The land market: the land buying foreigners and oligarchs

Рынок земли: Пашню скупят иностранцы и олигархи

The draft law on land market provides for a preferential right of the tenant to purchase land. Experts note that much of the land leased to large agricultural holdings, and the purchase is scheduled for October 2020, when the country will be busy with the local elections.

“The founders of Ukrainian companies may be foreigners”

The Ministry of economic development, trade and agriculture of Ukraine published a draft law that will open the market of agricultural land.

It should be noted that to lift the ban on selling agricultural land recommended lenders, and the Western partners of Ukraine. In particular, it is provided in the Memorandum on cooperation between Ukraine and the International monetary Fund under a new loan program stand-by.

According to the text of the government bill, the prohibition on alienation of agricultural land of all forms of ownership is to be abolished from 1 October 2020. The earth will be able to purchase citizens of Ukraine, territorial communities, the state, legal entities of Ukraine.

However, the expert on land issues Roman Golovin said in the media that in prospect the purchase of Ukrainian land by foreign capital: “the President wants to gently lead up to the subject… the Earth: who can own? Ukrainians and Ukrainian companies. But the founders of Ukrainian companies can be foreigners.”

Indeed, despite the condition that the land will be able to speak only Ukrainian legal entities, the bill has a provision that looks like a fuse from the Russian capital. It refers to “foreign state”, which may be subject to sanctions.

Thus, the bill complements the new sanction “prohibition of acquisition of property of land” law of Ukraine “On sanctions”. The ban will be introduced by the President upon the proposal of the Council of national security and defense of Ukraine and approved by resolution of the Verkhovna Rada.

“The sanctions can be subject of a foreign state, an indefinite circle of persons of certain activities (sectoral sanctions) and private legal and physical persons”, – stated in the explanatory Memorandum.

Previously, the government explained that, if it is found that the land in Ukraine was acquired by the company with Russian owners, the arable land will be expropriated by the state. And right to other foreign nationals and companies to buy land in Ukraine through the Ukrainian legal entities want to provide for economic growth.

Say, in the case of a total ban for foreigners to buy land, Ukraine can not get competition in the land market and investments. “This should stimulate economic growth. Introducing constraints, we will constrain economic growth, competitiveness and create conditions for corruption”, -explained the Deputy Minister of economic development and trade is responsible for the agricultural area, Taras Vysotsky.

Political analyst Dmitry Korneychuk sneered: “Well, Yes. Land for pennies bought up by transnational corporations that register in Ukraine its subsidiaries”.

“While the country is busy with the local elections”

In Ukraine already has a foreign company. For example – “Agropromservis” (leases 396 thousand ha) is the third largest agricultural holding of Ukraine. He belongs to the American investment Fund NCH. The owners of the Fund American businessmen George Rohr and Moris Tabashnik. “Mriya Agroholding” (165 hectares) Owners – the public investment Fund of Saudi Arabia, members of the Royal family.

At agrogeneration (80 thousand ha)- Franco-American business, Agromino (44 thousand hectares)- Finnish Agro Region (38 thousand ha)- Swedish. By the way, according to media reports, the General Director of “agro-Region” is Kateryna rybachenko – spouse Aivaras Abromavicius, General Director of “Ukroboronprom”.

In addition, in Ukraine there are “Dutch agrarian company” (22 thousand ha), Danish Goodvalley (19.4 thousand ha). and others.

Dmitry Korneychuk consider accidental opening of the land market on October 1, 2020 According to the analyst, due to the fact that in October 2020 in Ukraine to be held the next local elections. Besides it is not excluded that, according to the “formula Steinmeier”, the elections will take place in the uncontrolled territories of the Donbas that attract the attention of companies.

“It is logical. While the country is busy with the local elections, including the Donbass, Secomandi “cut” the ground,” said Korneychuk in the media.

“Brownian motion”

In the explanatory note to the government bill notes that the majority of Ukrainian land is officially owned by the land owners. Today the owners officially own 30.7 million hectares of agricultural land (74% of the area of these lands in Ukraine), including 27.1 million hectares of arable land (83,5% of the arable land in Ukraine).

Earlier, the Director of Fund “Democratic initiatives” Irina Bekeshkina said that, if you will lift the moratorium on the sale of land, immediately sell their land shares only 7% of owners. This is evidenced by a survey conducted by Fund “Democratic initiatives” together with the Razumkov Centre.

According to the survey, 4% of respondents plan to buy more land, 11% will leave the land with the same tenant, another 2% will be replaced by the tenant. With 48% of the land owners will do nothing after the lifting of the moratorium, neither sell nor buy.

Bekeshkina believes that these data refute the widespread opinion that all the land will be sold after the lifting of the moratorium.

However, most of the land had been under long-term lease. Roman Golovin explains: “Today, hundreds of thousands of acres of land or under perpetual lease or 49-year lease. There are also diagrams of inheritance… the Tenants are actually the third half of the land already bought, using the fact that a person has a problem. This land bought with blood and disease and on the fact that people have jobs, salaries.”

Informed economic expert Sergey Fursa noted that in Ukraine, “agricultural producers could twist the hands of the peasants.” He stressed that according to sociology, sell stock only want 5-10% of the owners. So basically people will start to get just a large income from the lease of land. Say, that’s why you should not believe the populists, who argue that land buying by foreigners and oligarchs.

However, the draft on land market provides for a preferential right of the tenant to purchase land.

It should be noted that the TOP 35 largest landowners in the world 2017 Ukrainskie includes such companies as: UkrLandFarming Andrew Verevskiy (570 ha), “kernel” Oleg Bakhmatyuk (560 ha) and “MHP” Yuri Kosyuk (370 hectares). According to the TOP 100 latifundists of Ukraine there are more than 100 agricultural companies, which handle not less than 15 thousand hectares of land. Among them, more than a dozen own more than 100 hectares each.

Experts predicted that the lifting of the moratorium will cause “Brownian motion of the earth (or rather, the corporate rights to the rental unit hectares) to those who have the money, opportunity and often its considerable Zembank”.