Agro Perspectiva

EBRD has launched the first facility for agricultural commodity financing in Serbia

27.07.2010 12:25 "Agro Perspectiva" (Kyiv) — The EBRD is launching the first facility for agricultural commodity financing in Serbia, aiming to improve the access to funding for agribusinesses and promote the use of warehouse receipts. Agriculture is one of the key sectors of the Serbian economy, accounting for up to 15.5 per cent of the country’s GDP. Serbia is also the largest grain producer in the region. The new EUR70 million risk sharing framework will be used to finance seasonal working capital needs of Serbian agricultural companies through participating partner banks. Following a successful policy dialogue led by the EBRD with the Serbian Ministry of Agriculture alongside international donors, relevant legislation for the development of warehouse receipt based lending was adopted in 2009 and an indemnity fund was established. The implementation of warehouse receipt system in Serbia is currently ongoing, with continuous support from the EBRD. By the end of 2010 Serbia is targeting to achieve a storage capacity in public licensed warehouses of 600,000 tonnes. The EBRD’s facility will support Serbian banks in extending financing to local agribusinesses using warehouse receipts as collateral, demonstrating the viability of lending against agricultural commodities. The first loan extended under the new framework is a EUR20 million loan to Société Générale Serbia, a wholly-owned subsidiary of Société Générale S.A, France, and one of the leading banks in the country with a vast network of branches and regional outreach. «We are delighted to launch this innovative facility in Serbia, which will help local companies in the agricultural sector to gain better access to financing and will support Serbian banks in providing new commodity-backed lending products», said Hildegard Gacek, EBRD Director for Serbia. «The implementation of the warehouse receipt programme in just one year after the passing of necessary legislation follows prompt measures undertaken by the Ministry of Agriculture. These include regular inspection of public warehouses, support in acquiring necessary equipment, improving quality control and licensing, as well as helping producers to cover the costs of storing their produce in warehouses», said Serbian Minister of Agriculture Forestry and Water management, Sasha Dragin. «The warehouse receipt financing is a great opportunity to help agricultural producers who are currently underserved by the banking system because they lack standard collaterals. The agreement will enable Societe Generale Srbija to provide this inventive financial product to agribusinesses and thereby enable them to time their sale for optimal returns. We hope this product will contribute to the further development of the Serbian agricultural system», said Zdravko Krunic, Member of Executive Board, Societe Generale Srbija. The implementation of warehouse receipt system in Serbia is supported by considerable technical assistance grants provided by the EBRD’s Special Shreholder Fund, UN’s Food and Agricultural Organisation and USAID for training of key government stakeholders, participating banks and warehouses staff as well as for introduction of an electronic register for warehouse receipts. The EBRD has already successfully implemented similar projects in Bulgaria, Slovakia, Lithuania, Kazakhstan, Croatia, Ukraine, Russia and Romania. With this latest project, the EBRD’s committed investment in Serbia reached EUR1.8 billion. In the agribusiness sector alone, the EBRD has directly committed more than EUR6 billion in over 400 projects across central and eastern Europe and the Commonwealth of Independent States since 1991.