Ukraine fails to launch its land reform

Author : Olena Holubeva

Source : 112 Ukraine

Ukraine does not have a clear understanding of who should lead the state agrarian market and what should be its driver - large agroholdings or small farmers?
17:23, 7 July 2017

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For several months the issue of land reform has been discussed in the Cabinet of Ministers in closed meetings with the press. The working group is headed by Prime Minister Groisman, who personally attended the meetings of the working group. The issue of reform is acute, as it is boosted by the main creditor of Ukraine IMF - in particular, when the last tranche was received, the government took an obligation to begin selling agricultural land from 2018 (after the end of the moratorium). July 5, Groisman said that the IMF could even postpone the next tranche of up to $ 1.9 billion due to the unpreparedness of the parliament to adopt land reform until the end of the current session (July 15).

To open the veil over what the working group is discussing and, in fact, what is an obstacle to opening for free sale of agricultural land, we visited a press breakfast at the Sigma Bleyzer office in Ukraine. There the head of the Ukrainian Agrarian Confederation and a member of the working group Leonid Kozachenko, as well as the head of the Sigma Bleyzer fund in Ukraine, Vadym Bodayev (the fund leases and processes 120,000 agricultural lands in five regions) discussed the main stumbling blocks, to overcome which.

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Based on the statements of the interlocutors, we identified three main theses, which are anchors that do not allow the reform to move from the dead center.

  1. Unidentified state lands

The huge land area in Ukraine remains unidentified, and this is a matter of correcting data in the State Land Cadastre and the Register of Rights to Real Estate, which has been discussed for a long time. In particular, according to Leonid Kozachenko, there is still no accurate and definitive information on who is cultivating the so-called state agricultural lands-which is almost 11 million hectares, a third of arable land (the total area of arable land in Ukraine is 32 million hectares ). Kozachenko said that under the pretext of the oral order of the Prime Minister, he collected the heads of the State Land Cadastre, representatives of the Ministry of Justice and the Ministry of Agrarian Policy, whom he asked to disclose information on the structure of formal owners Institution of state ownership of this land. "They do not want to disclose this information," Kozachenko claimed.

It is very understandable why they do not want to, especially in the light of the fact that representatives of the State Fiscal Service, as Kozachenko noted, reported that according to their data, about 40% of producers of agricultural products do not pay any taxes at all, selling it for cash. That is, tenants of about 16.4 million hectares of arable land pay taxes, but "no one knows" what is with the rest. Vadym Bodaev clarified that now experts and businesses are checking this information and specifying the figures.

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It was previously reported that more than half of all state lands - 7.3 million hectares – belong to the so-called "reserve lands." For various reasons, they were not divided into shares and were not transferred to private owners in the 90's. Also, the land is managed by various ministries and organizations. There was information that one of the largest owners is the Academy of Sciences, which manages about 429.5 thousand hectares of arable land. Another 200 thousand hectares are managed by enterprises of the Minagroprod system. Among other structures, arable land of state property is managed by the Ministry of Defense, forestry enterprises, enterprises and organizations of transport and communications.

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By the way, the Minister of Agrarian Policy in Yatsenyuk’s government, Oleksiy Pavlenko, when entering office, threatened to check the effectiveness of the use of the state earth, assigned to the Academy of Sciences. "Our scientists are the largest latifundists in the country, once they had 1 million hectares of land, now there are only 360 thousand hectares. Where the rest of the land?"

The government of Yatsenyuk raised the issue of selling ill-fated 11 million hectares of land as an economic experiment, preceded by a full-fledged land market.

  1. Farmers do not have money to buy land, agroholdings are not allowed to concentrate the land

As you know, the government tends to take the idea of organizing an agricultural land market in such a way that small agricultural enterprises have the right to buy land first. For this, a norm is proposed for the permission to sell no more than 200 thousand hectares of land to one owner and only to citizens of Ukraine. But the trouble is that most of small farms now do not really have the money to buy such a large amount of land. At the same time, they are owned by corrupt officials and large holdings.

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If you follow the idea of the Cabinet, it would be logical, to find mechanisms to support small and medium-sized farmers before opening the market. In particular, according to Kozachenko, now the idea of creating a land bank is discussed, through which it would be possible to implement a program of affordable loans for honest farms (those who pay taxes) to purchase agricultural land. In addition, state support for small and medium-sized farmers should be strengthened.

  1. Misunderstanding of the results

The most serious obstacle that does not allow shifting the land reform in Ukraine is the lack of understanding of its ultimate goal and the actual vision of the agrarian market of the country in the future. The result of meetings in state committees are initiatives that seem to be beneficial either to large agroholdings, or to small farmers. But notions “large” or “small” agroholdings are not clearly spelled out in any normative document.

The state now does not have a clear understanding of who should lead the agrarian market of Ukraine and what should be its driver - large agroholdings or small farmers?

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For this reason, according to Kozachenko, experts and market participants insist on adopting the State Program for the Development of the Agrarian Sector before elaborating the land reform. It should give answers to the main questions. If a bet is put on a small farmer, a clear mechanism should be prescribed, how much the state is ready to invest in its support. If these are agricultural holdings, there should be clear rules for the permitted concentration of land.

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