Anna Lebedynets: We remain one of the leading investors in Ukraine, we provide financing to our clients. Moreover, we expect more investments in 2019 than in the past year. Therefore, if some other banks or investors are wary of an evolving political situation, the EBRD continues to work as part of its strategy. We can invest in the country about EUR 1 billion annually. About 20 per cent of this amount may be allocated for projects in the agricultural sector.

Anna Lebedynets: I cannot say there is some kind of a focus shift. A few years ago, with the support of the EU under the EU4Business program, we created a special department consulting and lending to small and medium-sized businesses. Let's say that our team and resource base has increased to work with smaller companies since we financed larger companies more often. But this does not mean that we have shifted the focus — we have just expanded it.

Irina Amelina: We see perspectives for the implementation of long-term projects. Now the holding has mainly short-term financing and it is sufficient for current needs. But we have rather ambitious plans. The first and main task is to expand the land bank. Now we have 80 thousand hectares. But we are planning this year to expand it to more than 100 thousand hectares. In this case, we will probably need additional funding. After all, the increased land bank will require a stronger infrastructure including new grain elevators together with the existing ones being upgraded and the machinery fleet being updated.

Viktoria Kapelyushnaya: 2019 is another year in the company's development, we do not see how this year is special. And in general, we set plans for at least the next 5 years. At the same time, we clearly understand that the planning horizon should be 10 years. This year is fairly politically coloured for Ukraine, but we all have experienced it many times already.

As for MHP's development, everything is going according to plan, we continue stable organic growth in our production indicators. We finish the construction of 3rd-4th phases at the Vinnytsya Poultry Farm. Besides one of the recent big news is the completion of the transaction for the purchase of the Slovenian company Perutnina Ptuj.

We considered many different enterprises, there were plenty of rumours, pitfalls, still, we successfully closed this transaction. I am sure that this is only the first step towards our development in Europe, where MHP is already the 3rd largest producer of chicken. We see great prospects in this market. If your production is in the EU, the whole of Europe is open to you.

Viktoria Kapelyushnaya: Yes, and you must have seen the pressure that the French company LDC put on us using bad P.R. Nevertheless, we work in a market economy, and the market refereed everything. In this sense, there is a good example in world history. When the first cars became popular, a decree was passed in London limiting their speed to no faster than that of carriages. As you know, this did not last long. This reminds our case. If you have the right business model, no challenge is a threat. It may temporarily affect your financial results, but globally you are stable and competitive.

Yuliya Zhulanova: Indeed, since 2017, Oschadbank has strengthened the promotion of lending in the small and medium business segment, including private entrepreneurs, to help them develop their business. According to our new strategy, the share of the loan portfolio of MSME in the total portfolio of the bank should grow to 30 pct.

If we talk about the current loan portfolio of MSME in Oschadbank, it is 45 pct represented by agricultural sector loans, despite the fact that the average share of SME agro loans from banks is close to 30 pct. Our bank is universal in its approach to financing agro clients from different business segments. We provide funding to clients with a land bank of 50 hectares.

We are interested in all clients since the formation of a loan portfolio with different amounts and a large number of borrowers reduces portfolio risks. The bank had experience in lending exclusively to large companies and today we understand that dependence on one borrower may serve us a dirty trick.

As for small enterprises, during the period of crises, they learned to make good use of their money. SME clients have a stable business that allows them to service their loans. When analyzing them, we see, I would say, smart finances. We understand that a company may not show all revenues, but they are enough to fulfil their obligations in a timely manner.

Yuliya Zhulanova: As I have said, a micro-crediting program is available in our bank, one of the conditions of which is the possibility of granting small loans without a pledge or with one that other banks do not accept. This approach became possible due to agrarians' good credit reputation.

Oschadbank also offers financing under the program with the European Investment Fund and the European Investment Bank. This program provides for a loan with collateral the cost of which is 30 pct of the loan, and the remaining 70 pct is provided by the partner's guarantee. Thus, for getting a bank loan, the financial condition of the borrower is more important than the collateral.

Yuliya Zhulanova: Banks are not very willing to reveal this information. However, behind the scenes, the SME market operators note the good quality of the Agro loan portfolio in this segment. I can confirm that the portfolio of Oschadbank in the MSME segment is qualitative, the percentage of bad loans is less than 1 pct. The main causes of bad loans are either fraud (which is possible in any segment and business), or raiders attack.

Yuliya Zhulanova: Under any circumstances, a lender is interested in a high-class pledge. But, thanks to the mentioned program, we have a tool to expand access to financing for borrowers of different categories.

We work in the open market. Oschadbank here is not one and only in some segments state bank, but a competitor on market conditions in terms of speed, conditions, service. Cooperation with the EIB is our advantage, but far from the only one.

Vladyslav Vyniarsky: AgroVista is an already recognizable brand. Indeed, in 2016 we initiated the reorganization of the Group, as a result of which we transferred all the companies completely under a single parent structure. Last year, KPMG conducted an audit of all assets of the company, and now we are establishing corporate governance processes.

The Group has gone through a great innovative development. As a result, we are now signing an agreement with the export agency Euler Hermes. We are proud that we, in fact, returned this agency to Ukraine.

