In response to the dire need to bolster food security amid Russia’s invasion of Ukraine, the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), and the United States’ International Development Finance Corporation (DFC) have announced a substantial $480 million financing package for Ukraine’s prominent agribusiness group, MHP.
This funding is aimed at supporting the company’s ongoing operations and enhancing its sustainable power generation capacity, which will contribute to reducing its carbon footprint.
Ukraine’s agribusiness sector has suffered immense losses, estimated at up to $8.8 billion since February 2022, as reported by the Kyiv School of Economics.
These losses include damage to agricultural machinery, granaries, and manufactured goods.
The sector has also faced rising production costs, energy shortages, reduced crop and livestock production, and logistical challenges.
Access to financing is deemed vital for the sector to remain operational and ensure stable food production.
DFC will extend a $250 million loan to MHP SE, a Ukrainian poultry and grain producer, to help mitigate the impact of Russia’s war on Ukraine.
These funds will be used to refinance existing debt and support poultry and grain production, as well as expand food production and storage capabilities and bolster export capacity.
This support aims to alleviate the severe consequences of food insecurity exacerbated by the conflict.
IFC’s contribution includes a $30 million loan designated for upgrading and expanding MHP’s agricultural waste-to-energy facility, significantly increasing the company’s green power generation capacity to reduce its carbon footprint.
IFC also provided guidance to MHP on aligning with its Performance Standards for sustainable development and will extend an additional $100 million loan to enhance MHP’s financial stability by refinancing its notes due in May 2024.
The financing from IFC is further strengthened by first-loss guarantees from the United Kingdom, the IFC Canada Facility for Resilient Food Systems, and other sources of blended concessional finance, reinforcing agribusiness and energy security in Ukraine.
The EBRD is providing $100 million to support MHP’s financial resilience through the refinancing of its Eurobonds, particularly during a time when accessing capital markets has been challenging.
This loan will be backed by a guarantee from Spain and credit support from the EBRD Crisis Response Special Fund, aligned with the EBRD’s resilience package in response to Russia’s war on Ukraine.
Legal due diligence for the project is supported by Japan.
As part of their cooperation, MHP has committed to enhancing its climate corporate governance through technical assistance funded by the Clean Technology Fund under the High Impact Programme.
MHP, a leading international food and agrotech group and Ukraine’s largest producer of poultry and meat products, plays a pivotal role in the country’s food supply chain.
Despite disruptions in 2022, MHP re-established supply and export routes, continuing to export to over 70 countries and supporting thousands of smaller businesses and local farmers in Ukraine.
This collaborative effort underscores the importance of safeguarding food security in Ukraine and reinforcing the nation’s economic resilience through private sector financing, demonstrating the international community’s dedication to supporting Ukraine’s agribusiness sector in building a greener and more sustainable future.
