Ukraine Open Farmland Market: Benefits, Models, and Policy Recommendations
Analytical paper was developed by EasyBusiness as part of the project “Advocacy for Land Reform and the Creation of a Free Land Market in Ukraine by Changing Public Opinion and Increasing Political Will” funded by the Ministry of Foreign Affairs of the Netherlands.
Download 'Analytical paper Part 1: Open Farmland Market: Benefits, Models, and Policy Recommendations'
Opening of the Ukrainian agricultural land market will lead to economic growth, and the state will benefit the most from the liberal market model. This was discussed by policymakers, key market players and civil society experts at the Forum “LIFE AFTER: Key Aspects of Launching the Land Market in Ukraine” on October 30.
Politicians, experts and businesspeople have predicted the price of land after the land market opens.
$ 1,800 to $ 1,900 per 1 ha – this is the version offered by the Advisor to the Prime Minister of Ukraine for Economic Affairs Oleksii Mushak.
$ 4,900 per 1 ha is a fair price now, but we are not sure that it will stay at this level after the market launches, said EasyBusiness project manager Dmytro Lyvch.
$ 3,000 to $ 3,500 per 1 ha is predicted by Alex Lissitsa, President of the Ukrainian Agribusiness Club Association.
“When the land market opens, the price per hectare will amount to an average of $ 1,800 to $ 1,900 and tax revenues to the budget will reach 5 billion UAH annually. And this is excluding land sales taxes, which will amount to another 5 – 6 billion UAH annually,” said the Advisor to the Prime Minister of Ukraine for Economic Affairs, Oleksii Mushak. At the same time, hryvnia exchange rate will stabilize and currency risks will decrease. According to Mushak, now land is not generating any income, and therefore cannot be a national wealth, as enshrined in the Constitution.
“Medium” farmers are interested in the land market opening solely to individuals, because they cultivate 10-30 thousand hectares and benefit from market restrictions. A completely free market will benefit ordinary citizens who will receive the maximum price for their land. However, at the level of Amalgamated Territorial Communities (ATCs), restrictions should be put in place to prevent monopolies and to strengthen the Antitrust Committee and the transparency of ownership structure.
The Advisor to the Prime Minister outlined 3 key components for the future land market:
- No corruption schemes.
- Respect for property rights.
- Maximum openness to fair competition and land prices.
The fair land price in Ukraine (risk/return ratio) is $ 4,900 per 1 ha, says EasyBusiness project manager Dmytro Lyvch. However, this does not guarantee the same price when the market is launched because everything depends on the restrictions imposed by the Government.
Please read full report of the forum here.
Please watch short video "Land" created by Easy Business referring to Dutch experience here.
The forum was organized by EasyBusiness as part of the project “Advocacy for Land Reform and the Creation of a Free Land Market in Ukraine by Changing Public Opinion and Increasing Political Will” funded by the Ministry of Foreign Affairs of the Netherlands. Support for the organization and implementation was provided by the RPR Coalition within the institution building program of the Centre for Democracy and Rule of Law, with the financial support of Sweden.