4. ATTACHEMENT J.7 – DEC REPORT USAID Ukraine AGRO ActivityAnnual ReportFY23 Redactions Applied.pdf

Agriculture Growing Rural Opportunities (AGRO) Activity in Ukraine Quarterly Progress Performance Report

Agriculture Growing Rural Opportunities (AGRO) Activity in Ukraine

FY2023 PROGRESS REPORT

(October 1, 2022 - September 30, 2023)

Award No: 72012120CA00001

Prepared for USAID/Ukraine c/o U.S. Embassy 4 Ihor Sikorsky St.

Kyiv, Ukraine 04112

Prepared by Chemonics International Inc.

1275 New Jersey Ave., SE, Suite 200 Washington, DC 20003

DISCLAIMER

This publication was produced by Chemonics International for review by the United States Agency for International Development. The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

ATTACHEMENT J.7 – DEC REPORT USAID Ukraine AGRO Activity Annual Report FY23 Redacted

LuciaSandefur Highlight

EXECUTIVE SUMMARY

The purpose of the USAID Agriculture Growing Rural Opportunities Activity (AGRO) is to accelerate the economic development of rural Ukrainian communities with the greatest need through a better-governed agricultural sector that encourages more productive, modern, and profitable agricultural micro, small, and medium enterprises (MSMEs) that are successfully integrated into competitive markets both in Ukraine and internationally.

With the breakout of the full-scale war, AGRO refocused its activities to address national and global food security, providing immediate support to affected MSMEs and communities and addressing the emergency. In FY 2023, this approach included sustaining and recovering the Ukrainian agri-sector with a market systems development approach, ensuring forward movement by enabling and rebuilding agricultural market system reforms and agriculture sector gains, which are vital for economic growth and recovery amid Russia’s invasion.

AGRO continued applying a market systems approach that envisages engaging market and value chain actors and catalyzes a process for a more competitive, inclusive, and resilient system.

AGRO worked across three main objectives: improve productivity and market access in target value chains, improve key supporting functions, and improve agricultural sector rules and regulations.

Among value chains, AGRO focused primarily on grain and oilseeds, fruits and vegetables (including potato), artisanal and confectionary, dairy and meat, and aquaculture value chains.

AGRO continued implementing USAID Agriculture Resilience Initiative-Ukraine (AGRI-Ukraine) lines of efforts, primarily related to ensuring temporary grain storage, supporting the new planting season, developing processing capacity, and improving access to finance.

Overall, AGRO has reached 14,858 unique MSMEs since the start of the full-scale war in Ukraine in late February 2022 (31 percent out of about 47,000 MSMEs registered in the country before the beginning of the full-scale war). Since the beginning of FY 2023, AGRO reached 12,496 unique MSMEs. Those reached In FY2023 include (data may overlap):

• 8,849 farmers cultivating from 5 to 500 hectares of land received fertilizers, corn, rapeseed, and sunflower seeds during the winter and spring sowing campaigns (41% of 21,732 this-sized farmers that registered in the State Agrarian Register to receive external support)

• 1,109 MSMEs received grain storage services using AGRO-provided sleeves and modular warehouses.

• 238 MSMEs with a total livestock population of 30,342 cows received veterinary medicines

• 557 MSMEs received loans by using finance apps developed with AGRO support, totaling about $18.8 million.

• 113 MSMEs received state grants that AGRO assists the to administer; these farmers’ applications for state grants totaled more than $11.93 million.

• 3,640 MSMEs used AGRO-supported services such as marketing, finance and technical advice, technical services, pesticide spraying by drones, and legal advice.

• 308 MSMEs registered on the dedicated online platform and received services related to using and registering pesticides, chemical products, and fertilizers.

• 150 MSMEs growing fruit, vegetables, and grains implemented the innovative system for automating farm work developed by with AGRO co-investments.

A. Key Achievements the AGRI-Ukraine framework, AGRO established the platform, facilitating B2B cooperation between processors and farmers in the domestic market for long-term partnerships and contracts.

AGRO collaborated with to develop and test new packaging solutions for long-distance deliveries, ensuring the preservation of temperature regimes for relevant products. In June launched this new service.

Objective 2 Key Supporting Functions Improved

As a result of AGRO’s efforts to boost online agri-financial platforms, 557 farmers benefited from loans totaling 689 million UAH (about $18.8 million) in FY 2023. Overall, 1,025 agri-MSMEs received 2 billion UAH ($58 million) in loans through USAID AGRO-supported online tools since the beginning of Russia’s full-scale invasion in February 2022.

Within AGRI-Ukraine AGRO partnered with three agricultural input suppliers to extend financial instruments tailored to wartime exigencies: . AGRO helps these input-supplying companies to de-risk by providing trade credit to small farmers, who in turn will gain access to the resources necessary to work efficiently. As a result, 251 farmers received additional trade credits totaling 106 million UAH (about $2.9 million), directly attributable to AGRO assistance, to purchase plant protection products, seeds, and fertilizers through trade credit in the next 12 months. AGRO’s co-investments in blended finance unlocked significant interest from input providers who decided to start similar projects without direct donor investment.

Additionally, AGRO provided technical assistance to the to review, select, and administer farmers’ applications for state grants which totaled 490,468,805 UAH (more than $13 million) from the start of the state grants program by the time of reporting.

