The government is preparing a “radiant future” for Ukrainian farming. The former believes that grain harvest in this country may reach 80 million tons in just a few years. Ivan TOMYCH, President of the League of Agricultural Service Cooperatives and Honorary President of the League of Farmers and Landowners, also thinks that this country’s agrarian potential is being fulfilled quite inadequately – just by a quarter – today. At the same time, he doubts that the ongoing “simulation of agrarian reform” was conceived in favor of agrarians and the entire country. Tomych forecasts that this will usher in an era of oligarchs in Ukraine because the emerging land market will be “a very wild one,” while the government is backing big-time agro industrialists who already control hundreds of thousands, if not millions, of hectares of arable land.
Tomych fears the adoption of the Law “On Land Market” will trigger land dispossession among the Ukrainian farmers, a considerable reduction in the number of medium-sized and small farms, the devastation and extinction of rural populated areas.
He quotes the Ukrainian president’s promise that the farmer and the peasant will not be stripped of land as a result of this law, but he does not believe it. Tomych is going to organize a public hearing into this problem on August 16 and to hold a debate that will involve all the interested parties – from ordinary farmers to bankers and large landowners. Tomych hopes that a sound decision will be made, which will allow subduing “the elements of a wild market” or at least postponing the coming into force of this law until January 1, 2013. “It is not a strategic way out but just a likely postponement which must be used to remove dangerous schemes from the current version of the law,” he says. Tomych is sure that the president of Ukraine will support him.
Tomych is assessing the land market law from all viewpoints. He thinks that the first thing we need is a nation-oriented approach. In his opinion, introducing a land market under the current project may do Ukraine a lot of harm. If the ruling majority fails, as it has done more than once, to take into account sound proposals and votes the bill into law, “the consequences will surely be irreparable.” The land market law “is not only about today as it is about the future of Ukraine,” the agrarian notes. “As a scientific analysis shows, the destruction of crop rotation and of medium-sized and small farms that have up to 10,000 hectares may cause tremendous harm as far as food production is concerned. This will affect food stability as soon as 2012-13.” In his view, even today 105 companies have more than 100,000 hectares of land at their disposal. This is a Latin American-style latifundio option, which you will not find in Europe or the US. Tomych specifies that these companies grow only three crop varieties in Ukraine: grain, sunflower, and rape. This produce is mainly oriented for world markets, and when it begins to account for 65 percent of the overall farming output in this country (it is almost 60 percent today), Ukraine will have to import bread – at a European price to boot. Besides, Tomych is worried that such sectors as animal livestock farming, horticulture, vegetable-, hop-, and flax-growing will be completely wiped out in Ukraine. “Single-crop farming is not beneficial for Ukraine at all. Just the contrary,” the experts asserts and says that this prospect awaits Ukraine after 2015.
In Tomych’s view, the very setup of the Ukrainian countryside will change. There are 15 million rural residents and 28,000 villages in this county today. But once the land market law is passed, the workforce demand in the countryside will drop to 200-250 thousand. Besides, even now large companies are bringing in foreigners to work in Ukraine’s farming sector. “This is putting the skids under our future,” the expert says and puts a question: “What does the countryside mean to Ukraine?” “It is the soul of our people, the might and foundation of Ukraine as a nation,” Tomych replies. “It is about the preservation of the Ukrainian nation, language, and the basis of its statehood. This will be a great tragedy of the 21st century. The law on land market is the destiny of Ukraine. It will determine the future of our country.”
Speaking of loans and investments – the “trump card” of those who advocate the speedy formation of a land market, – Tomych expressed a doubt that “somebody will be crediting a Ukraine that pursues an unpredictable policy in the field of agriculture.” “At first they closed a port, then they cut off a railway, then they introduced a customs duty, then they backtracked on traders’ VAT refund,” the veteran farmer leader says. “Whatever happens on the grain market today runs counter to our acute need of credits and investments. With this approach, no serious investors and financial institutions will come over. On the other hand, what repels them is low cost-effectiveness of our farming which results from the government’s pricing policy. For example, the average market price of bread-wheat is an estimated 1,280 hryvnias today, while its prime cost is 1,550. Who will give credits, given this mindless and unpredictable policy?”
Tomych draws the likely picture of a 1,000 hectare farm. If the farmer has to take a loan at a 20 percent annual interest rate, the business plan shows that, with due account of the current agrarian policy and low cost-effectiveness, he may lose this land in three to five years. “The loan price will eat up everything,” the agrarian says. Yet he believes that the establishment of a state-run land bank which will credit peasants at a low interest rate (7 to 8.5 percent) is a clear way out of this situation. But where can one take money for this? Tomych thinks that this bank could be given, as an asset, such a huge resource as about 3 million hectares of black earth that remains almost unattended in Ukraine. It is an area larger than Belgium, Holland, and Luxemburg. But he warns jokingly that “no matter what we may try to build, we always end up with the CPSU, i.e., the agro-industrial bank Ukraina.” In the view of Tomych, one should have begun to carry out agrarian reform with the establishment of a land bank which could support a Ukrainian peasant and enable him to adequately compete with agro holdings in the purchase of land. Meanwhile, in his opinion, the myth about cheap loans will remain a myth in Ukrainian realities, whereas it is a proven fact that there are a large number of loopholes for big-time foreign and Ukrainian agro holdings to cook up “quite legal” land grabbing schemes.
COMMENTARY
Vitalii LVOV, general manager, Ecovitera; professor; member, Ukrainian Ecological Academy of Sciences:
“God forbid that in the rivalry for land between farmers and agro holdings the latter end up victorious, even though the draft law on land market is oriented to this very end. One can see its downsides even with the naked eye. But I personally hope that both the government and MPs will finally heed the voice of ordinary peasants and farmers. The value of land must not be assessed with the greenbacks which can be devalued at any time. I think this law should be postponed by at least a year, until January 1, 2013, so that we can do a lot of work to assess land and implement the law on land cadastre which in turn needs to be complemented with endless by-laws. Of course, I am not so optimistic to be sure that this short period of time can make it possible to remove from the current governmental draft the opportunities for concoct schemes aimed at bypassing this law. I can cite the examples of Rumania and Bulgaria which have passed similar laws on selling farmland. As a result, those two countries ended up deprived of 80-90 percent of land. The latter was bought out by foreigners, and in the current conditions of steep price increase for agricultural produce this attaches a somewhat different meaning to the abovementioned geographical entities. And it is also high time we understood that the market of land, the market of Ukrainian black earth, is a geopolitical, rather than domestic, issue.”
