Agrarian receipts and agrarian notes as mechanisms for financing agribusiness

Abstract

Problem setting.The article analyzes the peculiarities of lending to agricultural producers using innovative methods of financing agricultural receipts and agricultural notes. Lack of financial resources, limited bank lending and lack of own working capital stimulate the search for alternative mechanisms to attract financing to the domestic agricultural sector in order to increase its productivity and profitability. Agricultural receipts have become such an alternative mechanism, the process of implementation of which began with the adoption of the Law of Ukraine “On Agricultural Receipts” on November 6, 2012. The Law of Ukraine “On Agricultural Receipts” No. 5479-VI was adopted on June 6, 2012. Its purpose was to create an effective mechanism for financing small and medium-sized agricultural producers to provide them with quality plant protection products and seed against the future harvest. As of June 2024, more than 10063 agrarian receipts have been issued in Ukraine for a total amount of over UAH 69.7 billion. On February 22, 2024, in order to attract additional financial resources to the domestic agricultural sector, the Law of Ukraine No. 3586-IX “On Agricultural Notes” was adopted, which will come into force on January 1, 2025. This is a new financial instrument, which is a non-issue security in electronic form in the form of an account in a securities account in the securities depository accounting system with the reflection of information on the details of the agricultural note and other information in the Register of Agricultural Notes. Analysis of recent researchers and publications. An analysis of economic and legal literature shows that theoretical issues related to the study of this topic have been considered in many works of domestic scholars, such as: V.E.Andrievskyi, V.M. Yermolenko, V.F. Zharenko, O.P. Kulinich, N.G. Radchenko, R.I. Sodoma, S.V. Stender, S.M. Tereshchuk and others, as well as in the works of foreign scholars, such as: R. Buranello, C. Mendes, L. Umberto, A. Wilson and others. However, despite this, there are a number of unresolved issues that require new developments to determine the best ways to provide financial support to agricultural producers through agricultural receipts and agricultural notes, and there is a need for further research on practical experience, problems and prospects for the development of financing mechanisms. Purpose of the research is to analyze various theoretical, methodological and practical aspects of application of agrarian receipts and agrarian notes, to summarize domestic and foreign experience, and also to develop proposals for amending the legislative acts relating to the functioning and circulation of agrarian receipts and agrarian notes as mechanisms of agribusiness financing. Article’s main body. The introduction of a new mechanism for financing agricultural producers agricultural notes is based on the positive experience of using agricultural receipts and the shortcomings of legal regulation of this instrument. Agricultural notes do not replace agricultural receipts, but expand access to financing for agribusinesses. Thus, the introduction of agricultural notes simplifies the procedure for issuing, circulating and terminating obligations to deposit them in the depository system; ensures turnover through the mechanisms of regulated capital markets; expands the types of collateral; introduces legal conditions for multi-year credit obligations to be fulfilled in installments, etc. Thus, the introduction of agricultural notes, along with traditional paper agricultural receipts, will provide an opportunity to attract additional financial resources to agribusiness, ensure access to capital markets for agricultural producers, simplify the procedure for credit transactions, and ensure a reliable system of protection of the rights of creditors and debtors. Conclusions and prospects for the development. That is why the article emphasizes the importance of improving the mechanism of agricultural receipts by amending the current legislation of Ukraine and researching a new mechanism for financing agricultural producers agricultural notes. After all, this will help to improve agricultural producers’ access to production resources and financing, increase the ease of use, efficiency, reliability of agricultural receipts and agricultural notes, and expand the scope of their use.