Through numerous events and publications, AGRO continued raising financial literacy awareness among agri-producers who plan to secure working capital from banking, government, and non-governmental institutions.

To enhance access to critical services, AGRO and launched the to help small- and medium-sized enterprises (SMEs) get timely technical and repair services when access to qualified workforce is limited due to the war. In FY 2023, provided 97 services to 32 SMEs, resulting in an economic impact of $126,100.

To improve access to information on pesticides and their application, AGRO and NGO rolled out the information aggregator which served 251,918 visitors, of which 308 MSMEs registered and created company profiles on the platform.

150 MSMEs benefited from the farm management system for improving crop and horticultural production, which was implemented by with AGRO support.

Furthermore, a selected service provider, conducted 658 operations using aerial drones to apply crop protection products for 119 MSMEs across a total area of 50,853 hectares.

To further promote innovations in agriculture, in FY 2023 AGRO issued a solicitation seeking potential partners to boost SME productivity and efficiency by partially offsetting costs for innovative service solutions and expects to issue sub-award agreements early in FY2024.

After careful needs analysis, AGRO worked to expand the range of supported services and selected five projects, with subaward agreements scheduled to be signed in FY2024 aiming to foster MSME competitiveness, ensure production sustainability, increase the added value of their products, and facilitate the adoption of new technologies.

Objective 3: Agricultural Sector Rules and Regulations Improved

In 2023, AGRO shifted its focus from aiding the gradual removal of land market restrictions imposed after martial law to supporting in advancing land reform.

Specifically, AGRO assisted the in preparations to open the agricultural land market to legal entities, commencing in January 2024. The participation of larger players in the land market will strengthen it, unlocking the potential of land to attract credits and investments.

AGRO partnered with the to conduct an economic analysis of the land market, with the goal of enhancing its role in attracting investment, ensuring food security, revitalizing communities, and advancing national development. The resolution on monitoring land relations, developed by AGRO and adopted by the on May 12, will further strengthen the land market's role in Ukraine's economic recovery.

In June 2023, the approved in the first reading draft law #7577 "Amendments to certain legislative acts to improve the management system of state-owned engineering infrastructure of melioration systems," which AGRO advocated for. This law represents the final stage of reforming the state management of melioration systems, introducing new approaches to management, financing, and tariff formation for water supply and drainage. Additionally, AGRO's support led to the registration of 31 water user organizations (WUOs) at the local level in the Unified State Register of Legal Entities, Individual Entrepreneurs, and Public Formations.

AGRO continued its support for the development of the National Spatial Data Infrastructure (NSDI) and the AGRO enhanced the capacity of 330 department heads and specialists in national and community authorities to handle geodata and NSDI. With AGRO's support, 380 state cadastral registrars, over half of their total number, developed their capacity to work with the , contributing to reduced corruption in land use changes, spatial planning, and hydro-technical melioration.

AGRO continued supporting spatial planning for communities through various initiatives. It supported a draft law that established legislation for spatial planning during wartime and post-war recovery. AGRO facilitated the creation of an automated online form for comprehensive spatial development plans for community territories, benefiting 60 communities.

In 2023, universities that signed a joint declaration with AGRO to develop spatial planning programs graduated 1,338 specialists in Geodesy and Land Management. Their training program included an AGRO-developed methodology for preparing comprehensive spatial development plans for communities, based on the results of projects in the communities in Oblast. This partnership involved 16 universities from 43 higher education institutions across the country that train land management professionals.

AGRO continued to support war-affected farmers in documenting war damage. The Ukrainian solution developed by AGRO for documenting agricultural losses due to the war reached the finals of the innovation competition and was presented at the . The began implementing a new AGRO sub-award aimed at providing legal and other assistance to farmers affected by occupation and those who suffered damage due to active hostilities.

AGRO facilitated the delivery of essential goods provided by Ukrainian and international donors to war-affected communities for their agricultural production and overall recovery. The total weight of critical goods delivered, including food, medical supplies, hygiene products, generators, and seeds for spring planting, was 978 tons.

AGRO completed piloting the Megacommunities approach which resulted in tested approaches and methods to create synergetic cooperation between communities.

C. Activity Administration

AGRO hired fourteen (14) new employees during FY 2023:

At the time of preparing the report, recruitments were underway for the local long-term positions of a

Six staff members were promoted or transferred to higher or new positions with amended scopes of work.

In FY 2023 6 employees left AGRO. The position of the was replaced with the relevant position of which was filled by a local long-term staff member.

On March 13, AGRO received the updated USAID Action Memorandum for Mission Director regarding the Agency Policy Determination 15 (PD-15) and Consolidated Appropriations Act Sections 7025 (a) in response to AGRO proposals to support the production of ten additional agricultural products (peas, leguminous vegetables, oats, rapeseed, soybean, live chicken, ducks, and geese, rabbits, and bees).

On July 27, AGRO submitted to USAID the Return Management Plan which was subsequently followed and implemented. (Please see details in the Activity Administration Chapter).

On August 25, USAID and Chemonics executed the 6th Modification to Cooperative Agreement to provide support to AGRO Activity and increase the total estimated amount to $ 205,000,000, expand the program Description, update and incorporate other administrative changes.

