In Ukraine, the second stage of land reform has begun - from now on, agricultural land can be purchased not only by individuals, but also by legal entities - companies, banks, territorial communities.
The government and expert circles believe that the sale of land will give an impetus to the development of the agricultural sector and attract investments.
But as a result of the war, hundreds of thousands of hectares of land turned out to be unsuitable for use for many years in advance or are located in the occupied territories, so the producers of agricultural products suffer billions in losses.
Because of this, at the end of the past year, there were calls to postpone the start of the sale of land to legal entities from January 1, 2024 to a later date. However, the parliament did not consider such proposals.
So what awaits the land market, which was opened for companies after several decades of moratorium?
Revolution in the countryside
Since the beginning of Independence, the parliament has constantly voted to ban the sale of land. The law on the free circulation of agricultural land adopted in July 2021 was, in fact, a revolution in the agricultural sector.
The Verkhovna Rada predicted that at the first stage, only natural persons and only citizens of Ukraine will have the right to buy land. The law also established that the maximum amount of land such a person can buy will not exceed 100 hectares.
The law prohibited the sale of state and communal land and deprived foreigners of the right to buy land. Foreign citizens (but not Russian citizens) may have such a right only as a result of an all-Ukrainian referendum.
In peacetime, the free market operated for only seven months. It has been active in wartime for almost two years.
From January 1 of this year, legal entities created and registered by citizens of Ukraine received the right to buy land. They and individuals are now given the right to buy "in one hand" 100 times more land than during the first stage, namely 10,000 hectares of agricultural land.
Earth and war
It was the war that some politicians considered the reason why the second stage of the land reform should be postponed to a later time.
In particular, the ex-speaker of the parliament, Dmytro Razumkov, suggested postponing the start of the sale of land to legal entities to January 1, 2025.
The faction of the "Batkivshchyna" party called before the new year to leave the limit of 100 hectares in "single hands" for both individuals and legal entities until the end of the war and for another two years after the victory.
The leader of the party, Yulia Tymoshenko, stated the threat when large amounts of land "will end up in the hands of oligarchs, corrupt and unprofessional owners", who will be able to buy large plots of land, and farmers will not be able to withstand competition.
Warnings were also heard from representatives of the "Servant of the People" presidential faction.
Yuliya Yatsyk, who was elected to the parliament from the Zaporizhia region, which is almost completely occupied by Russia, emphasizes that millions of citizens will be deprived of the opportunity to use the right to buy land. Because they are either under occupation, abroad or in the Armed Forces, besides, "millions of Ukrainians changed their focus and directed their efforts not to conducting and expanding business (including agricultural), but to comprehensive assistance to the army."
However, the parliament did not consider all these proposals, so the sale of land to legal entities started.
Mined land
Another reason why it was proposed to postpone the second stage of land reform was the mining of hundreds of thousands of hectares of land, which are unsuitable for agriculture and have a lower value for the owners.
According to the Ministry of Agriculture, in general, about 20% of land in Ukraine is unsuitable for use due to occupation, hostilities, and mining. Taras Vysotskyi, the First Deputy Minister of Agricultural Policy, recently talked about this on the air of a telethon.
"After de-occupation, it will take a lot of time to demine and clean the territories. What the occupier leaves behind needs at least several months, and even up to a year, to return to production," he emphasized.
According to the Minister of Economy Yulia Svyridenko, the cost of complete demining of Ukraine may reach 50 billion dollars.
However, according to the founder of the Center for Food and Land Use Research of the Kyiv School of Economics (KSE) Oleg Nivyevskyi, after receiving the land, any owner, be it a farmer or a company, will be interested in demining it.
"Where the funds will come from is another question. Either they will find opportunities themselves, or they will attract donors. Demining will be a very large-scale project lasting tens of years, so we should expect state, donor, and private funds," he said in a comment to the Ukrainian BBC.
1% sold. Waiting for authorities and experts
In general, government officials and experts have quite optimistic forecasts regarding the prospects for land sales.
"Those who have been waiting for a long time will enter the market - legal entities who want to acquire land in their ownership in order to be able to develop long-term investment projects. This, of course, will lead to an increase in the price," says Deputy Minister of Agrarian Policy and Food Denys Bashlyk.
"After opening the market for legal entities, firstly, the circle of potential buyers increases, while the number of those who want to sell land will remain unchanged. Therefore, the demand will grow, and therefore the price will also grow," KSE expert Oleg Nivyevskyi told BBC Ukraine.
KSE experts believe that as a result of the continuation of the land reform, the price of land will increase and in three years it may double in price, in 7-8 years - by 200% and reach the indicators of Ukraine's European neighbors, where land costs from seven to 11 thousand euros per hectare .
Today, the average price of a hectare in Ukraine is 1-2 thousand dollars. According to the Ministry of Agriculture, the highest prices on the land market are recorded in Ivano-Frankivsk, Lviv and Ternopil regions.
The KSE predicts that the corporate land market will add 1-2.7% of GDP annually over the next three years.
In more than two years since the start of the reform, about 276,000 hectares of agricultural land have been sold or donated. This is 1% of all agricultural land located in the territories controlled by the Ukrainian authorities.
Experts of the Kyiv School of Economics believe that, despite the small percentage of sales, the indicators of the market's work are generally positive, because most of the time the market existed in conditions of war. Despite this, the conclusion of purchase and sale agreements did not stop.
Experts remind skeptics who considered it inexpedient to start the second stage of land reform that the shadow market of land existed all the time, and now it is important not to return it again.
Svitlana Dorosh
