The EBRD is extending a US$10mn long-term loan to the Ukrainian food producer Chumak to buy equipment to expand its edible oil business. A further US$5mn of short-term finance is expected to be extended soon for the purchase of sunflower seeds at harvest.
Under the EBRD’s innovative warehouse-receipts programme – which is increasing the availability of post-harvest financing to farmers and food processors not only in Ukraine but around the region – the seeds will be used as collateral for working capital.
Back in 1996, when two Swedish entrepreneurs started a small food-processing company in Kakhovka, in rural southern Ukraine, it would have been difficult to predict that Chumak would soon become one of the most recognised consumer brands in Ukraine, with a leading market position in each of its product segments: ketchup and sauces, edible oil and mayonnaise.
Chumak buys most of its raw materials from local farmers. Hans Christian Jacobsen, EBRD director of agribusiness, says the expansion of Chumak’s activities will promote a stable market for farm outputs and timely payments to local farmers. It will also enhance competition in the edible-oil production sector in Ukraine, where the EBRD is already a significant investor.
Carl Sturen, co-founder and managing director of Chumak, says the edible-oil division is one of Chumak’s fastest growing businesses. He also expresses satisfaction with the cooperation with the EBRD, which he believes will enable the company to take advantage of market opportunities, spur an even higher growth and contribute positively to the development of the whole Chumak group.
The EBRD is the largest investor in the agribusiness sector across its 27 countries of operations, with 211 investments worth in excess of Eu3.25bn. In Ukraine, the EBRD’s cumulative investment stands at Eu1.3bn through 58 projects.