D. Subsequent Reporting Period

In the subsequent reporting period, AGRO will retain its structure and scope and will focus on (1) implementing measures to ensure food security and retaining productivity and market access, (2) retaining and restoring key supporting functions and immediate services, assisting in retaining MSMEs’ access to finance, and (3) helping the government and Parliament to continue the land and melioration reforms as well as support local communities to restore after the consequences of war.

As per the FY 2024 Implementation Plan, submitted to USAID, AGRO will continue implementing initiatives to:

- Strengthen food security (supply side) and support harvesting, storage, and food-processing

- Assist MSMEs in ensuring business continuity, restoring marketing and sales

- Provide assistance on furthering and adapting land and melioration reforms, and spatial planning as well as maintaining the enabling environment for agri-business

For a more comprehensive list of major planned activities and events for the subsequent quarter, please refer to Annex E. Future Activities/Events Table.

Contents

CONTEXT

I. KEY ACHIEVEMENTS BY COMPONENTS

OBJECTIVE 1. MARKET ACCESS AND PRODUCTIVITY IN TARGET VALUE

CHAINS IMPROVED

OBJECTIVE 2. KEY SUPPORTING FUNCTIONS IMPROVED

OBJECTIVE 3. AGRICULTURAL SECTOR RULES AND REGULATIONS

IMPROVED

II. PROGRESS AGAINST TARGETS

III. COLLABORATING, LEARNING, AND ADAPTING (CLA)

IV. INCLUSIVE DEVELOPMENT

V. ENVIRONMENTAL COMPLIANCE

VI. LINKS TO OTHER ACTIVITIES AND GOVERNMENT

VII. SUBAWARD DETAILS

VIII. ACTIVITY ADMINISTRATION

IX. COMMUNICATIONS AND OUTREACH

ANNEX A. MAJOR ACTIVITY DOCUMENTS

ANNEX B. SUCCESS STORIES

ANNEX C. PERFORMANCE DATA TABLE

ANNEX D. SUBAWARDS TABLE

ANNEX E. Solicitations Issued by AGRO in FY 2023

ANNEX E. FUTURE ACTIVITIES/EVENTS TABLE

ACRONYMS AND ABBREVIATIONS

AGRI-Ukraine USAID Agriculture Resilience Initiative-Ukraine

AGRO USAID Agriculture Growing Rural Opportunities Activity

APS Annual Program Statement

B2B Business-to-Business

B2C Business-to-Customer

BRDO EU Better Regulation Delivery Office

BSGI Black Sea Grain Initiative

CAP USAID Credit for Agriculture Producers Activity

CCN Cooperating Country National

CLA Collaborating, Learning, and Adapting

DSTU State Standards of Ukraine (from the Ukrainian Derzhavni Standarty Ukrainy)

ECS Environmental Compliance Specialist

EMMP Environmental Mitigation and Monitoring Plan

EMSMA Emergency Market Systems Mapping and Analysis

ER Expected Result

ERC Environmental Review Checklist

EU European Union

FAA Fixed-Amount Award

FAO United Nations Food and Agriculture Organization

FSSC Food Safety System Certification

FY Fiscal Year

GESI Gender Equality and Social Inclusion

HACCP Hazard Analysis and Critical Control Point

HoReCa Hotel, Restaurant and Catering

HOVERLA USAID Governance and Local Accountability Activity

HPP Hydroelectric Power Plant

IDP Internally Displaced Person

IEE Initial Environmental Examination

IFC International Finance Corporation

IIP Initial Implementation Plan

IODA Index of Expectations of Business Activity

IT Information Technology

J4A USAID Justice for All

KOICA Korea International Cooperation Agency

MEL Monitoring, Evaluation, and Learning

MP Member of Parliament

MSME Micro-, Small-, and Medium-sized Enterprise

NSDI National Spatial Data Infrastructure

PE Private Entrepreneur

PERSUAP Pesticide Evaluation Report and Safe Use Action Plan

PPP Plant Protection Products

RFA Request for Applications

RFP Request for Proposals

RFQ Request for Quotes

ROC Record of Compliance

SAR State Agrarian Register

SERF Simplified Environmental Review Form

SIF Strategic Investment Fund

SME Small- and Medium-sized Enterprise

STTA Short-Term Technical Assistance

TCA USAID Transformation Communications Activity

UAH Ukrainian Hryvnia (national currency)

UK United Kingdom of Great Britain and Northern Ireland

UN United Nations

USDA United States Department of Agriculture

USG United States Government

UCAG Web Content Accessibility Guidelines

WFP United Nations World Food Programme

WUO Water User Organization

CONTEXT

FY 2023 was marked by Russia’s ongoing invasion of Ukraine, which continued to cause heavy disruptions in all domains. While the intense fighting continued in the east and south of Ukraine, the Armed Forces of Ukraine managed to liberate a considerable part of , including the city of , and push back the Russian invading forces in in November 2022, thus making many areas accessible to humanitarian and development actors, including the USAID Agriculture Growing Rural Opportunities in Ukraine Activity (AGRO).

FY 2023 was marked by numerous waves of massive missile and drone attacks launched by Russia against energy infrastructure, resulting in severe damage to energy production and distribution across the country. This further disrupted public services, including water, electricity, heating, health care, education and social protection; exacerbated humanitarian needs; and posed critical challenges to the economy, including the agri-food sector.

