Finding a lender through digital financial solutions

Founded in 2017, Sav Agro Partner specializes in cultivating strawberries and raspberries, as well as freezing vegetables and berries.

"We immediately recognized the potential of organic farming", says Andriy Shvydnyuk, co-founder and director of the company. Within just a few years, the company successfully established plantations in Volyn and obtained organic certification.

Last year, the company faced a pressing need for additional financing however banks were reluctant to invest in horticulture or berry cultivation projects, despite the company’s export opportunities. The ongoing war further exacerbated the problem.

In 2023, Sav Agro Partner once again sought financing, and digital financial solutions proved to be a valuable resource this time, simplifying the credit application process and finding a creditor within a short time. The company used AgroApp service, which was developed with the support of USAID AGRO Ukraine . The service helps farmers generate an online credit application automatically using their company’s identification code. The system retrieves relevant farm data from over 70 open registries and generates an application using a predefined template agreed upon with partner banks. The farmer indicates the desired amount of financing and selects one or several banks and programs. In comparison, the offline process of submitting a similar set of documents to a financial institution typically takes several weeks for agricultural producers.

“The loan application process through AgroApp was swift,” Andriy shares. “Within a few days, we started receiving calls from banks, and we selected the best terms. At that time, Oschadbank offered the best terms through their 5-7-9% program. Their loan procedure was not simple; it required attention to detail. From submitting the application to receiving the loan disbursement, it took about 1.5 months,” he recalls. Ultimately, the company secured a 5 million hryvnia loan to upgrade berry storage refrigeration equipment and purchase necessary cultivation tools. This financial support was significant for Sav Agro Partner, enabling them to expand their berry cultivation area in 2023.

“This business is like a conveyor belt; every year, we need to expand,” Andriy explains. As the company continues to grow, they approach expansion with caution. “When we started growing raspberries on test plots, we didn’t immediately plant the entire area. We did it gradually to understand our mistakes and how to avoid them in the future. In 2021, we planted the first 20 hectares of strawberries and 10 hectares of raspberries. Currently, we have two fields totaling over 140 hectares for organic cultivation,” he notes.

The decision to pursue organic production was a deliberate one for the company. Certified organic products can be exported at higher prices compared to the local market. In 2022, the company harvested its first crop and made its initial export shipment. Presently, 99 percent of their production is directed toward the European Union (EU). They initially established supply routes to Poland and subsequently expanded to Belgium, Lithuania, and Italy.

However, organic production brings additional challenges and requires investments with longer payback periods. “For a long time, we searched for land with soil suitable for growing our crops. It was crucial to avoid areas with intensive farming nearby and prevent pesticides and fertilizers from contaminating our fields,” shares Andriy. The company acquired land that had been unused for over 20 years, covered in self-sown vegetation, which required a significant amount of time and effort to develop.

Andriy points out how this limits their access to financing. “Banks are accustomed to working with grain producers who can sow thousands of hectares. They sow, harvest in the same year, sell the crops, and repay their debt. The dynamics are slightly different for perennial crops. You have to invest for an average of three years, and for some crops, even longer. In the initial years, it is a net loss activity, and no one wants to finance a loss-making company. Even after three years of operation, banks question why you had a loss in the previous year. That’s when we started explaining the logic of growing perennial crops,” he says.

Undoubtedly, timely access to financing is crucial for developing agricultural enterprises. Digital solutions play a vital role in helping find suitable creditors. Through AgroApp’s online application, Sav Agro Partner successfully obtained credit, expanded their cultivation areas, and even ventured into exploring new crops. Andriy shares their plans, “We will introduce sea buckthorn and cherries. We have already planted sea buckthorn on approximately three hectares, and we plan to plant cherries on 7-8 hectares in the fall. In the spring, we cultivated 10 hectares of raspberries and 10 hectares of strawberries. Overall, we have 50 hectares of perennial plantations, and we cultivate about 30 hectares of buckwheat for crop rotation. Perhaps we will focus more on vegetable crops for exports.”

The producer firmly believes in developing small farms in Ukraine, as they generate job opportunities in communities and contribute to stable tax revenues for local budgets. During the berry harvest season, Sav Agro Partner hires 300-500 workers.