Credit Agricole Bank has been closely engaged in the development of the Ukrainian agricultural sector for the past three decades, but nothing could quite prepare the bank or its clients for the unique challenges presented Russia’s full-scale invasion of the country when it began in February 2022. With the war now approaching the two-year mark, there are encouraging signs of recovery throughout the agricultural sector that mirror the resilience which has characterized Ukraine’s wider response to the Russian invasion.
“Broadly speaking, the overall health of the Ukrainian agri sector is not bad at all, especially if you look back to the kind of pessimistic expectations that were common at the start of the invasion,” says Alexandre Tchesnakoff, Member of the Management Board at Credit Agricole Bank in Ukraine. Tchesnakoff says he’s been particularly impressed by the resourcefulness and capacity to adapt that he has witnessed throughout the Ukrainian agriculture industry.
For much of the past thirty years, Credit Agricole Bank has been focusing on supporting Ukraine’s entire agricultural ecosystem. The bank holds one of the leading positions in support of Ukrainian agribusinesses by financing sowing and harvesting campaigns. The Credit Agricole loan portfolio for agri agrobusiness is UAH 0.5 billion under a financing program with the EBRD. In addition, the bank has issued UAH 2.7 billion in loans to Ukrainian agri agribusinesses within the framework of the “Affordable Loans 5-7-9%” state program since the start of the full-scale war.
Credit Agricole also takes part in the Government State Guarantees Program, under which it has issued almost UAH 1.3 billion. “We strive to contribute to the reconstruction of the Ukrainian economy during the wartime period. Our approach towards lending is prudent; we take into account the customer, the risks, the territories. Still, we finance and support our customers wherever possible,” says Tchesnakoff
The wartime conditions in today’s Ukraine have obliged Credit Agricole to do its share of adapting and adjusting since February 2022. Uniquely for Ukraine, Credit Agricole has long maintained a specialized agro-team with the necessary expertise and qualifications. The unprecedented challenges of the invasion mean bank officials must now pay additional attention to the details of every individual case. “Of course we look at the industry as a whole,” explains Tchesnakoff, “but the war has affected our clients very specifically, depending on where they are located and what segments of the agriculture industry they work in.”
Wherever possible, this process has involved face-to-face contact and personal site visits from the Credit Agricole agro-team. Throughout the wartime period, bank representatives have continued traveling across Ukraine to meet clients, maintain personal links, and identify tailored solutions. In 2022, key priorities included maintaining working capital and making sure existing crops could be monetized. In 2023, leasing activity began to pick up once again amid a broader stabilization in the Ukrainian agricultural sector.
Tchesnakoff says there is now growing demand for Credit Agricole’s leasing services from clients looking to acquire new agricultural machinery, but notes that much still depends on location. He recounts one recent visit to a client based close to the fighting in eastern Ukraine’s Kharkiv region who runs a mid-sized farm and is looking to work with the bank on financing for a new tractor. With artillery fire still clearly audible from the nearby fields, the farmer understandably wanted to make sure that any new investment would be worthwhile. Tchesnakoff says things are significantly more straightforward for clients in the western regions of the country, and sees Credit Agricole’s leasing operations as a key tool to support a return to growth in the sector.
At the end of November 2023, Credit Agricole Ukraine signed a EUR 50 million risk-sharing agreement with the European Bank for Reconstruction and Development (EBRD). This will enable the bank to support the capital investments of micro, small, and medium-sized enterprises, enabling them to upgrade their technology and equipment. It will focus on key sectors of the Ukrainian economy, in particular agriculture, the food industry, and retail.
In 2024, Tchesnakoff believes logistics will remain the key factor for Ukrainian agribusinesses as the industry continues to adjust to wartime realities. He acknowledges that it is impossible to accurately predict what might happen in the months ahead, and says the bank is preparing for a range of different potential challenges. “We are looking to help our clients adapt their logistics. I think the country has now reached the point where businesses can adapt to most scenarios. Of course, we may face specific issues such as attacks on different ports, but everything that is not human can be rebuilt. It’s a matter of patience, money, and resilience.”
Tchesnakoff recognizes that the war is likely to continue for some time, but says Credit Agricole is also looking to the future of the agricultural sector in Ukraine. He notes that the bank currently sees a need to prioritize financing services linked to mid-term investment, with a view to facilitating the transformation of the Ukrainian agriculture industry away from its presence emphasis on commodity exports towards greater value-added production. “This is something we are definitely looking to support,” says Tchesnakoff. “Increased processing of raw materials will allow Ukrainian agribusinesses to reduce their dependence on exports and rely more on the domestic market.”
Visions of future growth and expansion may seem out of place in a country fighting for its life, but such thinking reflects the resolute mood and determination on display throughout Ukraine. Tchesnakoff is effusive in his praise for the wartime resolve of Ukrainian agribusinesses and says he regards it as a privilege to have been able to work with Credit Agricole’s clients during the historic days since the onset of Russia’s full-scale invasion. “I am particularly amazed by all the people working in front line areas, and by the way Ukrainian agribusinesses have adapted to mines and missile attacks,” he notes. “Farmers are tied to the land and cannot simply move their businesses, but they do not complain. All they want is support in terms of financing and that is what we aim to provide. My team and I are very proud of what we are doing. It has been the most fulfilling and meaningful period of my career.”