UKRAINIAN LAND REFORM BILL CONFRONTATION BETWEEN GOVERNMENT AND SOCIETY
Oleh Gis
November 21, 2019
Ukraine has taken seriously one of the most complex and long-lasting reforms - land reform. The government's proposed model of the land market reform is flawed and is not supported by the overwhelming majority of Ukrainian society, causing criticism and protests.
Land Reform History
In the 1990s, land belonging to collective and state farms was dissolved in Ukraine. The shares were transferred to the property of farm workers and pensioners who had previously worked on these collectives. In 2001, a moratorium on the sale of agricultural land was established providing government the time to prepare a legislative framework for regulating land circulation. All successive Ukrainian presidents tried to end the moratorium but were not successful. The current President of Ukraine, Volodymyr Zelensky, whose election program included a point on land reform, is forging forward with a flawed proposal.
Power Market Land Concept
Currently, the deputies of the presidential party “Servant of the People” have submitted to the committee of the Verkhovna Rada (Ukrainian Parliament) a proposal. The parliament of Ukraine has passed bill No. 2178-10, on agrarian and land policy. This bill allows for the land market in Ukraine to be opened as of October 1, 2020.
Many experts have already called this document flawed in that it is beneficial only to ‘agroholders’ that are owned by oligarchs. It provides a “green light” for unlimited concentration of land in the hands of these oligarchs.
According to bill No. 2178-10, access to the land market is granted to both individuals and legal entities. It sets the limits for buying land and allows oligarchs to concentrate large tracts of land into their possession. The bill permits that no one natural or legal person or group of related parties are allowed to purchase or hold more than:
• 0.5% of the country's national agricultural land (approximately 210,000 hectares);
• 15% of the agricultural area of any one territorial region and
• 35% of the territory within a local community (OTG).
Why society is not satisfied
This legislative approach has many risks. In particular, one-handed land purchase limits are easy to get around. The bill only bans companies from acquiring agricultural land while the ban on the acquisition of corporate rights of a company that already owns agricultural land is absent in the bill. Any individual by purchasing several businesses that each individually already own the maximum allowable bank of land, can control an unlimited amount of land. Using such loopholes one can conceive that any three wealthy people will be able to buy all the agricultural land of a given region such as Lviv Region and control the activities of that region, including the control of its local governments.
In addition, there is currently no support mechanism for medium-sized farmers who currently farm 60% of the agricultural land in Ukraine. This in turn can lead to their displacement from the agricultural sector of the country. This threatens to reduce the number of jobs in the countryside and reduce the average added value of such farmers.
According to statistics, currently in Ukraine, the average value added of enterprises cultivating up to 50 thousand hectares of land is one third higher than that of companies with a large land bank. Medium-sized farms have twice the average number of employed workers (per 100 ha).
There are other risks. Experts predict that the introduction of such a reform model for the Ukrainian land market will halt the growth rate of agricultural production for at least 5 years. Farm enterprises will stop making investments in production in order to accumulate funds for the purchase of land.
This bill may soon be submitted to parliament. This will generate strong opposition from Ukrainian society. Agrarians, peasants, anti-terrorist operation participants are protesting against this new land reform. They demand that the bill 2178-10 be withdrawn and a new one should be drafted, taking into account the interests of all citizens of the country.