However, there are two important points to be kept in mind. We received a guarantee from Euler Hermes, but the agency does not provide funds, they say: "Guys, here's Landesbanken for you, go negotiate." Each German bank which we contacted pointed at odious cases of Mriya and Creative Group, although so much time has passed. In this sense, it is extremely difficult to prove to investors and bankers that we are different. It took us some time. But thanks to the reorganization and audit, we did manage to do it. As for the cooperation with Landesbanken, this is a seven-year line with rates much lower than those in Ukraine.

Vladyslav Vyniarsky: We will invest EUR 7.2 million in the purchase of German equipment, the reconstruction of the sugar factory, agricultural equipment and energy efficiency.

Vladyslav Vyniarsky: You know, this question reminded me of my banking times. In the early 2000s, when Kernel was building oil-crushing plants, it was often said: "What are you doing this for? There is a shortage of seeds in the country." In 2001, about 3 million tons of sunflower seeds were produced in Ukraine, and these days it is already 13-14 million tons. Sunflower seeds production is increasing steadily.

The same is about sugar. Today people say: if you grow sugar beet, it means that you have everything wrong. When sugar was at USD 500 per ton, everyone said: "Wow, it's great you're doing this." I agree with Viktoria when she says that everything depends on management. There are hedging instruments, forwards, etc. In addition, the sugar market is very cyclical.

Viktoria Kapelyushnaya: Eurobonds are the main source. They account for 85 pct of our financing portfolio. Due to their longtermness (8 years), it is one of the most convenient financial instruments. It is also important to enter the market in due time. The quality of the company, of course, matters as our rating is higher than that of the country. This would seem incomprehensible, if not for our case. In the difficult 2015, not a single company or even a country, except for us, made Eurobonds payments. The market remembers everything.

Viktoria Kapelyushnaya: As for poultry meat and diversification, it is important to keep a balance here. Our business is aimed at both the Ukrainian and the world market. In the domestic market, our sales depend on the income of the population. If there is income, everyone will win. On the other hand, there is a huge global market, the volume of world chicken trade is around 12-13 million tons. One of the priorities is the European market. But we do not revolve around it. We supply products to the markets of MENA countries, Africa and the CIS. If you create a competitive product, the market is limitless. As for diversification, keep in mind that we have a huge crop production sector. In addition, we continue monitoring and exploring the potential for new mergers and acquisitions abroad.

Anna Lebedynets: We followed closely these cases, but I cannot say that the bank has radically changed the view on the financing of agribusiness in Ukraine as an outcome. By and large, in any country, in any market, this could happen. But we have been working in the Ukrainian market for many years. We are very careful with the clients we finance, and, accordingly, we understand and see the difference between a good and a bad company. So one cannot judge by one company about all the others.

Irina Amelina: Oddly enough, Tascombank does not provide loans to TAS Agro. We have signed a loan agreement with Raiffeisen Bank Aval. We are also working on cooperation with OTP Leasing. In general, we try to work from our own resources. Last year, we harvested a very good yield, probably a record one. That allowed for a minimum use of credit funds. But, as I have said, in the long term we are considering cooperation programs with international financial organizations.

Irina Amelina: We are actively working on establishing transparent, efficient and controlled business processes. The main focus is on processes optimization, and not on personnel. Personnel optimization — will be more as a result, but the control over production and other operations is the main thing. We are also working on innovative developments. GPS monitoring, fuel level sensors have been introduced. The process of implementing logistic control of crop management is underway. The Mobile Agronomist project is planned. We are pursuing to ensure that all processes are automated in a comprehensive manner and in full — from the start (plans, applications) to completion (reflected in the accounting and statements).

Irina Amelina: Yes, such plans do exist given the land bank increase. And it's not just about vegetable oil production.

Irina Amelina: I think it is possible, and today our companies prove it. Since the first company appeared, we have been working "white" in all processes. All is good, but those who work in the shade spoil the picture much. Often these are farmers who work without documents, use cash and do not pay taxes. Of course, when a company operates legally and has legal restrictions on cash circulation and taxation, it is difficult to compete. Therefore, explanatory work is carried out with shareholders over the advantages of concluding an agreement with a transparent "white" company that works in the legal field of Ukraine, officially pays taxes, etc.

Vladyslav Vyniarsky: I agree, even at 40 pct it is overestimated. But almost all small farmers work with cash.

Viktoria Kapelyushnaya: I see that the number of companies doing white business is considerably growing. But, in fact, a "black" farmer is a truly complicated case. After all, such an agrarian with the help of cash easily gives today 12 pct of the normative monetary assessment of farmland for a share, and tomorrow — 15 pct. Today he is doing well, but tomorrow anything may happen.

My point is that one should not be afraid of such competition. I always say that if 2 or 3, well, even 10 shareholders will lease their land to a farmer, that's fine. For this, we must not make any concessions. Anyway, we are moving to a civilized market. By the way, with respect to the "black" agricultural market, this situation was largely defeated by the automatic blocking of tax invoices. The volume of shadow grain decreased and there are less illegal operations.

Anna Lebedynets: We expect it to finally open. But the question is in what form as it is still not clear. And the format of the market will depend on it. If the model implies that let's say only citizens of Ukraine can buy up to 100 hectares, and legal entities will not be able to buy land, then it is clear that the billion-dollar flow of investment will not occur. If there are other rules of the game, we get different results.

Besides, renting of land remains because most companies will continue to rent it from the owners, and will not redeem the entire land bank, which they cultivate. In addition, according to surveys, in the first year or two, only an insignificant part of shareholders are ready to sell it after launching the land market. So I don't see instant fundamental changes. They will come gradually.