Furthermore, on June 6, the Kakhovka Hydroelectric Power Plant (HPP) and dam were deliberately destroyed by Russian forces, causing catastrophic consequences for the population and their livelihood, the environment, agriculture, and food security. The dam breach led to the flooding of significant territories along the Dnipro River and posed a threat to agricultural activities in oblasts, which rely on water from the for irrigation. Water supply for nearly 1 million people in oblasts is estimated to be severely or catastrophically impacted by the depletion of the

It is estimated that the dam breach impacted agriculture, fisheries, commerce, and industry, with consequences for the economy of the region. The was used to supply water for irrigation systems and livestock farming across a total area of 584,000 hectares (the actual irrigated land area before the war was 262,000 hectares). The agriculture sector has suffered damage worth US$406.6 million2.

Overall, according to the latest available assessments, the war has already resulted in total direct damage of $8.7 billion and $31.5 billion of indirect losses for the agriculture sector3.

The estimated the decline in Ukraine’s gross domestic product (GDP) in 2022 at 29.4 percent. For the calendar year 2023 the Ministry of Economy forecasted GDP growth at 4%.4

Despite the growing challenges, in June, Ukraine accomplished the sowing campaign and planted

12.9 million hectares of grains, pulses, oilseeds, and sugar beets. Farmers sowed 5,619,000 hectares of grains and pulses.5 Ukraine expects to harvest around 80 million tons of grain and oilseeds in the 2023 calendar year6, with more than 50 million tons earmarked for export. Yet, since the start of Russia’s full-scale invasion, Ukraine’s long-term grain storage capacity has declined by nearly 22 percent (13 million tons)7.

On May 2, the adopted exceptional and temporary preventive measures on imports of a limited number of products from Ukraine, given the exceptional circumstances of serious logistical bottlenecks experienced in .

The measures concerned only four agricultural products originating in Ukraine: wheat, corn, rapeseed, and sunflower seed and were phased out by September 15, 2023.8 However, imposed their bans on Ukrainian grain9 and in response Ukraine filed WTO case against these countries over their unilateral grain bans10.

Meanwhile, on June 5, the EU extended for another year the suspension of import duties, quotas and trade protection measures for Ukrainian exports to the EU.

On July 18, 2023, the Black Sea Grain Initiative to facilitate the safe navigation of the export of grain, foodstuffs, and fertilizers from Ukraine, expired and was never renewed. Through FY 2023 it was a critical solution to enable Ukrainian producers to export grain and relieve global food security challenges. As of July 2023, almost 33 million tonnes of grain and other foodstuffs had been exported via the Black Sea Grain Initiative11.

Despite the termination of the Black Sea Grain Initiative Ukraine worked to ensure safe navigation of civilian ships through a humanitarian corridor. The first cargo ship left the on August 16, 2023. 12

This goes in line with an earlier Ukraine pledge to global food security and the launching of the Grain from Ukraine humanitarian initiative on November 26, 2022, to purchase and supply food for countries in Africa and Asia suffering from hunger.

On October 6, 2022, AGRO hosted the visit of AGRO facilitated dialogue with Ukrainian farmers on how the war has affected their livelihoods, how USAID support was helping them during the crisis, and learned how agricultural drones are used to remotely apply fertilizer and pesticides, thus helping farmers save resources and increase yields.

On November 8, 2022, AGRO hosted the visit of to discuss with grain producers and grain processing facilities the war challenges and the importance of the Black Sea Grain Initiative for food security amid Russia’s invasion.5

On July 18, 2023, AGRO hosted in the visit of to discuss with the Ukrainian farmers and authorities the importance and challenges of grain exports.

approach aimed to provide valuable information and insights to farmers and enhance their access to critical resources.

Recognizing Ukraine's substantial potential in exporting grains and technical agricultural crops, as well as the need to enhance the efficiency of local seed production and provide high-quality seed for agricultural producers domestically and globally, AGRO has initiated the "Enhancing the Seed Sector of Cereals, Oilseeds, and Legumes" program. This program aims to create conditions for the development of the national seed production market, attract private investments, diversify the seed market, and introduce new market actors. The program will be implemented in two stages:

1. AGRO has engaged a short-term consultant to analyze the seed sector of cereals, oilseeds, and legumes of domestic and foreign selection. The consultant will examine the current state of seed production in Ukraine and internationally, identify promising points for investments in the cultivation and processing of breeding seeds, and analyze the regulatory environment. The consultant will start working in the next reporting quarter.

2. Based on the analysis and recommendations, the second stage of the project will be introduced, encompassing a) An educational component for small and medium-sized enterprises (SMEs) on the adoption of modern technologies for the cultivation and processing of high-yield varieties and hybrids and b) Co-investments with seed farms to modernize their producing technologies.

This initiative aims to strengthen and modernize the seed sector, promoting agricultural growth and food security in Ukraine.

MSME access to critical inputs in selected value chains improved

AGRO partnered with the to distribute carrot seeds (in spring) and rapeseed seeds (in fall) donated by Bayer company within the USAID AGRI- Ukraine. These deliveries were done through AGRO’s sub-award to AUAC, see Chapter Objective 3. Agricultural sector rules and regulations improved, for details.

