During the panel discussion, the attending vice ministers of agriculture underlined the strategic significance of the agricultural sector in Russia, Ukraine and Kazakhstan. Notably Deputy Minister of Agriculture of the Russian Federation, Aleksandr Petrikov, and Deputy Minister of Agriculture of the Republic of Kazakhstan, Gulmira Issayeva, explained that their countries are providing considerable amounts of investments aids. In addition, Russia, Ukraine and Kazakhstan are making efforts towards improving the credit infrastructure for agricultural producers in their countries. Besides extension of the government-controlled network of credit banks, Ukrainian Deputy Minister of Agricultural Policy, Oleksandr Sen, underlined the increasing importance of forward contracts. It was also explained that government credit guarantees will play a larger role in Ukraine and Kazakhstan in the future.
Invited representatives of the business community included Dr. Heinz Strubenhoff, Agribusiness Program Manager, International Finance Corporation (IFC), and Dirk Stratmann, Ukraine Spokesman of the Agribusiness Working Group, Committee on Eastern European Economic Relations (OA). The discussion examined how governmentally administered credit supply is handled in RUK countries. It was found that typically there is no transparent evaluation of such schemes. Strubenhoff explained that local bank staff is often not sufficiently familiar with the agricultural sector to appropriately grant credits. In addition, there is a lack of suitable IT solutions, benchmarking and efforts to reduce transaction costs. The expert added that changes are required both in terms of agronomic knowledge and rights of banks regarding their scope of action and collateralization in order to improve the investment climate and thus conditions for small- and medium-sized farm operations. Stratmann conceded that agricultural producers in RUK countries with acreages above 5,000 hectares had a variety of development options while there was a lack of technological solutions for smaller producers. ‘Access to finance schemes very much depends on the size of agricultural enterprises. There is by no means a basic credit crunch in agriculture but small producers still have problems to access credits’, said Stratmann.
The expert panel continued with a controversial discussion of development opportunities in agrarian economy. Participating experts believed that only a small fraction of household producers have the potential for commercialization. Modernization and stabilization of the farming sector is a central objective which, however, should include all existing forms of farm operations. Suitable development strategies are necessary in order to permit also smaller agricultural businesses access to finance. The underlying reason is that only capital input into improved technical equipment and training of skilled specialists will enable efficiency improvement and thus further development in agricultural production.