Aside from the war in the Donbas, few topics inflame Ukrainian passions as much as the oft-maligned topic of land reform. Land reform – or the question, simply put, of ‘How to sell land’ – is one that has been tackled by every single administration since independence, with varying results. It is a requirement for many of Ukraine’s international partners, from the IMF to the World Bank and the European Bank for Reconstruction and Development.
But it’s proven to be an especially thorny topic, and a question particularly suited to political maneuvering, and a de-jure moratorium on the selling of land has been in place since 2001 – ostensibly to halt the tide of monopolization that started during the rough-and-tumble years of the 90s.
But, with a majority in the parliament, the president’s Servant of the People party has no real barriers to passing their bills, and they’ve decided to tackle the question of land reform in Ukraine once and for all.
Hromadske spoke to the Deputy Minister of Economic Development, Trade, and Agriculture,Taras Vysotskyi, to get the government’s view on some of the most pressing issues in land reform:
Three Important Points: Monopolies, Loans, and Growth
On the question of monopolization: “There will be three dimensions of restrictions for a single buyer: [a buyer can only buy] 0.5% of land in the country, 8% in a single region, 35% within the borders of a single community. This means that a monopoly can’t be formed even in relatively small communities. This will always encourage competition.”
On buying land with bank loans: “We’ve ensured it. We’ve gone a step further and assumed government support for the cost of the land. The [National Bank of Ukraine’s] discount rate should be compensated for. The final price will result in a 3-5% interest rate if buying with credit. This will primarily help existing farmers, namely small and medium ones, be competitive and help them buy land. However, let’s say we go to the bank and receive $2,000 in loans. If we need $3,000 to $5,000 for irrigation, for example, then there’s a shortfall. In this case we would need to attract additional resources for this investment.”
On the government’s promise of 40% GDP growth if land reform passes: “If we’re talking about some alternative MP’s plans – no. We will de facto have a restriction on entering new investments. And this investment is technological. Where do we have a reserve of added value that will contribute to the growth of the economy and GDP? Irrigation is an example. About 40% of land is irrigated. So we can increase harvests twice over. This requires about $10,000 in investment per hectare. This is twice the price of land. And will repay itself only over 10-15 years. Gardening is another. A hectare can produce not $400, but $1,500 to $2,000. But again this will only repay itself over 10-15 years. All of these methods will realize gains only in 10-20 years. So we need investment. But our internal investment reserves are limited, which is why the government is recommending this rather liberal model, in order to speed up the process of investment.”