Private Sector on the Frontlines of Land Reform to Unlock Ukraine’s Investment Potential

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Thursday, January 20, 2022
“Whether asparagus, blueberries, or fruit orchards, they all need long lasting investments. Opening the land market makes these investments feasible.”
Photo Credit: USAID

According to the International Trade Administration, Ukraine is one of the most fertile places on the planet, with 25-30 percent of the world’s black soil reserves. With over 41 million hectares of agricultural land, covering 70 percent of the country, agriculture is Ukraine’s largest export industry. Unfortunately, the absence of a functioning, private land market; limited investment in the agricultural sector; and corruption in land management, have impeded agricultural growth, prevented landowners and communities from effectively managing their resources, and deepened rural poverty. 

“If you do not own the land, the risk of cultivating a field for crops or an orchard is immense,” explains Larysa Boden, co-owner of Agro Focus LLC, the biggest asparagus farm in Ukraine and a strong supporter of land reform. “It is a big risk for us, and prevents us from investing in smaller producers within our marketing group.” Farmers are also eager to develop and compete in international markets. Luckily, USAID’s Agriculture Growing Rural Opportunities Activity (AGRO) implemented by Chemonics International is a flexible mechanism to address these challenges. It embraces a market system approach and cooperates with the local private sector to help the country implement efficient land reform and improve the agricultural market system.

USAID AGRO teamed up with several private-sector professional associations, including the All-Ukrainian Association of Communities and the All-Ukrainian Agrarian Council, to draft and advocate for a comprehensive package of laws that foster land reform and fight corruption in land management. Finally, after 19 years of restrictions, the moratorium on land sales was lifted on July 1, 2021.

USAID and its partners then launched a nation-wide information campaign to educate farmers and communities on how to take advantage of newly established land rights and the changes brought by land reform, including how to efficiently manage their lands and how to attract investment.

Simultaneously, the activity and its private sector partners launched a Public Anti-Raider Platform, which allows small- and medium-sized enterprises and communities to protect agricultural producers’ businesses, property, and property rights from illegal takeovers. The platform will assist in developing and implementing anti-raiding policy as the land market evolves.

Land reform in Ukraine goes hand-in-hand with decentralization that entitles communities to the ownership of previously state-owned land. USAID has partnered with the Association of Communities and UkrGeo to develop a Land Use Planning and Management Portal that integrates community-updated GIS maps with land use plans, information on administrative boundaries, spatial data, relevant resources, and more. By establishing the land and resources available in a community, as well as relevant economic data, both residents and outside investors are able to identify possible investment opportunities and lower the risk of investment 

To engage domestic investors, AGRO co-invested with Vkursi Agro LLC to develop an online tool that helps farmers and banks capitalize on new opportunities and overcome challenges, such as farmers’ low financial literacy, unclear banking and complicated collateral verification processes, and the lack of information on land plots. The online platform simplifies, accelerates, and improves access to funding for Ukrainian farmers. It demystifies loan processes and shortens the amount of time required for land valuation. In minutes – rather than days – the platform enables managers from partner banks to evaluate the land. More than 3,000 farmers have used the platform as of June 1, 2021. Those interested in buying land have placed 120 pre-orders for when the moratorium lifts on the sale of agricultural land. 

There are 6.9 million owners of land plots in Ukraine and 48 percent are farmers like Larysa Boden who intend to purchase the land that they farm as quickly as they can. The World Bank estimates that opening the land market, together with better targeting of subsidies and other measures to improve land productivity and transparency in the sector, could lead to incremental GDP growth of over two percent per annum over the next few years.

 

Last updated: January 20, 2022

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