On November 11th, the Ukrainian land reform bill passed with a majority in parliament. It was presented by Ukrainian President Volodymyr Zelensky.
Out of 450 MPs, 240 deputies voted for Ukrainian President Volodymyr Zelensky’s bill that allows the sale of land to foreigners. 227 votes were cast by the “Servant of the people” and 13 were given by independent deputies.
The bill includes the following, as set out:
- The land sale begins on October 1st, 2020;
- acquisition of land will be possible for: citizens of Ukraine, legal entities of Ukraine created under the legislation of Ukraine, territorial communities and by the state;
- no more than 15% of the land in one region and 0.5% of the all-Ukrainian land bank, that is, in fact one farm can receive no more than 200 thousand hectares;
- introduce a transitional period until January 1st, 2024, during which legal entities, beneficial owners of which are foreigners, stateless persons, legal entities created under the law other than the legislation of Ukraine, foreign states, will not be able to acquire land from the designation of state, communal property, as well as unitary lands, except for those lands which at the time of entry into force of the law are already leased, to such legal entities, and provided that such legal entities are created not less than 3 years before the effective date of the law;
- foreigners will be allowed to redeem priority land, which their companies currently rent already. About three million hectares out of 42 million are affected by this;
- There are no restrictions on buying up companies with existing land banks, there are already companies with 300-500 thousand hectares, a company can own pretty much half the land in Ukraine if it’s done as purchasing entities that already own land.
Opponents of the land reform claimed that this is a very share, and it opens the way for large land owners to buy all of the land (the change means that 200 people can put all of the land in Ukraine under their control).
Additionally, there comes the issue of price of the said land:
- It is proposed to establish the “minimum price” for land at the level of a normative monetary assessment (on average in Ukraine it is 28-30 thousand hryvnias per hectare, that is, about a 1,000 euro);
- Villagers would be allowed to buy the land at such a price, with an installment plan for five years. These individuals at one time have worked the land and prepared it for permanent use under a household or a farm (before the adoption of the new Land Code in 2002);
- Calculations show that farmers will have to pay about $ 200 per hectare annually (at the same time earnings per grain per hectare is $300, that is, after the bill enters into force, the villagers will have to give most of their income to the state);
- There are no mechanisms for lending to medium-sized farmers so that they can buy land and create a middle class of owners in the countryside. And no such propositions for establishing a mechanism were made;
The situation is quite simple: small and medium-sized farms at a massive disadvantage compared to large Ukrainian companies, and even more so when it comes to foreign investors who can have much more purchasing power and capabilities.
Zelensky’s predecessors shied away from the land reform bill because they could lose the support of rural residents and the agricultural business, which in turn could allow for the possibility for protests led by the opposition.