MSME dairy farms’ access to veterinary medicines improved. AGRO and the completed the joint project AGRO-S1-126 “Supporting Ukrainian SMEs in the Dairy Sector To Ensure National Food Security”, providing veterinary medicines to 238 SMEs with a total livestock population of 30,342 cows. The project also included:

• Seven educational webinars.

• Six group consultations for farmers and subsidiary farms were held at vet medicine distribution hubs.

• 238 individual consultations by the and on-site consultations by expert practitioners at farms on increasing productivity and efficiency in animal production.

• Electronic publications, distributed via email and Viber, cover topics such as preventing antibiotic resistance, animal health and welfare, calf rearing, preventing, and treating metritis, and preventing and treating mastitis. Project participants received technological consultations.

As a result of the project, 190 SMEs gained additional knowledge about new technologies in livestock breeding. Feedback from participants at educational and informational events, and success stories from individual participants, indicate that approximately 25 percent of participants significantly improved the efficiency of their agricultural activities, which led to an average productivity increase of 10 percent and an average sales volume increase of 15 percent.

Sub-ER: Productivity of Targeted Ukrainian MSMEs Increased

Establishing a high-tech market for pollination based on beekeeping facilitated.

During FY2023, fieldwork on studying the impact of controlled bee pollination on the quality indicators of grain and oilseed crops, as well as the enhancement of their productivity, was successfully completed. To achieve this, seven demo apiaries were established in the

. As observed during the project, controlled bee pollination improved the yield of buckwheat and sunflower by 10 percent to 20 percent and improved the quality seed fullness by 5 percent to 30 percent. Furthermore, because of bee pollination, the volume of marketable honey produced in beekeeping farms increased by 5 to 18 kg, depending on technological conditions. The profitability of these farms increased by 10 percent or more within the season.

On August 29, 2023, a "Bee Pollination of Grain and Oilseed Crops: Buckwheat" meetup took place at the . This event aimed to explore and promote bee pollination as a tool for improving the quality and productivity of agricultural crops for subsequent use in seed production and processing.

To popularize bee pollination, AGRO’s partner developed the "Managed Bee Pollination" training course. The course lasts for 5 weeks, with each week containing educational materials for 5 modules, and culminates in a final test. Each module consists of 3 short video lectures (up to 10 minutes each), practical assignments, and a thematic test with 10 questions.

The course will be available publicly on online platform and the website.

Development of swine farming in Ukraine.

The war killed about 12 percent of the livestock in Ukraine’s pig industry robbing the domestic market of more than 100,000 tons of pork in 2022. At the same time, the sector remains an important pillar of food security and economic activity in rural areas.

AGRO partnered with the to support the development of a model of contracted pig breeding. The model is a convenient scenario for increasing livestock without making capital investments. Under the model, a business relationship is established between a sire farm and a fattener. The latter receives a fixed fee for fattening commercial livestock. The sire farm provides the fattener with feed and veterinary support. For small farms, it is a guarantee of stable income regardless of market prices at the time of sale. In Ukraine, the model can provide employment in rural areas, decentralize production and, accordingly, reduce the environmental burden of scaling up the pig industry and increase its export potential.

In June, AGRO supported 10 representatives of Ukrainian pork production to visit the to study advanced practices. For the study visit, AGRO organized a series of meetings with farming enterprises in Iowa and a 2-day seminar with experts from a leader in the swine industry that services family farms and consults on swine health and maintenance, marketing, and production management at breeding farms. After the visit, AGRO is supporting the to present the American experience to a broader audience of Ukrainian pork producers, adapt the American contract pig finishing model with expert support, and competitively select farms to pilot test the model.

On September 21, held the online presentation

AGRO and the association presented the contract farming model as well as extensively covered implementation details for the Ukrainian market by looking at a case study of a company that engages in contract pig farming and does not use antibiotics. The event brought together over 30 businesses involved in pig farming across Ukraine who offered their vision of how the model should be best implemented in Ukraine. AGRO is analyzing the feedback to propose a viable contract farming model for Ukraine and plans to support specific initiatives in the future.

Supporting relocation of MSME production facilities to safer oblasts in Ukraine. AGRO and its sub-awardee continued to support the relocation of competitively selected MSMEs to safer oblasts in Ukraine. As of the end of FY2023, 10 MSME recipients reported progress of in establishing their operations in their new relocation sites while three beneficiaries were unable to relocate or resume their activities in the new locations, primarily due to active military conflicts in the regions they intended to relocate from.

Support to confectionery and artisanal MSMEs (APS-01). AGRO co-financed the acquisition of the final set of production equipment for . The sub-recipient successfully completed the construction and commissioning of the confectionery production shop.

Over the reporting year, the entrepreneur procured 1,140 kg of berries and 29,740 kg of vegetables from small and medium-sized enterprises in to produce pancakes and dumplings using equipment installed due to AGRO’s co-investment.

APS-02 Capacity development of agricultural processing enterprises. Within this APS, AGRO co-invests with MSMEs in new processing equipment, helping them to engage more MSMEs in their supply chains (this way increasing markets for these MSMEs and increasing their incomes) and to branch out businesses engaged in finishing/processing fruits, vegetables, meat, dairy, or fish products.

