American combines may be headed for Ukraine (03/17/96)

American combines may be headed for Ukraine

by Yaro Bihun

WASHINGTON - If all goes well in Congress, Ukrainian farmers may well be harvesting a good part of this year's crop on modern American combines - and bringing in up to 30 percent more than they would with the equipment they normally use.

Eight days following Ukrainian President Leonid Kuchma's talks with Clinton administration officials in Washington, the Export-Import Bank of the United States on March 1 took a preliminary step in support of a $187 million sale of 1,049 John Deere combine harvesters and other agricultural equipment to Ukraine.

The Ex-Im Bank's board of directors referred the transaction to Congress for a 30-day review period, after which the board will take final action.

"We're very happy to hear this news," Ukraine's ambassador to the United States, Yuri Shcherbak said upon hearing about the Ex-Im Bank action.

"We expect that the U.S. Congress will accept this agreement, and that 60 percent of these combines will take part in this year's harvest in Ukraine," Dr. Shcherbak said. The agreement stipulates that the remaining 40 percent of the equipment will be delivered in 1997.

"This is extremely important for us, taking into account that while the low-quality and ineffective combines currently in use in Ukraine lose up to 30 percent of the harvest, the John Deere combines - and I had the opportunity to sit in them and observe their technical capabilities - lose less than 1 percent of the harvest," he said.

"This means that we can boost the harvest by 25 to 28 percent simply by using these modern, comfortable and effective combines. And if we can get them this year - and we believe that we can," Ambassador Shcherbak said, "our harvest will be so much the better for it."

Dr. Shcherbak said it is a "mutually beneficial deal," providing jobs in a number of Midwestern states - Illinois, Indiana, Iowa, Wisconsin, Minnesota, Missouri and Ohio - and creating new jobs and opportunities in Ukraine as well.

According to the agreement, Ukraine will create spare-parts centers for the John Deere combines, and there is talk about possible joint production of these combines in Ukrainian factories, according to the ambassador.

He praised John Deere's "wisdom and foresight" in getting in early to study Ukraine's agricultural needs and potential. "They are the pioneers, and other American firms are now following in their footsteps," he said.

During President Kuchma's recent visit to the United States, a number of American agribusiness companies showed great interest in Ukraine, Dr. Shcherbak said. "They are ready to make large investments in Ukraine, transferring new technology, know-how, pesticides, fertilizers, and the like.

"This is very important for us," he added, "because improving Ukraine's agricultural production is priority No. 1 of our reform program."

Commenting on the Ex-Im Bank's decision, John Deere spokesman Robert Combs said, "We are grateful that the bank has chosen this opportunity to take a crucial step in supporting the establishment of a major U.S. presence in an exciting, new and promising market."

Under the deal, John Deere would sell the combines and related equipment to Ukragroprombirzha of Kyiv. Ex-Im Bank would provide a $171.3 million loan guarantee to Societe Generale of New York, and Ukraine's Ministry of Finance would guarantee the loan's repayment. The loan would be repaid in two tranches: the first in 10 semiannual installments beginning April 15, 1997, and the second in 10 semiannual installments beginning January 15, 1998.

Ex-Im Bank is an independent government agency that helps finance and promote the sale of U.S. goods and services abroad. It is open in Ukraine for short-and medium-term insurance and for medium-term loans and guarantees for financing guaranteed by the Ukrainian government.

| Home Page |