Why farmland moratorium cancellation is inevitable

Today, there are few among politicians, economists and experts who would deny that the most important step for rural development and land reform is the opening of the agricultural land market and that this step is inevitable. Despite the approaching of election campaigns, there are reasons to hope that it will be this Parliament that goes down in history as the one that has adopted the law on the circulation of agricultural land, i.e. it has introduced about 40 million hectares to the full economic circulation, restored the constitutional rights of 6.9 million citizens being the owners of shares and restored economic growth in the countryside.

Two significant statements were made almost before the launch of the new political season. The Ministry of Agrarian Policy named 5 basic principles of the future market on its website, and the Deputy Head of the Parliamentary Profile Committee Oleksandr Bakumenko promised to submit to the Verkhovna Rada a draft law on the circulation of agricultural land in the near future. In May, the President said about his attitude to the moratorium as the violation of constitutional rights of citizens and the factor of restraining investments in the agricultural sector.

Thus, for the first time during all years of the moratorium, all three branches of power received a signal of readiness to stop postponing the introduction of the land market, referring to various reasons.

However, how tangible the effect of opening a land market will be for the welfare of farmers and landowners depends not only on when the law will finally be adopted. The most important components of success are the ensuring of financing for the land market and farming through the creation of instruments for guaranteeing loans for small agricultural companies, introduction of electronic land auctions, improvement of transparency of land relations and protection of the rights of owners and producers.

These steps should be taken in parallel with the preparation and adoption of the land circulation law.

It is worth noting that there are different thoughts about what changes are most needed and in what order they should be implemented. There are requirements that certain additional measures (which in the majority of cases have only an indirect relation to the market agricultural circulation of agricultural land and do not interfere with the circulation of personal farming land and non-agricultural land already today) should occur before the opening of the market.

And in this case it is important that the process of developing land relations does not take place “from law to law” (when one law contradicts the other one, or the general priorities of developing land relations, and not the next day after the adoption of the law, it is necessary to initiate amendments thereto), but acquires a systemic character. Today, the formation of land legislation sometimes reminds of a letter from the cartoon Prostokvashino, to which a boy, then cat Matroskin, then the dog Sharik in turn add their phrases. In fact, amendments to the land legislation in recent years are the outcome of situational political agreements, rather than a systematic approach to sustainable development and use of land resources.

Today, the formation of land legislation sometimes reminds of a letter from the cartoon Prostokvashino, to which a boy, then cat Matroskin, then the dog Sharik in turn add their phrases

As a fresh example, we can state the general important and positive decisions of the Parliament on solving the issues of former collective ownership of land and a number of other issues through the draft law 6049-d. However, the aforementioned bill establishes a pre-emptive right of the tenant leasing 75% of the array in terms of using the total array. What does it mean? First, it is in the benefit of large and powerful producers, discriminates against small producers and single farmers, and landowners are again restricted in their rights (in addition to the 7-year lease and moratorium), since they lose control of those actually cultivating their land. Is it consistent with the declared course of development of small and medium-sized farms and the care of the rights of average landowners?

Therefore, we propose to the Profile Committee of the Verkhovna Rada at this session not only to introduce a draft law on the circulation of land (this issue has already matured), but also to start the formulation of the Strategy for the development of land relations in Ukraine until 2020. The experience of introducing pilot projects for the improvement of land relations implemented by the World Bank and other international partners may be useful in this process.

It should be noted that there are no further 17 years for thinking about how to properly launch the agricultural market. The decision of the European Court of Human Rights on the unconstitutionality of the moratorium on the sale of agricultural land entered into force late August. According to it, the government and parliament should find a balanced approach to land market regulation and restore constitutional rights of owners. If Ukraine does not want to create a special ministry, whose duties will include responding on behalf of the state to massive claims of shareholders to the ECtHR, and then provide for a special item of the state budget expenditures for payment of the violated ownership (my proposal is to independently multiply EUR 3,000, which is the expected amount of compensation, by 6.9 million), it is necessary to think much faster than in previous years.


Denys Nizalov, Head of the World Bank and EU Programme Ukraine Transparent Land Resources Management Support (Land Transparency)

The article was originally published on Liga