The land reform in Ukraine has been under discussion for years. For the years of independence private land ownership has been restored, restrictions on allotment to citizens have been lifted, leasing of land plots has been permitted and farm enterprises have appeared. Experts also point out the social effect of the reform: for the last 20 years, for example, Ukrainians have double the total area of their household plots. Now, 19.7 million hectares of farm land are in ownership and use of 25 million citizens and produce two third of the gross output of the agro-industrial complex. At the beginning of 1992 all land reserves were in state ownership, but at the beginning of this year the state share made 48.9%, and 51% of land were in private ownership.

With the adoption of the National Program of reforms for 2010-2014 the work on the land reform has been resumed. After heated discussions in the end of 2011, the primary draft bill on land market was passed in its first reading. The draft bill stipulated for legal and economic basis of market organization and functioning, as well as the order of sale and rent of land plots. However, the process slowed down and the development of reform's principles continues to this day.

According to economists, initially it was expected that only citizens of Ukraine could buy agricultural land, but a number of specialists opined that the ban on selling land to foreigners will weaken the demand for land and, consequently, the prices. Thus, former World Bank's Director for Ukraine, Belarus and Moldova Martin Raiser told ForUm that similar ban would suppress investments into the agro-industrial complex. Taking it into account, in 2012 the parliament of Ukraine introduced some amendments to the Land Code, and foreign legal entities were allowed to buy Ukrainian land of state or communal ownership. However, director of the "Agroeffectivness" agency of the Ukrainian club of agrarian business Roman Slasten does not see any problem in such ban. "Foreigners do not rush to buy our land, because the picture of possible payback is not quite clear. Moreover, many shareholders who lease plots to non-residents are happy with such state of affairs - foreign operators pay high rent than the national ones. I believe that the access to our land market should be restricted to foreigners, but not closed completely."

The second important principle of the reform provides for imposing a limitation on the area of agriculture land in ownership of one person. It was proposed to set the limit at 100 hectares regardless of location. Head of parliamentary committee on agrarian policy and land relations Hryhoriy Kaletnyk adds that it is also planned to impose limitations on the area of leased plots (not more than 10% of the territory of an administrative district and 50 thousand hectares within the country). "Such limitations are necessary to avoid monopolization and concentration of agriculture land in a single pair of hands, to secure stable development of all agricultural enterprises and prevent deprivation of land from farmers," the MP notes.

Finally, in September of 2012 the state Land Bank was formed within the frameworks of the land reform. The main goal of the Bank includes crediting agricultural companies at the rate exceeding the NBU discount rate not more than by 5%. The Land Bank also has a right to take land as security against the loans. Chairperson of the Bank's management board Svitlana Skosyrska informs that the establishment has been working successfully and that its main goal for the second half of 2013 is to attract more credit resources by means of cleanup in the management of state agricultural lands. 

According to the top-manager, the Land Bank will continue working with partners until it accumulates sufficient amount of assets to provide own proper banking services. "Our primary goal is to increase the share of land under leasing agreements from current 13% to at least 60%. For effective management of corresponding means we will open customer accounts for every district to deposit money paid for leasing of local state land plots. These means will be invested into development of the very district." 

Analysts expect that the Land Bank jointly with the State agency of land resources will be able to prepare, inventory and list state agriculture land in the single land cadastre within the next 3-4 years.  As soon as listed in the cadastre the land plots will refill the charter capital of the Land Bank. Meanwhile, until the moratorium on land sale is lifted, the Bank will overtake assets, create infrastructure at the local level and provide agrarians with standard set of financial services.
As for the major problems of the land reform, corresponding member of the National Academy of agrarian sciences of Ukraine Anton Tretyak says there is the risk of speculations, when large areas are bought for reselling at higher price. "We also cannot rule out monopolization. Considering high level of unemployment in rural areas, certain argoholding companies can take advantage of it and buy up the land. And finally, we have a big problem of urbanization of agriculture land because of uncontrolled alteration of its intended purpose," the scientist specifies.

Let's hope that such moments will be fixed within further development of the reform. Meanwhile, the discussions continue, and experts expect new developments and results by the end of 2013. Moreover, the President of Ukraine has promised to control realization of the reform personally. According to the Head of State, the principle goal is to secure interests of land owners. "In this respect, the work of the Land Bank is especially important for land owners to collect dividends. Our land will not be cheap, but should be seen for its true value," Viktor Yanukovych said recently. If this is the case, in a couple of years our country may have a decent land market, which will attract new investments into the agro-industrial complex and will enable the development of rural areas.

Andriy Boyarunets


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