reform reach all Ukrainians, the Verkhovna Rada needs to pass the draft law On the Partial Credit Guarantee Fund in Agriculture.
Mykola and his family have been growing vegetables in the Kyiv region for almost twenty years. He cultivates more than 400 hectares of land shares leased from farmers. The farm has a modern warehouse, automated sorting and packaging facilities and all necessary equipment. Mykola is proud that he has made most of his investments on his own, never requesting subsidies from the state or ever withholding salaries to workers. Having invested heavily in the restoration of the irrigation system, he annually spends considerable resources on its maintenance and protection.
But if he loses the land, he will lose everything.
Now, with the land market opening, Mykola finally has the opportunity to secure his family’s future. He can buy out the land, invest unconditionally in the production infrastructure, and finally hand over the business to his two sons, who work on the farm with their father.
During the visit of Anna Bjerde, World Bank Vice President for Europe and Centrsal Asia, to Ukraine last month, she and I had the opportunity to visit Mykola’s vegetable farm and meet him and several other farmers from the Kyiv region. Their farms ranged in size. One farmer cultivates 2 hectares, another 20; Mykola’s 400 hectares are less than the 700 hectares cultivated by a compatriot. However, as we discussed their challenges with them, they all spoke of their major concern: how to protect the investments they have made in infrastructure and/or provide funding for developing their business.
The opening of the land market on July 1 this year gave hundreds of thousands of small and medium-sized farmers in Ukraine a new type of asset – land. Now one can sell land, buy it with a mortgage, or take a business loan secured by land they own. This is without exaggeration a historic event, made possible by the leadership of the President of Ukraine, the will of the parliament and the hard work of the government. But there is a last, but essential task – to ensure the rapid provision of loans to small and medium-sized farmers on affordable terms. To this end, the Verkhovna Rada needs to adopt as soon as possible the law on the Partial Credit Guarantee Fund, which is included in the agenda of the current session.
Limited access to finance, including bank loans, has long been a barrier for small and medium-sized agricultural producers, who produce more than 50% of Ukraine’s total agricultural output. According to a World Bank study, most of them do not have access even to basic banking services. Banks mostly work with farmers whose farms are larger than 500 hectares and who grow grain and oilseeds. Moreover, interest rates on loans for SMEs are on average 5-7% per annum higher than those available for large enterprises. If loans are attracted, they are short-term to cover current expenses. Lack of long-term loans, as well as adequate collateral and credit history, have long deprived small and medium-sized agricultural businesses of the opportunity to invest in development.
Partial credit guarantee (PCG) funds operate successfully in many countries around the world. Such funds allow banks to cover part of their losses in the event of a borrower’s default. The Draft Law now being considered by the Parliament proposes to create a PCG fund in the form of a non-bank financial institution with the participation of the state, under the supervision of the National Bank of Ukraine. A special law is needed for the Fund to have an independent management structure and be separated from political influence. This will allow the fund to effectively cooperate with international financial institutions and foreign companies in order to raise funds for its activities – and allow for over 20 billion hryvnas in loans to farmers, with a maximum term of 10 years.
In the context of today’s land market in Ukraine, when prices have not yet formed and the liquidity ratio of land as collateral is one of the lowest, the PCG Fund will make lending to small and medium agricultural producers for banks less risky and more attractive, result in more affordable interest rates for borrowers, and longer times allowed to repay loans.
October 9th will mark 100 days since the opening of the land market. The government has managed to create the basic conditions for its launch, introduce a system of restrictions and safeguards against significant abuses and speculations, and provide publicly available information on land transactions. The adoption of the Law on the Partial Credit Guarantee Fund in Agriculture is the last cornerstone of the legislative foundation of land reform. Subject to the prompt adoption of the Law, the World Bank will be happy to support Ukraine in the rapid establishment of the Fund, as well as the earliest possible implementation of a temporary government program to provide portfolio guarantors to those farmers who need them now.
Mykola is one of more than 30,000 officially registered individual farms and more than 4 million sole proprietors who work in Ukraine’s agriculture. Increasing their financial capacity will significantly expand opportunities for private investment in infrastructure and processing, increase efficiency and competitiveness, create value chains – and help bring about prosperity for them and for all Ukrainians.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
