On Wednesday this week Ukraine held parliamentary hearings devoted to finding the best model for agricultural land regulation.
The discussion was attended by over 600 people including farmer representatives, professional associations, scientists, experts, executive authorities and local governments.
The First Deputy Minister of Agrarian Policy noted that while restrictions on land sales was a necessary precautions, the prolonged moratorium had resulted in very large agricultural groups with a prevalence to produce simple crop production cycles such as corn and sunflower.
He pointed out that the only source of income for land owners who are not willing or able to farm the land is to rent it at unreasonably low rates and that all actions and decisions in the context of land reform should be considered in the light of rural development.
Therein lies the issue; economic viability, sustainable land use and the social implications of not keeping people on the land.
If you study the EU Common Agricultural Policy you will see the same story played out over the last fifty odd years, while many people associate the CAP as an economic policy, it is in fact a social policy.
The EU could probably farm and produce food much more efficiently than it currently does but what would all those people do?
It’s the same if not more so in Ukraine; without farming there is literally no other employment options available in rural areas.
The Deputy Minister went on to say that “in rural areas, it must be the middle class which will be the driver of economic activity and job creation. Tools to achieve this goal may be different, but it is clear that the transformation is not possible without changing the size of land relations."
Given the high capex required to go farming, even on a small scale, then finance at preferential rates must be one of those tools which is why so far in Ukraine’s redeveloping economy, farms are predominantly large and financed from private sources.
It doesn’t sound like anything will be decided soon but it’s definitely worth keeping a close eye on Ukraine's land reforms.
The moratorium (ban) on the sale of agricultural land was introduced in 2001 and has been extended every year since with the next review due in 2018.