Ukraine permits the sale of farmland for the first time in 20 years

RUSSIA / FSU POLITICS - In Brief 05 Jul 2021 by Alex Teddy

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On July 1 a new law took effect which allowed people to buy and sell land. The law was demanded by the IMF as a condition for a loan. However, the land can only be sold to Ukrainians. A citizen can buy up to 100 hectares. As of 2024 auctions will take place allowing agribusinesses to buy up to 10 000 hectares. The government hopes that this will bring a lot of investment. Ukraine is one of the world's major agricultural exporters. In 1991 Ukraine became independent. State farm and collective farms were broken up and the land given to farming families. The farmers were allowed to lease it to the agribusinesses but not to sell it. The country has 42 million hectares of agricultural land but only 32 million is used. Agribusinesses use 6 million and SMEs use 11 million. The rest is in the hands of individual farmers.Agriculture has been racked by shady deal and tax evasion. The sector is nowhere near as productive as it could be. Agricultural banking is in its infancy. Ukraine has the lowest wages in Europe. Therefore farming could be very profitable as labor costs are so low. Some think the reforms are too limited. Allowing foreigners and foreign companies to buy land would have a transformative effect on farming. But this would need a referendum to approve it. The public is sceptical because they saw how the sale of public assets in the 1990s enriched a minute elite at the expense of the masses.