By Gerelyn Terzo, GAI Contributor

 

Ukraine, while in the midst of heightened geopolitical instability, is attracting the coffers of major lenders and investors to agriculture in the country. The Overseas Private Investment Corporation, or OPIC, a government agency with $18 billion in assets under management, is seeking out lending opportunities in the country while billionaire investor George Soros is willing to commit $1 billion to Ukraine across several sectors including agriculture, spokespeople for both financiers confirmed.

 

OPIC has made Ukraine agriculture an area of focus for the near future, committing to lend between $1 million and $250 million per project to modernize agriculture in the region through debt financing. This will not be the organization’s maiden allocation to the region, as OPIC supported a pair of Ukrainian agriculture projects in 2011 and 2012 for sugar plants ($17.5 million commitment) and grain and oilseed storage ($12.5 million commitment), respectively.

 

OPIC extends financing to U.S.-based private investors ranging from corporations to individual entrepreneurs looking to invest in high-impact projects abroad in a host of industries including agriculture. By design, OPIC specializes in financing private investment in areas where there is heightened political and economic unrest, such as Ukraine, and helping to bridge the gap when traditional bank financing is unavailable or undesired.

 

“We can extend loans with a five to 10 year tenor,” said OPIC spokesman Charlie Stadtlander. “That’s uncommon for private sector offerings in the emerging market agriculture sector, and obtaining this financing through OPIC can be a big difference for the developer.”

 

More than half of Ukraine’s total land area, or 32.5 million hectares, is comprised of arable land, according to the Food and Agriculture Organization of the United Nation’s latest data. Much of the soil, however, is degraded from poor irrigation techniques, and the latest conflict with Russia, which extends to trade restrictions between the rivals, has only exacerbated the conditions.

 

“Ukraine is well situated and has the potential to be the bread basket of Europe in terms of ramping up yields for the export market,” Stadtlander said. We’re not scared off by challenging economies. In fact, that’s what we do,” he added, pointing to regions in need of economic development, such as South Sudan, Afghanistan and Iraq, for instance — in addition to Ukraine — in which OPIC has exposure.

 

 

Billionaire Investor

Soros, meanwhile, has his sights set on Ukrainian agriculture, as well. The Hungarian-born investor is hunting “attractive investment opportunities in the energy, agriculture and information technology sectors” in Ukraine, according to spokesman Michael Vachon. Any investments, however, have contingencies.

 

Western leaders must step in to help the battle-torn country without extending military force, as Soros, according to an Op Ed he recently co-authored in The New York Times, expects that “Ukraine will defend itself militarily, but it urgently needs financial assistance” of $15 billion currently. Also, financial support must be secured with “provisional risk insurance at affordable rates,” the spokesman told GAI.

 

“Investments would be designed to be profitable, but all profits would go to benefit Soros’s charitable foundations,” Vachon said.

 

Ukraine Trade

Investors and lenders are largely driven to Ukraine for its vast and in many ways underdeveloped potential as an agriculture export market. In 2014 Ukraine agriculture exports, which in addition to grains extend to meat, fish, dairy, vegetables, nuts and other items, were valued at $17 billion versus $17.3 billion in the previous year, according to the Ministry of Agrarian Policy and Food of Ukraine cited in reports. To offset declining agriculture exports to Commonwealth of Independent States (CIS) countries, Ukraine is reportedly in discussions for free trade agreements with additional nations including Canada, Turkey and Israel. Time and investment will help determine the outcome of such developments in the overall agricultural sector.

 

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