In fertile Ukraine, a 20-year freeze on the sale of agricultural land is lifted – with uncertain consequences

HRYSHCHYNTSI, Ukraine – For small farmers in Ukraine, a traditional ‘breadbasket’ that has some of the richest soils in the world, there is something new under the sun this summer: They can sell their land if they wish.

Liliya Sytnyk does not.

Like many of her neighbors in this village of 600 people in the central Cherkassy region 125 kilometers (77 miles) south of Kiev, an area known as the Sunflower Belt, she plans to retain her inherited land – despite the new legislation that came into effect on July 1, ending a two-decade moratorium on the sale and purchase of a total of 42.7 million hectares (103 million acres) of fertile farmland in Ukraine.

“I would prefer to transfer the property to my children and grandchildren,” said Sytnyk, 61, a subsistence farmer who rents 1 hectare from a neighboring poultry farmer, the largest in the country. “It is our heritage, our wealth.”

Lyudmyla Borkinets, who grows what she and her husband need for a living and leases around five hectares from the same poultry giant, also has no plans to sell.

Lyudmyla Borkinets shows a field she cultivates in the village of Hryshchyntsi, in central Ukraine.

But she hopes buyers in the region will be small-scale farmers whose business could help generate a thriving local micro-economy with local seed and fertilizer suppliers, and on a larger scale, help stem the disappearance of crops. rural communities in the country.

Borkinets, 63, said that “big farms” – those that cultivate more than 20,000 hectares – “do not register their businesses in the communities in which they operate, so their tax dollars are not used. to improve our villages. ”And, she added,“ their trucks are damaging our roads and they are not helping to repair or build new ones ”.

His hopes of seeing prosperous rural communities align with one of the goals of the reform that has been brewing for years: to create incentives in what, until July 1, was one of the few countries in the world that did not had not authorized the sale of agricultural land.

Lower returns

Since 2001, some 7 million owners of agricultural land in Ukraine had not been able to use their property as collateral to buy or rent machinery, buy quality seeds, store grain in silos and invest in new technologies.

Reform advocates say the status quo has been a strong deterrent to farming, discouraging investment and keeping Ukraine’s farm yields significantly lower than in the European Union and the United States.

Forbidden to buy and sell, many Ukrainians who became owners of their land in the mid-1990s following the collapse of the Soviet Union had no choice but to rely on agriculture subsistence while renting what was left to larger farms.

In the past, these leases averaged around $ 150 per hectare per year, said Denys Bashlyk, who runs the Land Club, a consultancy that facilitates the purchase or lease of farmland as a source of residual income.

Ideally, the change could give a big boost to farmers, landowners and the country as a whole.

“Land reform that truly empowers owners and users to take control of their land can be transformative,” wrote Arup Banerji, World Bank regional director for Eastern Europe, in an opinion piece. in 2020.

“For landowners who are currently renting out their land, this could bring in up to $ 3 billion each year. For rural residents and small farmers, this can create some $ 24 billion in guaranteed assets that allow them to invest in irrigation, horticulture or small non-farm businesses. And for local communities and local governments, it can provide an income stream of up to $ 2 billion per year to improve the lives of Ukrainians, ”Banerji wrote.

Sunflower stems are starting to grow in the village of Trypillia in the Kiev region.

Sunflower stems are starting to grow in the village of Trypillia in the Kiev region.

Citing calculations by the World Bank, he wrote that “for Ukraine as a whole, this can add permanently almost a percentage point per year to economic growth”.

An April 2021 report from the International Monetary Fund (IMF), which is one of Ukraine’s largest foreign lenders and made lifting the moratorium a condition of its latest loan package, predicted that economic output could increase from 6% to over 12% over the next decade, depending on the quality of reform implementation.

Home to about a quarter of the earth’s fertile “black earth” soils, Ukraine is the world’s largest producer of sunflower oil and the fourth largest producer of corn. Along with soybeans, sunflowers and corn are among the main crops grown in the Sunflower Belt, which stretches from Kharkiv in the east to the Ternopil region in the west.

Contentious reform

About 30 percent of the country’s estimated population of 43.6 million live in rural areas, according to official statistics. The agriculture industry employs more than 14 percent of the workforce, according to data from the US Department of Commerce and the World Bank.

Agriculture accounts for nearly 10 percent of the economy and is its main export. The agricultural land market created by the reform encompasses a territory larger than Italy or California.

A windmill no longer works in the town of Kaniv in the Cherakasy region

A windmill no longer works in the town of Kaniv in the Cherakasy region

Since July 1, Ukrainians – and not foreigners – can buy and sell up to 100 hectares. From 2024, Ukrainian legal persons will be eligible for transactions covering up to 10,000 hectares.

One of the bones of contention surrounding the reform is whether foreigners should be allowed to buy land. President Volodymyr Zelenskiy has said he plans to put the question to the people in a national referendum, but the result of such a vote seems almost certain: more than 80% of Ukrainians are against it, according to a poll by opinion led by the Kyiv International. Institute of Sociology in June.

Since the moratorium was imposed in 2001, politicians have used the subject as a tool for manipulation, according to Alex Lissitsa, president of the Ukrainian Agribusiness Club, an agricultural industry advocacy group.

This is a particularly sensitive issue in Ukraine, where the forced collectivization and deadly famine blamed on Soviet dictator Josef Stalin and his government looms large in historical memory, and “the issue has been politicized,” Lissitsa said.

During this time, the Ukrainians began to buy and sell agricultural land. Between July 1 and August 10, more than 5,000 agreements were registered and more than 10,000 hectares sold.

However, for the great farmer Kateryna Rybachenko, managing director of Agro-Region – a 40,000 hectare farm that spans four regions in the north where seeds and grains are grown – little will change just yet. .

Due to the two-decade moratorium, in many parts of the country land tenants have become monopolies, leasing most or all of the land on offer, and little demand from other market players is expected, she declared.

As a result, “few people want to sell their land,” Rybachenko said.

Another potential obstacle to an effective system is land disputes.

Only about 73 percent of the country’s farmland has been mapped, leaving many borders unexplored and unclear, said Bashlyk, former head of the government’s mapping and cadastral service.

“It is too early to say whether these communities will prosper after the reform,” Olena Shtefan, who heads the group of 24 villages including Hryshchyntsi, told RFE / RL.

For now, at least, villages are like millions of small towns around the world to many who grew up there: places of escape.

According to Borkinets, Hryshchyntsi saw 10 people graduate from high school this year.

“And the vast majority leave the village to study” in the district headquarters, the regional capital of Cherkassy, ​​or Kiev, she said.

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