People’s law

Land reform appears to have started skidding on the home stretch after the Verkhovna Rada passed Bill No. 9001-1 “On the Land Market” in the first reading on November 17, instructing the pertinent committees to prepare it for the second reading. The State Land Resources Agency (SLRA) regards this as a positive aspect, never as a defeat. SLRA’s number-one, Serhii Tymchenko, declared that the land reform can now be dealt with “in terms of completion… Any indecisive move, any attempt to protract the process of reform will add to the daily degradation of the Ukrainian countryside.”

Under the Ukrainian land market bill, plots of land can be owned only by Ukrainian nationals, private and corporate farming businesses, the state, and “territorial communities.” The customs duty is 100 percent the cost of the land, in case this plot is meant to be used for purposes other than the designated ones during the first year of ownership. The land contract can’t be breached in case of change of ownership. The Ca-binet’s bill provides for such land parcel transactions to be carried out via the Land Bank, with up to 2,100 hectares per capita ownership ceiling. This clause draws most enemy fire, especially from farmers.

Says Vice President Mykola Stryzhak, Association of Farmers and Private Landowners of Ukraine: “Given current land prices, the Ukrainian farmer in the street can’t afford to buy a thousand-hectare plot, considering that an average village numbers under 3,000 hectares. Suppose one can purchase 2,000 hectares… This would mean a couple of men owning the whole village, with a variety of machination opportunities.”

On the other hand, big agrarian holding companies correctly point out that dividing land between thousands of small farming businesses won’t help agribusiness in Ukraine.

Tymchenko believes the second reading will allow to take into account all critical remarks and suggestions concerning the land market bill — the result of 6,000 village meetings polled by SLRA in various regions of Ukraine. He further believes that the bill should be made public on the broadest possible scale, so as to meet the demands of every business entity concerned. He says establishing the Land Bank is one of the farmers’ key demands.

Oleksii Tkachenko, director, General Banking Oversight Department, National Bank of Ukraine, agrees, saying this tactic will allow to straighten out agribusiness funding “without straining the central budget any further, without the farmer having to worry about so many other things. A government-run land bank can offer farmers long-term loans to develop livestock breeding, logistics, and short-term loans to replenish their working capital and fund their sowing and harvesting campaigns.” Queried by journalists, he even promised that the interest rate wouldn’t exceed eight percent (precisely what the farmers want, provided the government work out refund procedures).

Mykola Kaliuzhny, deputy head of the State Land Resources Agency, says a revised land market bill is expected to be submitted to the Verkhovna Rada before December 8. Under the law, parcels of land can be purchased by the state, individual Ukrainian nationals, and farmers.

Ukrainian famers are worried about other farming businesses mushrooming, being capable of making large land purchases. The Verkhovna Rada is offered several options, he adds: (a) keep the original wording of the law; (b) allow land purchases to be made only by businesses formed before January 1, 2011 (as proposed by the Farmers Association); (c) leave the farmers out of this list, considering that they will be able to buy land on a par with other Ukrainian nationals.

Another stumbling block in this bill is the maximum area of plots that can be owned by a single proprietor. Kaliuzhny says everybody would agree that this area should be lowered from 1,000 to 500 hectares, with an eye to weather conditions (e.g., 500 hectares in the Carpathians is a different story in the Crimea or in the steppe regions of Ukraine). Whatever the case, the buyer will have to sign a land contract. An inventory of land will have to be carried out in Ukraine, in 2012, and the State Land Resources Agency is prepared to do just that. The agenda includes proposals concerning the maximum size of rentable plots. Kaliuzhny believes this issue should be settled in coordination with current holdings in the agrarian realm, so as not to upset the existing output structure.

The land market bill was passed by 240 ayes [in the first reading]. In other words, there were quite a few Ukrainian MPs opposed to it. When asked by The Day, Tymchenko said cheerfully: “We will do our best to make this bill meet the interests of all parties concerned.”