The last moratorium?

About a year is left until yet again canceling a moratorium for purchase and sale of agricultural land. As it is known, the previous moratorium was to expire on January 1, 2010. However, in December 2009 the Verkhovna Rada made amendments to the transitional provisions of the Land Code of Ukraine, which presuppose extending the moratorium for two years, till January 1, 2012.

In the meanwhile, in his economic reforms program the President of Ukraine Viktor Yanukovych promised to create an agricultural land market. The first deputy of the head of the Presidential Administration Iryna Akimova later talked about the initiative to adopt all bills, in order to enable the lifting of the moratorium by the end of this year, and making sure the process is as fast as possible.

But has the process been accelerated? Is it true there are no reasons for the “moratorium epopee” to persist after 2012?

Analyzing the present progress on the land reform, experts state that the most valuable Ukrainian resource is still in a chaotic state.

“Conditions hindering further development of agriculture have been established for the twenty years of reforming land relations. Farm enterprises cannot possess a sufficient amount of land,” points out Anatolii Vovk, the first deputy head of the Council of the Land Union of Ukraine Associations. “Today there are over 26 million privately owned land plots in Ukraine,” he declared.

Experts are confident that it is impossible to work efficiently on such small plots. “Establishing competitive large farms is necessary. Instead, right now farming enterprises possess no more than 90 hectares. The ballpark figure for competitiveness is 460 hectares,” says Anatolii Yurchenko, the head of a chair at the Research Institute for Natural Resources Economy and Land Use Ecology at the State Ecology Academy of Advanced Studies and Management.

According to Yurchenko, there is an urgent need to adopt a law on completing the land reform. “If the reform has been going on for twenty years with no end in sight, one should stop it,” expert thinks. “Land policy should be formed by natural market forces.”

So far, due to the flawed legislation, every farmer can be considered a criminal, states Andrii Martyn, a doctoral candidate at the National University of Biological Resources and Natural Use. Martyn says that this concerns collective land property, particularly, field roads. “Politicians also often stress that land must belong to those who cultivate it,” says the expert about the reality of the current land relations. “So, as of today we have an absurd situation: the land does not belong to those who cultivate it. It is cultivated by agricultural enterprises, but it is owned by pensioners who do not have the interest or the ability to do anything with it. They would rather get money for this land. When a person dies without heirs, the land is ‘frozen’ altogether. It doesn’t belong to anyone: neither the state, not to a territorial community. The procedure of settling this problem is extremely complicated. As a result, there are depressed regions where some 20 percent of plots are not cultivated because they don’t belong to anybody!”

It is commonly believed that the law on the state land cadastre and land market should be adopted to lift the moratorium. According to Martyn, the land cadastre today is extremely deficient. For example, there are about 26 million plots in Ukraine, while the state only knows about 39 percent of them.

However, Martyn supposes that even despite such “blank spots” Ukraine’s legislation basis is sufficient for the land market to function. “We have the Civil and Land Codes,” adds the expert. “It would be good if in the near future the state also established a state property fund like the ones in European countries.”

Consequently, experts believe that the current land moratorium is to be the last. This year’s active legislative work adds confidence that this will be the case. “The Verkhovna Rada considers the new version of the bill on land market, the discussion on the State Land Cadastre has been ongoing. In other words, there is a political will to cancel the moratorium today,” stresses Martyn.

“The rural population understands the situation as well. So, hopefully politicians will take appropriate steps for agriculture to stop being a ‘reservation of non-market methods of economic management.’”