AGRO co-invested with to assist in expanding its production of value-added goods and facilitate procuring berry, fruit, and vegetable inputs from a greater number of MSME producers in . Using the equipment acquired through AGRO’s co-investment processes its own raw materials and has also commenced offering services to small and medium-sized enterprises for the processing of apples and pears into juice. In September, under a tolling arrangement, 673 kg of raw materials were processed, resulting in the production of 476 liters of juice.

APS-03 Improving capacity of the aquaculture value chain actors. With this APS, AGRO aims to support the aquaculture value chain, provide services for post-processing/processing of aquacultural products and provide laboratory research services and/or consulting and technological support in aquaculture.

Within the framework of the project, the installation of equipment for growing trout fry was continued under a subaward agreement. 300 aerators and 2 pumps for the

RAS, 100 m3 bacteria beds for biofilters, two EL 46 / 2P blowers and two WEG 18.5 kW 3000 rpm electric motors were purchased in FY 2023. Also, provided advisory support to 3 MSMEs on the following issues: keeping, transporting, rearing fish, and setting up systems for fish farming. , started preparing a training center for the cultivation of marine species of shrimps and established partnerships with two potential training center participants. Ice generator with a compressor operated on R448A, chiller with a compressor operated on R448A and with a heat recovery system were purchased in FY 2023.

APS-04 to increase long-term storage and processing and improve small producers’ access to sales channels. Due to AGRO’s co-investments in new equipment within this APS, seven selected MSMEs participants built additional partnerships, increased productivity, added new value-added products, and expanded their markets.

engaged 12 local SMEs in partnership and purchased from them 42,000 kilograms of vegetables and fruits. used these products to produce over 80,000 units of finished products: juice, fruit chips, and canned vegetables. With the new equipment, the company created three additional job positions: a technologist and two workshop specialists. The company started preparing for HACCP certification according to the international standard FSSC 22000.

used the equipment co-invested by AGRO to increase its processing capacities, procured 9,500 kilograms of fresh and frozen fruits, vegetables, and berries from local agricultural enterprises during the summer and is additionally purchasing mushrooms and wild berries from local households, providing rural inhabitants with additional income.

used the equipment co-invested by AGRO to produce products under its own brand . The company developed a marketing strategy and design for this new product line. Despite the war affecting sales of other product categories in the market, the product line experienced a sales increase, which can be attributed, in part, to its extended shelf life without requiring special temperature conditions. The company doubled its production and procurement of fruits, vegetables, and meat, establishing stable supply channels with over 10 suppliers. Production expansion, achieved through modernization, allowed the company to create six new jobs.

expanded its production capacity for long-lasting ready-to-eat food products through the sublimation of fruits, berries, vegetables, and meat. Apart from the domestic market, the company actively developed new contacts for exporting its products.

expanded its vertical partnership by cooperating with which purchased another CC-100 equipment for product sublimation (the first two were co-invested by AGRO and for mutual production, marketing, and sales. Thanks to this expansion, the volumes of the company’s raw material purchases, production and sales grew significantly: involved 10 SMEs and family farms in the partnership for growing products and created a joint program with the suppliers of raw materials to ensure guaranteed marketing of finished products that ensure food security in the region. Before the implementation of the project, sold products only in retail and did not have the opportunity to export or sell in the B2B segment. After purchasing the equipment and involving the company in cooperation, increased the production capacity by 10 times! The potential processing of raw materials increased from 5 tons per year to 50 tons per year.

shipped products to was focused directly on the production process and the promotion of finished products – The main range of products developed and tested, includes apple chips, apples dried in slices, dried sea buckthorn, borscht (with and without meat), and bograch (with and without meat). Products are sold both in sets and separately. Starting from January 2023, the company sold more than 1,000 food sets engaging both civil and military clients.

created a website to sell products online15. In total, the company signed 31 contracts with MSMEs suppliers that are producers of berries, fruits, and vegetables.

modernized to increase production on average to 72 tons of cereals per month with a total increase of raw materials purchased to 150 tons per month (oats, millet, corn). During April- May 2023, modernization allowed to supply of 250 tons of cereals to the amounting to 250 tons of cereals, while ensuring ongoing orders for retail chains, distributors, and export. In May 2023, applied for the new tender for the delivery of 150 tons of cereals in small packages as well as concluded long-term contracts with

In October 2022, in order to determine the production capacity of the enterprise, produced a trial batch of Blanched flounder with the addition of oil product, the total volume of which was 8,640 tin cans per shift. The company submitted the samples of products for testing to determine sodium chloride and for a sanitary-biological study and received a conclusion that the products comply with the group A canned products sterility requirements.

Currently, is in the process of receiving an operating permit for production facilities from the and receiving a Euro number.

Meanwhile, the company is negotiating with potential counterparties regarding the supply of finished products. A number of preliminary agreements have already been reached with potential counterparties:

Negotiations are underway with other potential customers.

MSME capacity in quality potato processing.

In FY2023, AGRO initiated a sub-award program titled "Value Chain Development for Potato Production and Processing." The program's objective is to enhance MSMEs' access to potato pre-sale processing and deep processing services, certified seed potato supply, and advisory support for contract farming of market-demanded varieties. It aims to create conditions for production diversification, expand sales channels in domestic and international markets, and consequently, improve the prosperity of rural communities in Ukraine.

Following a competitive selection process, five projects have been chosen for implementation in the oblasts. These projects are focused on engaging MSMEs in partnerships and cooperation to establish local hubs for industrial potato cultivation, providing access to modern potato processing equipment, energy-efficient crop storage technologies, and increasing production and sales of commercial potatoes to meet market demands.

