“Free” land market in 2013

Agricultural land will be available for sale on the free market from 2013, the deputy head of the State Agency for Land Resources Mykola Kaliuzhny told a press conference. According to him, the agency together with the Ministry of Agrarian Policy is finalizing the bill “On the Land Market,” which will be submitted for the deputies’ consideration in one or two weeks. They are also preparing some changes to legislative documents dealing with land issues, the adoption of which, in Kaliuzhny’s opinion, will make speculation on agricultural land impossible.

“We proposed that only citizens of Ukraine could purchase the land and acquire the rights of ownership for it,” says Kaliuzhny. The state can also be the owner of lands suitable for agriculture through an Agricultural Land Fund, which the bill suggests to establish. So it looks like foreign investors and big domestic agrarian holdings (which act as legal entities) are excluded from the list of potential owners of Ukrainian black earth. As Kaliuzhny specified for The Day, if the document is adopted in its current version, these candidates can expect only to rent these lands.

The Agricultural Land Fund, according to Kaliuzhny, will be subordinated to the Cabinet of Ministers or the Ministry of Agrarian Policy. “It will purchase land from citizens if they want to sell,” Kaliuzhny explains and adds that this institution expects to become the key player on the agricultural land market.

According to the official, the fund will control almost five million hectares of black earth, three million of which are outside settlements belonging to nobody, which are currently rented or simply unused. Two more million hectares are so-called unwanted lands (people received vouchers for this land but they either don’t use them or still didn’t register ownership).

The fund will be able to sell or rent out the gathered lands. “If citizens want to sell the land, they first of all must inform the fund about it, as well as neighbors, local government bodies and farmers who work in the settlement where the land is located. These groups have priority to buy the land. If during a month no one shows interest, the owner can sell the land to anyone,” Kaliuzhny stated in his comment to The Day.

In the opinion of Kaliuzhny, amending the decree of the Cabinet of Ministers “On State Obligations” will help make speculation on reselling agricultural land impossible. These amendments suggest the following: if one bought a land plot and wants to sell it in the first year one bought it, one has to pay a state duty in the amount of 100 percent of the normative pecuniary land valuation, which today constitutes 11,000 hryvnias on average in Ukraine. In the second year, Kaliuzhny says, the duty rate will be 90 percent, in the third year it will be 70 percent, and in the fourth — 60 percent.

In the meanwhile, in the opinion of Maria Kolesnyk, the head of the analytical department of the consulting agency AAA, the suggested version of the bill “On the Land Market” is unnecessary for the agrarian market and will only hamper its successful development. “It will be like in Russia, where the land market exists formally, but in reality it doesn’t,” she says in her commentary for The Day. The expert explains that depriving legal entities and foreign investors of the right to buy agricultural land will hinder substantial investments into agro-industry, which are badly needed. Kolesnyk doesn’t support the creation of the state fund either. In her opinion, no one will transparently keep track of how the land will be selected. In addition, there is a risk that the state, when renting out the land, can offer special terms for its cronies. Therefore, Kolesnyk supposes, it is necessary to open the land market by providing all potential investors the right of free access to buying and selling agricultural land. Simultaneously, in the opinion of the expert, one should introduce strict limitations for land concentration by one owner.