Land reform can make Ukraine an agricultural superpower

Ukraine stands today on the threshold of historic change. The country will launch its agricultural land market on July 1. It is no exaggeration to state that this is one of the most significant landmarks in the thirty years of Ukrainian independence.

The opening of Ukraine’s farmland market will provide a major boost to the country’s already powerful agricultural sector, helping to drive growth while eliminating corruption. The impact on the wider Ukrainian economy will be equally significant, and could eventually add several percentage points to the country’s GDP.

Ukraine’s land reform breakthrough would not have been possible without the requisite political will of the current authorities. For decades, it was opposed by Ukrainian tycoons and politicians who extended the country’s longstanding moratorium and used the shadow land market to their advantage.

Resistance also came from many ordinary Ukrainians who gained little from the old status quo but were intimidated and misled into believing that an open land market would be exploited for the benefit of the few. Those who fought for land reform often found themselves exposed to blackmail, bribery, and even threats towards their personal safety and that of their families.

Looking back at the experience of the past year and a half, I can confidently say that anyone pursuing genuinely transformational reforms in Ukraine must be prepared to pay a high price and face formidable opposition. Nevertheless, I sincerely believe that this is the only way to achieve shared prosperity for all Ukrainians and to finally release the vast untapped potential of my homeland.

Two thirds of Ukrainian land, or 42.7 million hectares, is made up of chernozem, the legendary black earth that is widely regarded as the world’s most fertile soil. This is almost exactly the same size as the US state of California.

Ukraine’s remarkable land bank makes the country a potential agricultural superpower. While the Ukrainian agricultural sector current offers huge scope for modernization and expansion, Ukraine is already one of the world’s largest exporters of agricultural products and a guarantor of global food security.

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Ukrainian land reform was desperately needed. Even in the highly conservative format which will launch in the coming days, this reform represents a major step forward for the country that will enable the transition from a shadow land market towards a more transparent and efficient model.

We have been working 24/7 to make this happen. This work has not been confined to the offices and corridors of power in Kyiv’s government district. Instead, it has taken place in fields and farmhouses across the country. I have personally traveled all over Ukraine with my team to listen to the hopes, fears, and advice of individual farming communities.

This dialog is vital and will continue.

For decades, the former political elite exploited stereotypes and employed disinformation to stoke fears within Ukrainian society that land reform would deprive them of the country’s greatest physical asset, its rich soil. Given the often dubious acquisition of assets during the post-Soviet era, the Ukrainian public was understandably vulnerable to such scare tactics. However, I remain confident that the common sense pragmatism of Ukrainians is ultimately stronger than any intimidation.

Ukrainians are right to insist that our farmlands must be protected, cared for, and used effectively. If a majority of Ukrainians eventually favors such a move, in the future it may become possible for foreigners to also own Ukrainian farmland. However, foreign ownership will not be considered earlier than 2024, and only if Ukrainians agree to this during a referendum on the issue. Meanwhile, Ukrainians will continue to welcome the many foreign farmers and international agricultural groups who rent and cultivate Ukraine’s famed black earth while investing millions and creating thousands of jobs in every region of the country.

Ukraine’s land reform aims to establish clear rules that guarantee social security and justice while overcoming corruption. This will increase the productivity of the Ukrainian agricultural sector and revive the Ukrainian countryside. Ukraine will strengthen its position as a major contributor to world food security. This is the vision I outlined when I first agreed to take on the post of Agrarian Policy Minister.

Once Ukraine’s land market opens, all transactions will be tracked to record buyers and sellers, along with the price and the source of payment. To achieve this, we are developing a monitoring system. This will make it possible to analyze data and identify trends at the local, regional, and national levels. We have launched an open data portal that will allow anyone to view detailed information about the ownership and usage of Ukrainian farmland. This digitization of Ukraine’s land bank is extremely important for transparency.

Steps are currently underway to eliminate obsolete auctions that demand physical presence and are often subject to questionable outcomes. From now on, anyone will be able to participate in e-auctions, with bidding taking place via the government’s Prozorro digital platform.

We aim to provide land market participants with the financial instruments to make the most of the new reforms. This includes creating a partial loan guarantee fund for small farmers offering financing on simplified terms. The government will also temporarily expand an existing loan program for farmers looking to buy land.

In parallel to land reform, we are working on a range of other key issues that are of paramount importance for the further development and expansion of the Ukrainian agricultural sector. Among the priotities are the modernization of Ukraine’s irrigation and drainage systems, the establishment of a new institute of agricultural insurance, and the simplification of procedures for the provision of state support to farmers.

I always like to emphasize that Ukrainian farmland reform is a living organism. We approach it in a step-by-step manner, moving organically and adjusting our policies as we proceed based on our observations. We try not to lose sight of our overall objective, which is to bring the agricultural sector out of the shadows and create a transparent, effective market that works in the interests of all Ukrainians.

For centuries, Ukraine was known as the breadbasket of Europe. The transformation of the country’s agricultural sector that is currently underway has the potential to open up a new era of global opportunities. In the years ahead, land reform can cement Ukraine’s status as one of the world’s agricultural superpowers.

Roman Leshchenko is Ukraine’s Minister of Agrarian Policy.

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Image: Long known as "the breadbasket of Europe", Ukraine is already one of the world's top agricultural exporters. Farmland reform may now enable the country to play a central role in the future of global food security. (REUTERS/Valentyn Ogirenko)