EcoFinLan

Starting situation, problems and potentials

In 2007, still 40% of the population in Ukraine lives in rural areas and one fourth of the persons employed work in agriculture. Poverty and unemployment are widespread in the country and migration from the countryside to urban centres or abroad is a serious problem. Access to finance is lacking and most SMEs in rural areas are not yet using formal financial services.

The organic market is rapidly developing in Western Europe and USA, thus creating a demand for organic products from Ukraine. Economic growth in UA for the past years is increasing the potential on the domestic market.

Previous Phase

A first project phase in the years 2003 and 2004 was implemented with the emphasis on education and training of agronomists specialised in organic agriculture. The second phase of the EcoLan project was planned for the period 2005-2007 and maintained its focus on production and marketing of organic products.

The rural credit started its activities in summer 2006 with successful results. Within a few months 69 loans of an amount of CHF 1.3 million have been provided to small farmers in four districts in the Vinnitsa region.

Overall goal

Promotion of sustainable rural development in Ukraine in order to preserve natural resources, to generate income and to reduce migration from the countryside.

Outcome or Project Objective

Support is given to

(1) Development of organic production and market,

(2) Access to rural financial services in Ukraine

(3) Phasing out of this project till end of 2010.

Output and (generic) Activities

Specific objective 1: Marketing and processing

"Efficient marketing of raw and processed organic products on national and international markets is assured and monitored".

Specific objective 2: Capacity Building and Training

Specific competences in organic farming are built up in Ukraine through formal training, further education, and exchange of experiences and knowledge with other countries.

Specific objective 3: Advisory services and Production

Agricultural products - meeting the quality requirements of organic farming and oriented towards the growing market demand - are produced in a sustainable way.

Specific objective 4: BioLan Association

A strong professional association for organic agriculture (BioLan) promotes organic farming and the interests of producers in Ukraine by conducting a permanent policy dialogue with the relevant decision makers and by collaborating with interested parties.

Specific objective 5: Access to rural financial services

Small and medium size producers in rural areas of the Vinnitsa and one other oblast have access to financial services on a sustainable basis.

Work Approaches

The main new element is the project support towards the development of value chains, with the objective to involve at least one strong private stakeholder in the value chain (retailers, processors, traders, exporters) who is ready to invest in the development of an organic product line. The EcoFinLan project will assist local supporting actors and institutions, to deliver services towards value chain actors and to improve the functioning of the organic value chain.

Project Organisation

A small project team leads the project activities. Main partner for the implementation is the association for organic agriculture stakeholders BioLan, who will be supported by a pool of local experts in marketing and advisory services as well as by international expertise when needed. For the FinLan part, support will be given directly to Bank NADRA with international expertise and to ACI for education in financial issues. 

Budget, Funding and timeframe

Phase I of the project EcoFinLan Ukraine lasts from January 2008 to December 2010 with a total budget of about 1.6 Mio CHF.

Controlling

The progress will be constantly monitored with qualitative and quantitative indicators and monthly reports to COOF in Kiev.

Implementation

SDC is the contracting body and the financial backer and is responsible for the monitoring, evaluation and for the financial controlling of the project. The Swiss College of Agriculture (SCA) is the implementing agency. SCA will assume financial and administrative responsibility for the project and provide one person for project management.

The Agrarian College of Illinzi is the project partner in Ukraine and will provide the project management in Ukraine. The second project partner is the association for organic agriculture stakeholders BioLan as well as for the access to finance part is Bank NADRA.