Miroshnichenko: Absence of the land market hinders the development of the country and limits the rights of people

“On December 20, the Verkhovna Rada once again extended the moratorium on the sale of agricultural lands and once again did nothing to open the land market,” says a member of the Parliamentary Committee on Agrarian Policy, Samopomich deputy Ivan Miroshnichenko.

Over the last 17 years, the authorities have done nothing for Ukrainians to become the owners of their land. Even worse, over the years, the situation with the land market has given rise to various myths and manipulations. Ivan Miroshnichenko dispels them.

Myth: the land market will take the land away from the peasants

Ukrainians should be in equal competitive conditions – landowners and those who work on the land should be the buyers of land. These people are the ones who should have access to financial resources in order to buy land. So, there should be the same loan rate, the same mortgage mechanism, as, for example, in the real estate market. The way I see it, one of the main conditions for opening the land market is the prerequisite that Ukrainian owners or Ukrainian farmers are competitive and equal buyers. This must be ensured, a person owning or renting a land should be able to go to the bank and receive funds under land mortgage and these funds will be issued on a competitive basis and the person will not lose the land. In practice, it will look like this – a person has some land, takes a loan and opens either a small family farm or a greenhouse, or a cheese factory. A person should have an alternative: sell the land or try to work on this land. And the financial mechanism of this alternative should be provided by the state.

Myth: the land will be sold for a penny

Land pricing is an important issue. Land is an asset. And it is the most important resource asset of the state after its people. Land will cost as much as you can earn on it. Also, one should take into account the capitalization ratio. That is, if you earn a lot, you are ready to be returning money during 5-7 years, you know that today the price is $1,500 per hectare, and in 3-5 years it will be $3,000, then you will also put this in the pricing formula. But an important factor is how much we will open the market: the more we open it, the more expensive the land will be. If we say that only Ukrainians can buy land, only physical persons and only 100 hectares per person, respectively, the price of land will be lower. If we let foreigners in the market in a couple of years, then the demand increases and the price of land increases. But, in my opinion, in the first stages (7-10/10-15 years), priority should be given to the Ukrainian owners, Ukrainian farmers, tenants, and this should be provided for in the law. This means to temporarily limit the access of foreigners to the Ukrainian land. But it should be noted that for the first 5-6 years, the Ukrainian land, despite the fact that it is better than European, cannot cost as much as in Europe. There are many reasons behind this, but one of them is that we closed the market and did not give access to more buyers. The shadow land market shows $1,500 per hectare, and if the market were opened, the price would be $3,000.

Myth: foreigners will come, buy up all the land and there will be no Ukraine any more

We can legislatively limit the foreigners’ possibility to buy the land. If we make an open market here and now, then these risks really exist. Foreign buyers have money, the price of land might increase to even $10,000. But if we legislatively ensure the preferences to Ukrainians, we can regulate the situation. The problem is that there is no proper law yet. There should be safeguards in relation to foreigners and the priority right for Ukrainian buyers.

Myth: Lifting the moratorium is beneficial to large landowners.

No, it isn’t. Large landowners, like everyone else, are not ready for an open market. They do not have that kind of money. After all, if we imagine that land costs $3,000 per hectare, then the state’s asset is $81 billion. It is more profitable for large agricultural holdings to lease land because it was and remains cheaper than buying and owning. But the cost is constantly growing.

Everyone agrees that the law on the land market is needed, but no one does anything. This Verkhovna Rada alone has extended the moratorium on the sale of land for four times in a row. Ivan Miroshnichenko emphasizes his doctrine. It consists of simple things:

– to eliminate people’s fears of the land market;

– to give people access to money for the purchase of land (lending, insurance);

– to offer an alternative: sell land or work on it;

– to ensure protection. To provide only Ukrainians with the right to buy land for about 10 years.

According to Ivan Miroshnichenko, one cannot say that someone is blocking bills; it’s just that nobody wants to do anything, because it is easier to extend the moratorium every time. Not only in the parliament, but also in the society there is no consensus regarding the land market either.

“The concept of the market should be perceived by Ukrainians who own and work on the land. After all, even if the law is perfect, but not agreed upon with people, it will be a fiasco.”

 

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