“We have successfully launched the exchange trade in timber, and have such intentions on the agricultural market,” – Ruslan Magomedov, the Chairman of the NSSMC

The NSSMC (National Securities and Stock Market Commission) records the positive results of timber trade on the organized market for four months of work according to the new standards and becomes to develop the exchange trade on the agricultural market. This was stated by Ruslan Magomedov, the Chairman, at the Advisory Board of IFC (International Finance Corporation), dedicated to the access of the agricultural sector to the capital market and the implementation of agricultural developments.

“At the moment we see that the commodity timber market has shown its effectiveness. We are talking about the growth of timber trade and, as a consequence, additional revenues for the state. So, from July to November, during the period of timber trade on the licensed exchange platforms, the state received 1.1 billion UAH of the additional income from unprocessed timber. We will extend such scheme to agricultural markets, we hope for success and support from the market,” Mr. Magomedov said.

Talking about the transformation of the agricultural sector of Ukraine, the ensuring economic growth and sustainable development, the Chairman of the NSSMC clarified that the export of agricultural products exceeds 12 billion USD, but in Ukraine there is no organized commodity market for its sale.

“Our commodity receipts are traded even on the Chicago Merchentile Exchange, but the market participants have no instruments to secure their products in the domestic market. We will promote the launch of an integral spot agricultural market in Ukraine and will work directly on creating a market for derivatives and debt instruments, in particular, for the agricultural development, focusing on the best world experience,” the Chairman of the NSSMC said.

The expanding the scope of agricultural receipts will improve the access of agricultural producers to the industrial resources and financing. Such a step will ensure the economic growth and sustainable development of the industry, as well as allow to lay the foundation for building a transparent market for agricultural products.

Concluding his speech, Ruslan Magomedov emphasized: “We highly appreciate the draft law On the Agrarian Receipts №2805-d, which creates the opportunities for market participants to receive loans and transparently trade in their own production. We consider commodity markets in close connection with the capital market. The algorithm of our actions is clear: first to ensure effective trading of standardized commodities on exchange markets, then to introduce derivatives. I am sure that the spot market will help create new financial instruments, hedge risks in the capital market and, as a result, ensure the development of the domestic economy. In order, first of all, a proper legal framework should be prepared, so the NSSMC supports the reform of the agricultural market.”

The agrarian receipts, introduced by IFC in 2015, give Ukrainian farmers the opportunity to use future crops as collateral. To date, the farmers have received more than 7.500 agrarian receipts worth almost 1.8 billion USD.

The project “The development of the Ukrainian agricultural sector access to the capital market” is implemented by IFC, a division of the World Bank Group, in partnership with the Swiss Secretariat for Economic Affairs SECO.