A Ukrainian farmer may have land, equipment, experience, and a promising harvest\u2014but lack sufficient funds to purchase seeds, fertilizers, fuel, or crop protection products in a timely manner. It is at this moment that even a strong farm hits a financial ceiling. <\/p>\n\n
Can future agricultural production help break through this ceiling?<\/p>\n\n
Activitis, within the WEAGRO ecosystem, has launched a pilot of a financial agricultural note using a real farm as an example. The team is going through the complete process: from analyzing financing needs and preparing documents to issuing the agricultural note, registering it in the depository system, and actually receiving the funds. <\/p>\n\n
The pilot is being implemented with advisory support from IFC under the Project “Development of Agricultural Notes in Ukraine Based on Fintech Solutions,” implemented with the support of the Swiss Confederation, and in partnership with the National Depository of Ukraine, which ensures the operation of the Agricultural Notes Register.<\/p>\n\n
An agricultural note is a non-issue security that certifies the unconditional obligation of an agricultural producer to deliver agricultural products or pay the creditor a specified amount of funds. The fulfillment of such an obligation is secured by a pledge of future agricultural products. <\/p>\n\n
The key feature is that the agricultural note exists in electronic form and is registered in the depository system. Information about it is displayed in a special Agricultural Notes Register, administered by the Central Securities Depository\u2014the National Depository of Ukraine. <\/p>\n\n
By type of obligation, agricultural notes are divided into commodity and financial. A commodity note provides for the delivery of specified agricultural products, while a financial note provides for the payment of funds within a specified period. The amount of the financial obligation may be fixed or calculated according to a formula agreed upon by the parties. <\/p>\n\n
In other words, this is not simply a digital version of a contract, but a full-fledged financial instrument integrated into the depository accounting system.<\/p>\n\n
The potential of the agricultural note is not limited to the relationship between the farmer and the company providing financing. For a supplier of seeds, fertilizers, crop protection products, fuel, or equipment, this can be an additional instrument to secure deferred payment. For a financial institution, it is a standardized digital mechanism for processing and accounting obligations, pledges, transfer of rights, and transaction execution. For a trader or processor, it is an opportunity to link farm financing with future product delivery and better plan commodity flows. For an investor, it is potential access to structured instruments linked to actual agricultural production. Thus, the agricultural note can become a common financial language for the farmer, supplier, creditor, trader, and processor. <\/p>\n\n
“For IFC, it is important that the agricultural note be used in real financial transactions. That is why it is especially valuable that Activitis and WEAGRO have undertaken to thoroughly test the entire agricultural note process on a real case. Such practical experience will help identify operational barriers, make the use of the instrument simpler and more accessible to the market, and form a standard approach that banks, financial companies, suppliers, and other creditors will be able to scale in the future. The more real transactions appear on the market, the greater the potential of agricultural notes to expand agricultural producers’ access to private financing,”<\/em> \u2013 Kyrylo Mukhomedzyanov, IFC. <\/p>\n\n In theory, the agricultural note looks promising. But between the law and the money in the farmer’s account, there is an entire route: verification of the land bank, farm assessment, agreement on terms, contracts, work with registers and the depository system. <\/p>\n\n It is precisely this route that Activitis and WEAGRO are now exploring. The goal of the pilot is not simply to announce the use of a new instrument. It is important to determine how long the procedure takes, where difficulties arise, what costs the farmer bears, and what needs to be changed so that subsequent agricultural notes are processed faster and more clearly. It can already be said today: the agricultural note creates a fundamentally new infrastructure opportunity for Ukrainian agricultural finance. It can combine future agricultural products, digital accounting, and capital within a single transparent mechanism. <\/p>\n\nReality Check<\/strong><\/h2>\n\n