For whom are we opening the land market

The government has presented us with slides on pension reform. The next step may be the same presentation of slides and slogans about the opening of the agricultural commodity land market.
For decades, the issue of land market for commodity production has been politicized. There have been two polar approaches to this issue: “to immediately abolish the moratorium” vs “we will not allow squandering our native land” – both of them are equally irresponsible for shareholders, farmers and the state. Ukraine should be moving towards the land market, as almost all countries of the world have done – with the exception of Congo, North Korea, Venezuela, Tajikistan, and Cuba. The year to year mechanistic extension of the moratorium is the path to poverty and a shadow economy. Let’s consider this situation with the help of an example. An old lady in Zaporizhia region leases her share of 8 hectares for 7,000 hryvnias per year without an official lease contract – receiving cash. The old lady receives very little, she is deprived of the opportunity to work on her land, or to dispose of it. The tenant farmer knows that this land does not belong to him, he is not the owner, so he plants rape or sunflowers there, which deplete the land. If the market is opened rapidly without any preparations, the farmer may lose this land along with the plantations, because there is no agreement and legal grounds for using it. Therefore, this farmer will not have the right to preferential purchase from the old lady. The local budget suffers, because no tax is paid from the unofficial income. While an official lease in the Ivano-Frankivsk region might bring to the owner of a much smaller share of 2-4 hectares the same money, but with the payment of the tax, part of which goes to the local budget for the development of the society.
Therefore, it is necessary to carry out the reform, but the main question is how and in whose interests. Every reform has the people for whom and in whose interests it is done. In the case of Ukrainian land these should be small, medium-sized farms and family farms. Are they ready for a quick, momentary opening of the market? We have a bitter experience of privatization in the 1990s, when impoverished people gave their privatization certificates for nothing, and enterprises got into the hands of oligarchs. Amidst total corruption, consolidation of the already legalized financial resources in the hands of a small group of officials and oligarchs, there is a risk that they will become landowners. Another risk is that the land will be bought by companies controlled by foreigners who do not live in Ukraine, which is unacceptable for Ukraine’s national security in the short term, especially considering the factor of Russia and its attempts of economic colonization of Ukraine.
If we analyze the situation of small and medium-sized farmers, most of them, unlike large agroholdings, have no structured accounting system, reports, business plans written for banks, so they won’t be able to claim equal access to attracting financing. Therefore, the state’s task is to ensure that all market participants have equal access to funds and, accordingly, to land acquisition. We also need to prepare the banking sector, to simplify the requirements for the documents that are submitted for obtaining a loan, to introduce special credit programs for farmers at low interest rates. This will give an opportunity to buy land for those who work on it, rather than representatives of oligarchic structures.
Key agrarian associations – “All-Ukrainian Agrarian Council”, “Agrarian Union of Ukraine”, “Ukrainian Agrarian Confederation”, Association “Ukrainian Agrarian Business Club”, Association of Farmers and Private Landowners of Ukraine – express the same opinion regarding the preparatory period and observance of the interests of farmers. Recently, they sent their consolidated requirements to the government, among which there were:
– opening of the market from January 1, 2024, but not earlier than:
1. Full filling and correction of the data in the state land cadastre and the Register of rights to immovable property.
2. Launching of a program of concessional lending to small farms (less than 100 hectares in farming).
3. After 3 years from the date of entry into force of the law, which establishes the procedure for correcting mistakes in the state land cadastre and compensation for losses to the affected land owners.
4. Allocation of shares to former and current employees of agricultural enterprises that did not take part in receiving land shares.
5. Simplification of the procedures for issuing mortgages.
If we want a civilized, rather than a wild land market, then we need to take into account the requirements of farmers, the interests of shareholders, the economic interests of the state and its security.
What should our next steps be like?
First of all, it is necessary to conduct an inventory of state lands – including those that are owned by state enterprises, military units, the Academy of Sciences, etc. In order to check how much of this land is leased, at what price, how much revenue this brings to the state budget. And also to check how much of this state land is leased illegally. However, even now the government should provide a holistic model of market opening, including a financial model, with stages and prerequisites for moving to the next stage foreseen for years to go.
Presently, we don’t have this. There is no holistic model of the market functioning. No discussion is being held with farmers. The government and the authorities are mistaken if they think that a pin point bill on lifting of the moratorium, even with a bunch of fuses, will find support of people and will pass through the parliament. We need a step-by-step model of land reform calculated for years to come, with a detailed calculation of the financial implications for the state, for the agricultural sector, as well as the legislative mechanisms for access of small and medium-sized farmers to financing.

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