Land awaiting effective owners

Ukraine has 33 million hectares of farmland, and experts value them at more than 300 billion hryvnias, or some 60 billion dollars. These figures can be called into question, however, because no one has ever sold Ukraine’s chornozem soils, the best in Europe and even the world, in market economy conditions. Ukraine’s market economy status has a major drawback: its land has never been considered a commodity.

On Dec. 19 the Verkhovna Rada again prolonged the moratorium on farmland sales until Jan. 1, 2008. Voting in favor of the draft resolution was a confident constitutional majority of the Party of the Regions (180), BYuT (109), the Socialist Party (30), and even Our Ukraine (8).

The land law prohibits inclusion of land shares in the statutory funds of “economic associations” and the sale and purchase of farmland and municipally owned plots of land (except when such plots are acquired for public needs), the sale and purchase or other methods of alienation of land or any changes to the existing status of such land in individual and corporate possession, in terms of agricultural production, or land provided as payments in kind (land shares) and intended for private farming purposes, except when such plots of land are obtained by legal heirs or in exchange for other plots.

However, the moratorium may continue past 2008 unless laws on the national cadastre and land market are enacted. Any agreements (including power-of-attorney deeds) made during the period banning the sale, purchase, and other alienation of plots (land shares) will be null and void as of the date of their endorsement.

The government has been instructed to submit to the Verkhovna Rada bills amending the laws “On Mortgage” and “Leasing Land” within six months from the date of enactment of the law, concerning the possibility of using land ownership as collateral for bank loans, including long-term ones; also to develop and adopt normative- legal acts aimed at upgrading methods of valuation for farmland and plots intended for agricultural production.

What is behind the unanimous stand of Ukraine’s parliamentarians in this complicated matter? Perhaps the best answer can be provided by the Association of Farmers and Private Landowners of Ukraine (AFPZU). Before the vote on the bill, the association asked the Verkhovna Rada not to abolish but to prolong the moratorium on the sale of land for another year. AFPZU president Ivan Tomich told a press conference in Kyiv on Dec. 18 that if the bill extending the moratorium is not enacted before the New Year, the AFPZU will picket the Verkhovna Rada.

“We will be there in front of the parliament building for as long as it takes to resolve the issue.” Tomich said that canceling this moratorium next year would result in many rural residents losing their land. He believes that some 70 percent of Ukrainian chornozem soils already have potential and eager buyers, and that a significant part of such farmland can be acquired at prices considerably lower than market rates. Tomich is also afraid that if the process of prolonging the moratorium bill is delayed, the president of Ukraine may have no time left to sign the bill before the New Year.

This begs the question: what will happen to all these potential landowners who today are anticipating advantageous deals? The Day received an answer to this question from Leonid Kozachenko, president of the Ukrainian Agrarian Federation (UAF): “On the one hand, this is a step backward because it delays the introduction of a land market in Ukraine; on the other, we can assume that this was a step the Verkhovna Rada had to take.”

Kozachenko notes that the UAF is “above all concerned about whether our parliament will be able to do without another moratorium, primarily in terms of passing bills without which there is no way for a land market to function in Ukraine... If this law were to be regarded as a step taken in the direction of more active measures aimed at passing bills, the UAF would support it. If this deferral is aimed at telling us again at the end of 2007 that they had no time to pass the required bills, which are all ready and have been at the Verkhovna Rada for more than a year, then this decision is the wrong one and it will never benefit our country.”

Indeed, agricultural reform has stumbled over the ban on land sales. Ukraine’s agriculture, despite the world’s best soils, is in decline. Eleven months of statistics indicate that, good harvest yields notwithstanding, the total agrarian output has decreased by 0.9 percent, compared to January-November 2005. Data from the State Statistics Committee of Ukraine show that agribusiness output has increased by 0.8 percent, while individual and family farms are down by 2.2 percent. These businesses are slowing down livestock and plant production (by 1.3 and 2.7 percent, respectively). This is proof that small-scale commodity production, previously sustained by the unregulated slave labor of older generations of Ukrainian peasants and also - it’s no secret - by free “loans” from the large commodity sector, is no longer capable of competing with large modern businesses in the field.

The land is waiting for effective owners who have access to modern technology, farming expertise, fertilizers, and pesticides. It is reasonable to assume that our peasants, tired of backbreaking and unproductive labor, will not insist on being dog-in-the-manger owners of such plots.

Price is what really matters. The government is supposed to monitor this, making sure that prices will be not only fair but will also allow farmers to get a fresh start in life, be it in urban or rural areas where they will have lots of job offers.