Banning the Purchase and Sale of Land Would Mean Holding Back Land Reform

“What is your stand on the decision to extend the ban for selling land, issued by the parliament?”

“Obviously, this means radically holding back the land reform with all the ensuing consequences. If the land becomes a subject of purchase and sale in 2005, there is every reason to believe that the village will receive additional loans amounting to at least 8 billion hryvnias per year.

“This would mean a fundamental breakthrough not only in the agriculture, but also in the development of the banking sphere, agricultural machine building, and other spheres. The country’s economy can undergo qualitative changes in a short term.

“Land leasing, which now dominates in the village, is a barbarian form of management, giving the lessees an incentive to exhaust the soil due to, say, an unjustified increase in sunflower cultivation.

“Postponing the land reform for another six years might cause irreparable damage to Ukraine’s chernozem soils; our country can be deprived of one of its most important advantages in securing international economic competitiveness in general.

“One must remember that the decision in question is of a historic scale, able to define the country’s fate for decades. At present, the total value of Ukraine’s arable land is estimated by some foreign experts as 400 billion hryvnias. Nobody knows what this estimate would be after six years of continuing to deplete Ukraine’s soils.

“As to the parliament’s decision, I would like to remind you that beginning in 1990, Ukraine has seen three such bans. Nevertheless, a shadow land market and illegal schemes of land misappropriation have always existed. The longer introducing the land market is impeded, the more this land bazaar will flourish.

“Who profits here?

“A mere ban does not solve the problem of protecting the peasants’ right to the land. On the contrary, it leads to violations of the legislation, fraud, trickery, and abuses.

“The horror stories about buying up land are baseless. In the countries practicing [land] sales for a long time no more than 1-2% of agricultural lands are sold annually. In 1998-2000, after issuing land certificates in Ukraine, only 0.2% of their owners exercised their right to sell them. It is understood that in fact this is an attempt to win the votes of the future electors.”

“What are the economic losses from banning land sales?”

“This ban distorts the essence of private property in land, preventing its owners from fully exploiting their property, especially in terms of attracting investment and credit.

“In other countries, farmers get only 40% of loans on the security of their produce and 60% on the security of their land. If mortgaging land were permitted, last year peasants could have gotten eight to ten billion hryvnias in loans. Without a land market and mortgaging land, they will be unable to obtain these loans. Note that as a rule these are long-term loans without which technical re-equipment of the village becomes impossible.

“Only the opportunity to sell and use as collateral land parcels can raise the reinforce to invest in the economy and implement mortgage mechanisms.

“Let me reiterate: this will be a breakthrough not only for agriculture but also for many other spheres. Economic growth will get a second wind, which is precisely the goal of our policy.”