Three stages of land market introduction: Position of Samopomich on land reform in questions and answers
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What do we have today?

For 17 years, since 2001, Ukraine has been systematically extending the moratorium on opening of the land market. However, there is still no unified vision and, most importantly, no common understanding or concept of reform neither in society nor among politicians.

It is commonly known that the gray “creeping” market has been working for years: the land is bought by means of various schemes and holes in the legislation. And this situation is definitely not in favour of the owners of agricultural land.

What do Ukrainians lose from the moratorium?

First of all, by extending the moratorium, de facto, we are violating the Constitution, because citizens have property, but they cannot dispose of it. Moreover, during these 17 years, more than 1 million Ukrainians who owned the land died not having exercised their right.

Therefore, Samopomich supports the position of opening up the land market. According to experts’ estimates, its opening could attract about $100 billion of direct investments into the agro-industrial complex. However, the state must be properly prepared to this step.

What is the Samopomich vision of the reform?

According to the faction, the opening of the land market in Ukraine should take place in three stages. This will allow preparing equal conditions – first of all, for Ukrainian owners and for farmers who already work with land. When the market is opened all of its participants should have equal opportunities – access to financing, projects, etc. Until we create these conditions, until we let people get rid of their fears of becoming noncompetitive and of being left without access to money and loans, we cannot open the land market. It is this step-by-step systematic approach that will allow the land market to be launched, taking into account all possible risks, and will allow improving the overall state of the country’s economy.

What does the first stage suggest?

First and foremost, it is necessary to improve the mechanism of land leasing and the right to sell it. It is necessary to regulate the possibility of pledging and selling such a right in banks as soon as possible, as well as to improve the mechanism of emphyteusis (the right to use somebody’s land plot for agricultural needs, which is certified by a contract between the owner and the person who has expressed a desire to use this land plot; the ownership is not transferred in this case).

That is, all owners should get the right to borrow money upon the security of the right to use the land. In such a way we will stimulate the development of medium and small producers, and family farms. In the meantime a fair assessment of agricultural lands should be carried out (the state should determine the minimum price that will form the basis for obtaining a land mortgage). Another important thing is that all draft laws for the land reform should be adopted in 2017 and implemented as early as January 1, 2018. And it’s worth starting with the draft law “On the circulation of agricultural lands”. It is quite possible to do this.

What will happen in the second stage?

The second block is the development of state programs of preferential financing of small producers and family farms. Everyone who has land or wants to open a business in rural areas should have all the conditions for the realization of this plan. The draft budget for 2018 should provide for the financing of projects aimed at development of family farms and small farms on the security of property rights and land use rights for agricultural purposes.

In the medium term (3-5 years), budgetary preferential and long-term loans to small farms and family farms should be secured through public and private banks. First of all, loans should be provided for projects in horticulture, vegetable growing, berries growing, and livestock (production of milk, meat, cheese, organic products), construction of greenhouses. However, when allocating budgetary funds, there should be a clear mechanism for controlling their use: it is necessary to monitor that they are spent in Ukraine – for the purchase of domestic goods and services.

How should the reform be completed?

The third stage is actually the launch of the land market. We once again emphasize that the launch must be preceded by careful legislative preparation of the first two stages and a clear definition of “fuses” against the dispossession of land of farmers (the priority right of purchase should be granted to the Ukrainians), against the expansion of foreign companies (to admit them after a 10-12-year transition period and oblige them to grant the priority right of purchase to Ukrainians in case of land resale).

It is necessary to protect farmers from financial speculation (we suggest a resale tax of 90%) on the land market. All this (adoption of laws, launch of preferential loans, etc.) can be done in three years, and the market can be opened from January 1, 2021.

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