Monday, 14 June 2010

Experts say the biggest obstacle to development of Ukraine’s promising agriculture sector is the continuing moratorium on the sale of farmland

Another article on the land moratorium debate (here) with the predictable and oft quoted line that the lack of land ownership is holding back agricultural development in Ukraine.

That’s a very simplistic view and personally one I don’t buy. There are many and varied reasons why agriculture in Ukraine isn’t developing as fast as some would like; whether you own the land or not is not one of them.

How many farms actually own the land they farm in Western Europe? Less than you would imagine. In the UK most of it is owned by the Church of England, pension groups and equity funds, the MoD and a small number of super wealthy land owners and it doesn’t seem to be an obstacle to farming there.

Critics argue that the ban on land sales stops investors sinking money in to developing land that they don’t own. Apart from normal agricultural practice of applying fertiliser and lime, deep cultivations and perennial weed control what else would you do to develop land? Sure you need to invest in infrastructure and machinery but you need to do this regardless of land ownership issues. Plus if land is made available for sale then the price will (eventually) rise and you’ll have less cash to put in to grain stores, buildings, tractors and combines.

I reckon the real reason that the moratorium is seen as such an issue by “experts” is the real money is to be made in land sales.