By KYIV. Sept 14 (Interfax-Ukraine) – The United States Agency for International Development (USAID) is ready to use grant funds to cover almost 97% of the insurance tariff in a joint program with PrivatBank and the Universalna insurance company to support micro, small and medium-sized agricultural businesses with a budget of about UAH 572 million for insurance of future crops and reduction of credit risks.
As the head of the board of Universalna, Oleksiy Muzychko, said at the presentation of the program in Kyiv, the insurance rate is 6.4%, of which 6.2% is covered by USAID grant funds, and 0.2% is paid by farmers.
He also clarified that crops such as winter wheat and rapeseed are covered by insurance, while the crop density criteria for acceptance into the program are as follows: winter wheat – from 250 plants per 1 square meter, and winter rapeseed – from 30 plants per 1 square meter.
As PrivatBank indicated, enterprises with from 20 to 1,500 hectares of land can use this service.
According to the terms of the contract, if an insured event occurs in the autumn-winter period, a payment of 30% of the insured amount is required with a 0% deductible, and in the spring-summer period, the payment will be determined in the amount of a reduction in yield to 100% of the insured amount based on a 20% deductible.
The program covers more than 30 agro-risks, mainly associated with weather events, natural disasters and plant diseases. Muzychko noted that this insurance does not cover military risks and potential man-made risks caused by them, but the consequences of them existing at the time of registration of insurance will be taken into account.
“But if… there is another explosion… of some dam or destruction of some granary or damage to equipment, then these are purely military risks and they will not be covered,” Muzychko explained to reporters.
According to the CEO of Universalna, the choice was made specifically in the agricultural sector, since, due to its specifics, it faces a large “cash gap” and the high cost of insurance.
It is expected that this program will allow additional financing for about 220 clients from among small agricultural producers with an average loan amount of UAH 2.6 million, the insurance period is from September 1, 2023 to August 31, 2024.
According to head of the mass business department of PrivatBank Oksana Kutsokon, the financial institution also plans to launch lending secured by the future harvest.
Universalna Insurance Company was founded in 1991, is one of the major players in the insurance market in Ukraine, and has been operating in the agricultural insurance segment since 2015. The Canadian holding Fairfax owns 70%, while the remaining 30% is owned by the European Bank for Reconstruction and Development (EBRD).
