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What are agricultural notes and their potential for the Ukrainian agricultural sector

Agricultural notes are a new financial instrument that will enter into force in Ukraine on January 1, 2025. They are non-issueable securities in electronic form used to attract financing in the agricultural sector. The main purpose of agricultural notes is to simplify farmers' access to financial resources and increase the efficiency of settlements in agriculture.

How do agricultural notes work?

Circulation: Agricultural notes will operate through a depository system and a specially created Register of Agricultural Notes. All interaction with notes will be carried out electronically through secure platforms.

Settlements: Settlements under agricultural notes can be monetary, commodity or combined, depending on the terms of the agreement between the parties.

Cost: The price of the note will be determined by market conditions and agreements between the creditor and the debtor.

Prospects for the use of agricultural notes

Bank financing: Agricultural notes open up new opportunities for obtaining loans. Although they are not yet included in the list of acceptable collateral under NBU Resolution No. 351, it is expected that the NBU will adapt the regulatory framework, taking into account the potential of this instrument.

Commodity financing: Notes can be used for settlements between agricultural producers and suppliers, in particular in the form of supply of products, fertilizers, seeds or other goods.

Integration with international markets: Due to standardization and electronic form, agricultural notes have the potential to attract foreign investors.

NBU position on agricultural notes

The National Bank of Ukraine has not yet included agricultural notes in the list of acceptable collateral. However, with the introduction of this instrument, further changes in legislation are expected, which may increase their attractiveness for the banking sector.

Agrarian notes will complement existing financial instruments, such as agricultural receipts, and will help Ukraine's agricultural sector expand access to financing, increasing its competitiveness in both the domestic and international markets.