Alim Mischuk is a farmer from Khmelnytska Oblast in western Ukraine. There, in the small village of Zelena, located between Lviv and Vinnitsya, some 400 kilometers southwest of Kyiv, he grows grain crops, soy, flax and legumes on 1,400 hectares of leased land.
But the busy harvesting season, which kicks off in about a month, wasn’t the main issue on Mischuk’s mind last week.
Instead, he was in Kyiv to join hundreds of others protesting in front of the Verkhovna Rada, Ukraine’s parliament, against plans to finally allow the sale of the country’s farmland.
The creation of an agricultural land market has gone nowhere since Ukraine regained independence in 1991. A moratorium on sales, first introduced in 2001 for three years, has repeatedly been extended.
It is set to expire on Jan. 1, but many want it extended yet again.
Ukraine’s inability to allow for the buying and selling of agricultural land has stifled foreign investment and slowed the nation’s progress in becoming an agricultural powerhouse that not only feeds Ukraine but also much of the world.
The political sclerosis is also putting at risk another installment of a multibillion-dollar stabilization loan from the International Monetary Fund, now stuck at $8.38 billion out of a possible $17.5 billion by the end of 2018. Lifting the moratorium on the sale of agricultural land and launching a land market are requirements of the international lender.
But there’s no consensus among the major stakeholders: agribusinesses, farmers, government and lawmakers. Consequently, the latest attempt may derail again.
IMF and investment
While an IMF staff report noted Ukraine’s achievements in the energy and financial sectors, it emphasized that the nation must accelerate the privatization of state-owned enterprises, create an anti-corruption court and cut the pension deficit, besides the land reform issue.
The IMF’s position is logical. Agriculture, which accounts for between eight and 14 percent of Ukraine’s economic output, is potentially one of the most attractive for foreign investment. The moratorium is a big brake on development because foreign creditors are reluctant to invest and banks are reluctant to lend unless land can be used as collateral. Also, disputes between landowners and leaseholders are common, and sometimes involve violent raider attacks.
With 70 percent of its territory suitable for agriculture, Ukraine is already a farming superpower.
According to official data, 75 percent of the country’s 32 million hectares of arable land is currently in private ownership. In 2016, half of it was leased, while the 10 largest agroholdings control only just over 2 million hectares. Because of the moratorium, big agricultural companies can only lease farmland,
Farmers’ fears
The nation’s small farmers, in contrast, see the moratorium as a guarantee of their livelihoods, rather than a restriction to growth.
“No ordinary farmer has money to buy land, and there are no cheap bank loans,” Mishchuk, the farmer from Khmelnytskiy Oblast, told the Kyiv Post. “So the land will eventually be bought by rich landlords, who have nothing to do with agriculture, and corporations.”
Mishchuk is happy to pay $100 a year per hectare to lease the land he farms, and is afraid he may lose it if the land’s owners decide it makes more sense to sell their land plots.
This fear was on display at the protest on June 7.
On an improvised stage, actors wearing masks with the faces of Ukrainian politicians ate a big cake in the shape of Ukraine greedily cutting away chunks of “land” with large spoons. At another stand “a politician” was using shop scales to sell off Ukrainian “chernozem” — or black soil.
Meanwhile, the Agrarian Party of Ukraine, which doesn’t have any seats in parliament, has launched a campaign #НеДамоВкрастиЗемлю (We won’t let our land be stolen) and claims to have gathered 3 million signatures.
“The main goal of land reform should be to make speculation impossible and prevent the concentration of land in the hands of people who want to speculate on it and resell it,” Vitaly Skotsik, the leader of the Agrarian Party, said in a recent television interview.
He said that the sale of agricultural land should not start without a proper inventory of farmland.
Second, the State Service of Ukraine for Geodesy, Cartography and Cadastre (StateGeoCadastre) should be liquidated. Skotsik said it is a corrupt and unnecessary institution.
Third, only people who live in a given locality and do farming should be allowed to buy farmland, according to the Agrarian Party.
“The risk is very high that Russians will buy Ukrainian land through local nominees,” Skotsik said.
The party’s model echoes a new Polish law passed in April that banned foreigners from buying farmland for five years. The new law also restricts Polish citizens, since they now have to live in a locality for five years before they can buy farmland there, and they must pledge to work the land they buy for a decade.
Officials bicker
The end of May deadline set by the IMF was not met. On May 18, the Verkhovna Rada rejected a draft decree on creating a roadmap for regulating the land market. Days after the vote, Agriculture Minister Taras Kutoviy resigned, allegedly over the issue. In interviews, Kutoviy said the land reform envisaged by Prime Minister Volodymyr Groysman might never be accepted.
Groysman has proposed that only private individuals with Ukrainian citizenship be allowed to buy or sell farmland plots, and then no more than 200 hectares.
“At this stage we are against sales of agricultural land to foreigners and legal entities,” he said at a meeting of the Cabinet of Ministers on May 29. Unlike Groysman, Kutoviy supported the sale of leasing rights, which could be used as collateral, instead of granting land ownership rights.
Lawmakers from the pro-presidential Bloc of Petro Poroshenko faction in parliament have another plan.
But with the minority Batkivschyna Party, led by populist lawmaker Yulia Tymoshenko, proposing a national referendum to ban the sales of agricultural land, the issue looks set to drag on.
