The first-ever Ukrainian AgroDebates on “Should Agricultural Land Market Be Created and When Will Ukraine Be Ready for This Step?”, organized by the Ukrainian Agribusiness Club Association (UCAB), were held in Kyiv on September 20, 2011. During the debates, representatives of government institutions, professional and industry-specific associations, experts, and representatives of agricultural business agreed on one main point: the draft law on the land market needed to be seriously improved. Anna Sisetska of UCAB’s legal adviser Vasil Kisil & Partners took part in the debates.

The need to amend the draft law was also supported by the relevant committee of the Ukrainian parliament, the Verkhovna Rada (Supreme Council) of Ukraine. “On September 20, the agricultural committee resolved to return the draft law for a new first reading. This will provide an opportunity to improve the document within tight time frames subject to the comments of both our committee members and members of other parliamentary committees,” said Hryhoriy Kaletnyk, a Ukrainian MP and the head of the parliamentary committee for agricultural policy and land relations.

Agricultural holdings also volunteered to give their comments on amendments to be made to the draft law. They suggested a particular focus on the mechanism for consolidation of lands and exercise of lease rights and on the need to provide lessees with an opportunity to consolidate lands.

Anna Sisetska, in her turn, communicated the clear position of practicing lawyers arguing that the draft law should provide a more balanced regulation. Some issues, such as the land auction procedure, are covered in a rather great detail. Meanwhile, such issues as land privatization and land lease are not given sufficient attention. “Since the possibility of the sale of agricultural land plots has been causing a growing public concern, attention should be given to other land market development options, such as the lease option. The appropriateness of developing such options is also supported by the restriction introduced by the draft law as to the number of persons with the status of land market entities. Should the draft law be adopted in its current wording, all legal entities, other than those with the status of farms, will be deprived of the right to acquire title to agricultural land plots,” Anna Sisetska said.

Volodymyr Lapa, UCAB General Director, observed in his speech that it is particularly important to understand how land laws will integrate with the country’s general framework of economy and agrarian policy. “It is challenging to comprehend how the European management pattern for land measurement may be introduced in Ukraine, without the EU Common Agricultural Policy (CAP) being implemented, especially considering the scope of governmental support to agricultural producers,” Mr. Lapa said. “Indeed, these EU policy factors guarantee the competitive edge for farmers in the European Union,” he added.

In the opinion of UCAB, a great deal of restrictions suggested in the draft law are artificial and bear evidence of the country’s low institutional capacity. For instance, the country possesses information on the ownership structure of all companies but somehow declares that it is not able to analyze such structure for the presence of foreign capital when the land reform is implemented. As a consequence, agricultural companies which are major producers of grain and industrial crops in Ukraine (including those in 100% ownership of Ukrainian residents) will be deprived of the possibility to purchase lands. This factor will obviously restrict investment opportunities. Besides, the considerable limitations on the circle of land buyers, as suggested by the land laws, will underprice land plots and prejudice the interests of rural dwellers holding the lands.

Summing up the results of the meeting, Dr. Alex Lissitsa, UCAB President, said he expects that the profound discussion by professionals of the land reform baselines will help improve the legal framework to make it meet the interests of both rural communities and agricultural producers.

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