I've been serving as a Kiva Fellow at HOPE Ukraine, Kiva's only field partner in Ukraine, for almost 3 months. Thanks in large part to your generosity and commitment to microfinance in Ukraine, HOPE Ukraine is successfully growing as an organization and has recently made efforts to diversify its portfolio to include agricultural loans. These loans to greenhouse farmers in eastern Ukraine have been extremely successful in helping HOPE weather an economic storm that has been particularly bad for HOPE Ukraine's clients.
The 2008 economic crisis had a direct and devastating impact on the Ukrainian economy, and its citizens are still reeling. I've gathered from HOPE Ukraine's clients and Loan Officers that the devaluation of the Ukrainian Hryvna against the US Dollar has had the most negative impact on Ukraine, and in particular its small business owners. The US Dollar plays an extremely important role in the banking, manufacturing, and retail sectors of the world economy. Here in Ukraine, most bank loans are repaid in dollars and most wholesale products are priced in dollars. So when the value of the Ukrainian Hryvna dropped from 5 UAH to the dollar to nearly 10 UAH to the dollar, small businesses were hit especially hard. Now the Hryvna has stabilized to about 8 UAH to 1 USD. For Lidiya Geiko, who runs a kiosk selling shoes and clothes in Dneprorudnyi, this meant the 10,000 UAH loan she received through HOPE Ukraine and Kiva purchased 2/3 as much product as it used to. She told me that she would not be able to stay open were it not for her microloan.
Meanwhile, repaying loans became harder than ever, even for the borrowers of HOPE Ukraine who received loans funded by you Kiva lenders. HOPE Ukraine delinquencies and defaults rose greatly between 2008 and 2009, and HOPE was forced to close several of its offices throughout Ukraine. Something needed to change.
HOPE Ukraine noticed greenhouse farmers throughout Kamenka in eastern Ukraine were getting small loans from different organizations and creating lucrative businesses with their greenhouses. Greenhouse farmers can yield as much as 35,000 UAH (about $4,750) from one greenhouse during a growing season. But purchasing the materials to build a new greenhouse costs a third of that and must be done before the growing season starts, when farming families lack that extra capital. So HOPE Ukraine introduced its own agricultural loans for the greenhouse farmers in Kamenka. A loan in January allows the farmer to have that extra money to build a greenhouse and repay his loan in two large chunks at the end of a 6 month loan term, after the completed greenhouse has already yielded its profits. These loans have been extremely successful. The office in Kamenka that manages these loans has a delinquency rate of less than 1%.
Ukrainians have been greenhouse-farming for generations. Under the Soviet Union, families were allowed to build small, recreational greenhouses that measured no more than 70 centimeters high and a meter long. If USSR officials came around and saw that they were any bigger, said Sergei Galushka, they would just mow them down with tractors.
Today, the greenhouses are massive. Sergei's were 60 meters long and 8 meters high. Driving along dirt roads through Kamenka Village in Ukraine, I must have seen hundreds of greenhouses, one after the other. They're really quite beautiful, round half cylinders, the sunlight reflecting off the opaque plastic covering steel and wooden bars.
The beauty of the greenhouse is that it has a built-in cycle that puts farmers months ahead of the natural growing season. With snow still on the ground, radish seeds are planted in a kind of "staging area" or prep-greenhouse. There they grow until the radishes are about one month away from being ready to harvest, and then are planted in the greenhouse. There the plants grow for another month and are harvested. At the time of harvesting, the tomato plants are growing in the staging greenhouse and will soon be moved to the greenhouse, while a new crop of tomatoes or maybe cucumbers are planted in the prep greenhouse.
One greenhouse crop of radishes yields about 7,000 Hryvna, and even more for tomatoes, cucumbers, and cabbage. Volodya Alekyan can just take his vegetables to the highway and set up a stand, where semi trucks will come from as far away as Moscow to get quality produce ahead of season. With such demand, greenhouse farmers can charge more for their produce and thus reap more profits.
HOPE Ukraine plans to expand its agricultural loan program, says the organization's director Andre Barkov. He hopes that the success of Kamenka's farmers will influence greenhouse farmers in neighboring villages where HOPE Ukraine does not yet work. This will be beneficial not only for HOPE Ukraine but more importantly for those residents of the villages who depend on farming for food and a sustainable income. To see all fundraising loans from HOPE Ukraine, click here. To get more involved, consider joining the HOPE Ukraine Kiva lending team!
I had so much fun going to Kamenka to visit the greenhouse farmers. They're so hard working and so warm and welcoming to someone such as I who interrupted their working day to visit them. After showing me around their farms, Volodya and his family invited me into their two-room home for Armenian coffee; Sergei and Oksana had me in for Ukrainian borsch and vodka.
Warm wishes from Ukraine,
Leah Gage, KF10, HOPE Ukraine
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