Ensuring a Brighter Future for Ukraine’s Smallholder Farmers

STORY HIGHLIGHTS

• Russia’s invasion has exacerbated the financial challenges for family farms and small-scale agricultural operations across Ukraine.
• With support from the World Bank Group, Ukrainian banks are offering loans and guarantees to smallholder farmers through the Partial Credit Guarantee Fund.
• To date, World Bank Group-backed programs have helped tens of thousands of farmers across the country receive affordable loans and other financial products to keep their businesses afloat and reduce disruptions to the planting and harvesting seasons.

Today, Volodymyr cultivates wheat, barley, peas, and rapeseed on 215 hectares of land, though a small part of his fields still needs demining. Upon returning home, he wasn’t sure he’d be able to rebuild.

Seeking financing for the 2025 planting season, he approached Ukrgasbank but lacked the collateral - his own savings and equipment - to get a loan. That is when the bank’s staff told him about the Partial Credit Guarantee Fund (PCGF), a new program that reduced the collateral requirement by half and provided a loan at an affordable interest rate. With this assistance, Volodymyr was able to plant his crops and rebuild.

PCGF’s main goal is to serve as a reliable support for small agricultural producers.

“We are always there for farmers, especially in tough times when support is most needed," says Oleg Prykhodko, Chairman of PCGF’s Management Board.

Launched in early 2024 by the Government of Ukraine, with support from the European Union and the World Bank Group, the PCGF helps banks lend to small and medium-size farmers and to support ongoing land reforms.

Keeping agri-resilience during the war

Even more than the war, extreme weather has greatly affected the family farm of Anatoliy and Lesya Vilkun.

Situated in the Odesa region, the siblings cultivate 450 hectares of land, where they grow wheat, barley, rapeseed, peas, and sunflowers.

“Our farm was established in 1993 by my father,"explains Anatoliy Vilkun. “Odesa region,it’s a fickle climate zone. We only get a good harvest once every three years. One year, you make a profit, but the next two years, you break even or operate at a loss.”

The war also affected the farm.

“Since 2022, the farm's main problem has been a lack of working capital,” adds Lesya Vilkun. “While considering taking a loan to buy new machinery, we lacked collateral. We didn't even have 20% for a down payment on the equipment.”

The Vilkuns turned to a bank that partners with the PCGF for assistance.

How does the Fund operate?

The PCGF offers guarantees to Ukrainian banks, covering up to 80% of a borrower's obligations, for both investment and working capital loans. Eligible borrowers can receive loans for up to three years for working capital, up to seven years for investment financing, and up to 10 years for land purchase, with a maximum loan amount equivalent to $800,000 per borrower.

To support the PCGF development, IFC—a member of the World Bank Group—launched a nationwide awareness campaign for smallholder farmers, including information on how to apply and the financial products offered by the PCGF-participating banks. Now, IFC is working with financial institutions to introduce new and adjust existing financial products backed by the PCGF guarantees for land, equipment, and working capital finance for small farmers.