To sell or not to sell? That is a question that has been worrying Ukraine for many years. Will the land problem move from the dead point with the arrival of a new president?
Zelensky: wind of change?
With the choice of a new president in Ukraine, numerous questions have been stirred up about the moratorium on the sale of land in the country. As a reminder, at the end of last year, the Rada upheld for the tenth time the ban on the sale of agricultural land. This moratorium has been in effect since January 2001 and was voted for as a transitional arrangement until 2005. But, as it is often the case, nothing lasts as long as a temporary solution. Land reform in Ukraine is a bit younger than Ukrainian Independence: the authorities are trying to resolve this brain twister since 1991.
Should we now expect a big change with Zelensky? This is a controversial question, as the president in a democratic parliamentary republic cannot directly interfere in any sector of economy and the real new political force will be formed after the parliamentary elections scheduled for October 27, 2019. It is to be recalled that Poroshenko, who was for the opening of the land market, could not find an agreement with the Rada. The market kept a close eye on Zelensky team formation and, with some fear, saw that there was no place for a specialist in the agricultural sector. Nevertheless, the new president has already announced in his program the need to create a transparent land market.
Man may work from sun to sun. But woman’s work is never done.
The moratorium was introduced nearly twenty years ago. At that time the Ukrainian market was not ready for commercial operations with land. Today, the question of selling land is acute enough, especially since international institutions, in particular, the International Monetary Fund and the International Bank for Reconstruction and Development, stand for the speedy lifting of the moratorium in Ukraine. Since 2001 things have changed. Indeed, an electronic land cadastre has been created; there are propositions of a law on land turnover, Ukraine has become one of the world leaders in the grain and oilseeds export.
However, many issues remain to be resolved. For example, the creation of a land bank, the search for the optimal system model for the introduction of a free land market, as well as the question of loans, taxation and VAT. The problem of raider attacks also, unfortunately, remains of current interest.
Land market: pro and contra
Ukraine is among the leaders in terms of land resources in Europe and is one of the largest countries rich in black soil. There are 28 million hectares of black soil with a total agricultural land of 42 million hectares in the country of which 32 million hectares are arable land. Today, a little more than 3 million hectares of land is cultivated by 14 largest agricultural holdings.
The question of land remains open and concerns operators of the market. Renting land becomes more expensive every year, but the lease has also increased from 3 to 7 years minimum.
It is clear that some market participants benefit from the current state of affairs. They mainly talk about the threat of use of agricultural land for other purposes. The other argument is the prospect to see all the lands passing into the hands of foreigners.
Nevertheless, the lifting of the moratorium has more positive aspects. Free selling will contribute to more efficient land management due to market competition. Landowners will be able to get the bank loans. The specialized banks, insurance companies, cadastral offices, educational institutions, and research centers will also appear. Investments in the land sector (including foreign ones) will help to improve the investment climate in the country. So, now it’s “only” necessary to decide who and how can own the land…
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