At the moment of preparing this report, AGRO was negotiating and preparing agreements with the selected MSMEs.

Sub-ER: Post-Harvest Production Loss Mitigated and Reduced

MSMEs’ access to temporary grain storage ensured

Under the AGRI-Ukraine Initiative throughout in FY 2023, AGRO provided storage and pre-sale preparation services for 1,109 MSMEs and as of October 2023 assisted in storing 1,013,761 tons of various grain crops. To provide storage services AGRO engaged 11 partner companies and supplied them with 7,708 sleeves, 29 units of equipment for loading grain into sleeves, 30 storage bins and 29 unloaders, and together with them equipped 74 grain storage facilities. Through its partners, AGRO will continue to provide grain storage services in the marketing season 2023/2024.

In partnership with AGRO and leveraging its extensive experience growing and storing grains and oilseeds, developed the instructional video “Early Harvesting: How to Successfully Harvest and Minimize Losses in the Storage of Rapeseed and Wheat.”16 This initiative allows even small-scale households to adopt proven practices in cultivation, harvesting, and crop storage. The video has been viewed by 9,800 users. also created a video about growing technologies "Winter wheat. How to grow and harvest successfully?”17 engaging 960 viewers as of today.

Long-term grain storage facilities improved agricultural production (horticulture, berry farming, viticulture, and greenhouses); of them 441,428,297 UAH ($11.93 million) paid to 113 MSMEs since January 2023.

Additionally, AGRO supported the in developing the online form “Assessment of the Farm’s Compliance with the Grant Requirements” for farmers planning to apply for state grants for developing horticulture, berry cultivation, and viticulture, which is already functional on the ministry's website. Potential applicants can immediately check their eligibility for grants related to the planned crops in their respective regions. The form also helps to verify that the grant request was calculated correctly, and checks if the declared plant variety is listed in the

, among other criteria.

Appropriate models for blended finance assessed and deployed

AGRO partnered with three agricultural input suppliers to extend trade credit tools for farmers tailored to wartime exigencies: . In partnership with input suppliers, USAID AGRO will increase the volume of available loans to small agricultural producers by developing and implementing financial products adapted to the needs of farmers during the war. AGRO anticipates that in the next 12 months, a minimum of 600 agri-MSMEs will benefit by purchasing plant protection products, seeds, and fertilizers, with a collective expenditure of UAH 460 million (approximately $12 million). The companies will be able to mitigate their credit risks and renew trade credit for small farmers, who in turn will gain access to the resources necessary to work efficiently. For each dollar invested by AGRO, the private sector is expected to facilitate $4.20 of trade credit to small farmers.

As soon as AGRO informed about its decision to co-invest in these projects, the companies launched issuing trade credits and provided trade credits to 340 MSMEs for a total amount of 100 million UAH in Q3 even before signing their sub-award agreements. And after signing in Q4, 251 farmers received additional trade credits totaling 106 million UAH (about $2.9 million).

As of Sep 30, developed instructions to monitor the compliance of participating MSMEs with state directives regulating the use and application of crop protection products and mineral fertilizer. The companies also developed deferred payment schedules for each type of product and ancillary service in priority regions and compiled a list of covered products compliant with USAID’s environmental protection requirements, including the Pesticide Evaluation Report and Safe Use Action Plan (PERSUAP) as regards crop protection products (DCN: 2018-UKR-044).

Access to information about finance opportunities expanded

In collaboration with AGRO continued supporting the development of an ecosystem for long-term interaction between agri-food MSMEs and companies that provide innovation, financial, and other supporting services to MSMEs. During FY2023, AGRO and organized 10 joint events to provide information and consultations regarding government support and private financing options; manufacturing added value products; conducting marketing, promotional, and training activities and live streams; producing videos, infographics, and publications; and other activities to create an ecosystem for cooperation between suppliers, agri-food MSMEs, and other stakeholders in order to save agricultural producers from bankruptcy, open new jobs, and help the Ukrainian economy to operate during the war. Among them, in FY2023 Q4:

• Online meetup with a financial expert about sources of financing for agribusinesses (July 21, 2023).20 The speakers discussed the general state of the market, possibilities of bank lending, and non-standard ways of financing, such as partnership and commodity credits, grants, non-bank loans, and agricultural receipts. Of particular interest to the audience were

On September 28, AGRO signed a sub-award agreement with for the project “Providing MSMEs with self-propelled crop spraying with mixing chambers and seed treatment services” to facilitate Ukrainian MSMEs’ access to crop spraying services using self-propelled sprayers with mixing chambers as well as seed treatment services. Increasing access to these services will enhance the competitiveness and sustainability of the domestic agriculture sector, improve labor productivity, add extra value to MSME products, and promote new production technologies, thus contributing to improved national and global food security. As part of the subaward, will provide crop spraying to at least 30 MSMEs (a total of 40,500 hectares) and seed treatment services for at least 50 MSMEs (a total of 8,000 tons of treated seeds), which are allowed by the Pesticide Evaluation Report and Safe Use Action Plan (PERSUAP) for Ukraine.

Agricultural enterprises’ access to agricultural machinery services improved One of the problems faced by agricultural enterprises in the liberated territories and areas affected by Russia’s military aggression is a lack of agricultural machinery for sowing and harvesting. In Q2, AGRO thoroughly examined the possibilities of assisting agricultural enterprises and/or service companies to acquire and provide large agricultural machinery for sowing and harvesting.

After consultations with agricultural market actors and desk research, AGRO decided that direct procurement and transfer of large-scale agricultural machinery would be economically and technically ineffective and very risky and dropped the idea from its annual plan.

A more efficient approach is to fully or partially compensate the cost of services provided by service companies to agricultural enterprises in war-affected areas for soil cultivation, sowing, spraying, and harvesting. While this initiative may face risks related to the safety of the land plots in these areas, it is considered a better option.

AGRO started solicitating applications from service-providers in late FY2023, targeting different kinds of services for MSMEs. AGRO is going to prioritize selecting co-investment partners that will suggest efficient solutions for agricultural machinery shortages, e.g., services to MSMEs in war-affected areas for soil cultivation, sowing, spraying, and harvesting will be prioritized.

Sub-ER: Ecosystem for Agricultural Business Relocation/Relaunch/Startup Expanded

Platforms and IT solutions for relaunching agribusiness deployed and improved In early FY2023, AGRO engaged four consultants in oblasts to continue the project’s support for relocating businesses. As a result of this support, 39 MSMEs from Eastern Ukraine that have decided to relocate or are in the process of moving to target areas covered by AGRO received relevant consulting support. Of these, 21 enterprises have completed relocation and 66 people were given employment assistance. Additionally, AGRO identified 35 local MSMEs in the project’s target areas that can host relocated MSMEs or create joint production facilities with them.

To support the Government of Ukraine’s efforts to relocate MSMEs to safer regions, AGRO engaged four IT consultants who maintained the relocation platform. In FY2023, 120 MSMEs applied for relocation through the Platform, 43 of which work in AGRO’s value chains.

Of those 43 MSMEs, 12 have resumed their activities at a new location and 5 are in the process of relocating. Most of the enterprises moved their activities from oblasts and moved to . AGRO ended support for the relocation platform as the number of MSMEs significantly declined (in Q2 only one applicant was engaged in AGRO value chains) that indicated that the demand for relocation was negligible.

Based on this, AGRO focused on agro-business recovery interventions by providing advisory support on resource saving agrarian technologies. The pilot activities in February – May 2023 resulted in 10 agrarian businesses increasing their productivity by applying proposed technologies and techniques. These interventions included: developing garden and berry plant

• Draft Law #8167 "On Amending the Land Code of Ukraine to Regulate the Use of Land Plot Sale Proceeds Owned by a Citizen of the Aggressor State."

• Draft Law of Ukraine #8167-1 "On Amending the Legislation Regulating the Seizure and Sale of Land Plots Owned by Citizens of the Aggressor State."

• Draft Law of Ukraine #8178 "On Amending the Legislation to Fast-track Changes for the Designated Use of Land Plots."

• Draft Law #8225 "On Amending the Legislation regarding forced appropriation and condemnation of land plots and real estate objects located on them for public use and construction or reconstruction of critical infrastructure objects."

• Draft Law of Ukraine #8295 "On Amending the Land Code of Ukraine regarding the extension of the limitation period for the sale of agricultural land."

• Draft Law #8366 "On amendments to the Land Code of Ukraine regarding the restoration of the rights of certain categories of citizens to the privatization of land plots during the legal regime of martial law on the territory of Ukraine."

• Draft Law #8366-1 "On amendments to the Land Code of Ukraine regarding the restoration of the rights of certain categories of citizens to the privatization of land plots during the legal regime of martial law on the territory of Ukraine."

• Draft Law #8263 "On De-Communization of the Procedure for Solving Certain Administrative and Territorial Arrangement Issues in Ukraine."

• Draft Law #9085 "On Amendments to the Land Code of Ukraine regarding the Settlement of Certain Issues of Compensation to Landowners and Land Users."

• Draft Law #9086 "On Amendments to the Land Code of Ukraine regarding the Withdrawal of Land from State Agricultural Enterprises, Institutions, Organizations that are not Used for Their Intended Purpose, and Transferring Land to Communities for the Development of Sports and Recreational Parks, Construction of Sports and Recreational Infrastructure, Allocation of Land Plots to Participants of Combat Actions."

• Draft Law #9292 "On Amendments to Article 79 of the Land Code of Ukraine regarding the Preservation of Ownership Rights to Perennial Plantations."

• Draft Law #9373 "On Amendments to Certain Legislative Acts of Ukraine regarding the Settlement of Certain Issues related to the Effectiveness of Land Lease Contracts."

• Draft Law #9603 "On Amending Article 19 of the Law of Ukraine 'On Land Lease' regarding the right of the land lessee of agricultural land to harvest."

• Draft Law #9604 "On Amending Article 35 of the Law of Ukraine 'On Land Lease' regarding land lease contracts."

• Draft Law #9658 "On Amendments to Article 143 of the Land Code of Ukraine regarding procedural norms for the forced termination of rights to land plots."

• Draft Law #10027 "On Amendments to the Land Code of Ukraine regarding the Settlement of Certain Issues of Compensation to Landowners and Land Users."

• Draft Law #9341 "On Amendments to the…