With state-owned collective farms now gone, Ukraine seeks to complete privatization of land (12/07/97)

With state-owned collective farms now gone, Ukraine seeks to complete privatization of land

by Roman Woronowycz
Kyiv Press Bureau

KYIV - More than five years after private land ownership was legalized by the Verkhovna Rada, Ukraine's state-owned collective farms have finally been disassembled. Fledgling agro-enterprises and private farms are emerging, but the process is far from complete.

"We can say today that the land reform that began with the giving of certificates to individuals and legal entities is practically complete," said Volodymyr Kulinych, deputy chairman of the Ukrainian State Committee on Land Resources on December 4 at a roundtable on land privatization sponsored by the World Bank.

Ukraine legalized the private ownership of land in 1992, but only in August 1995, when President Leonid Kuchma signed an edict on the procedure for delving out shares of state collective farms to individuals and organizations, did the transfer of state-owned land into private hands begin. That act and one from November 1994, which initiated the privatization of agricultural lands, began putting land in the hands of the farmers who had worked it for years for the Soviet state.

Since then, 8 million hectares of land have been privatized through the issuance of certificates to farmers in state collective farms. The average size of a plot of land redeemed for a certificate is 5 hectares. In the eastern and southern regions of Ukraine some of the plots doled out were as large as 20 hectares, while in the western portions of the country certificates were redeemed for as little as eight-tenths of a hectare.

Mr. Kulinych said he still views the process as one of transformation. "Today it is important that we develop the markets and infrastructures that will allow this effort to proceed to a true free market system," said Mr. Kulinych.

That process also has begun. Ukraine's State Property Fund has slated for privatization in mid-December a large number of agricultural storage silos. It is the beginning of a large-scale sell-off of the agro-industry by the government, which it hopes will be the seed for a natural development of the infrastructure the industry requires.

But problems remain, the most notable of which is resistance by the Left in the Verkhovna Rada, specifically by Verkhovna Rada Chairman Oleksander Moroz. He has resisted the land privatization effort and has said that he would never allow foreigners to own Ukrainian land. The Parliament under his leadership has not passed a single piece of legislation in favor of land reform.

This, according to Mr. Kulinych, has led to a situation in which new landowners are not sure of their rights and responsibilities. "I must admit that there still are serious problems with the ownership of land. Even at the village level this has resulted in disagreements and arguments," said Mr. Kulinych. He said also there have been instances where farmers have had difficulties receiving their parcels.

As in most every aspect of Ukrainian life, organized crime has made its presence felt here. Racketeers have moved into several regions and forced landowners to give up their claims at dirt cheap prices.

Even where farmers are not pressured to sell by organized rackets, land at times sells at bargain prices. Viktor Sinchenko, head of the district administration of Kaharlyk, in the Chernihiv region, said that pensioners have sold plots of land worth $6,000-$7,000 per hectare for $100 in his district. "Because of the serious economic situation in Ukraine those who have money are buying from those who need the money at very low prices," said Mr. Sinchenko. "Unfortunately, there are no formal mechanisms for the buying and selling of land."

Today landowners can do one of four things with their plots. They can sell them to others, work the land as individual farmers, rent the land or include it in a private collective agricultural enterprise. Oleksii Onyshchenko, agronomist at the Ukrainian Academy of Sciences, said that although Ukraine is encouraging farmers to form large collectives, which would allow for large-scale agricultural production, he sees no problem with a network of small farmers. "The factor of private ownership is the deciding sociological factor. It has more influence on the success of the agricultural industry than size," explained Mr. Onyschenko. "Larger would be better, but it is not the deciding factor."

Adrian Neal, project manager for a World Bank-supported agricultural education project in Ukraine called the British Know-How Fund, which has invested $10 million in land reform, best summed up the current state of confusion in Ukraine's agricultural sector. "People are frightened - they are not sure of their rights. Politicians are scared of losing control of the situation. Landowners are not sure of where to put their land shares; which choice will give them the best economic opportunity."

He also noted ominously that his organization "has not seen one kopek of investment by the government into land reform," and that "if we don't soon see a partnership we and other agencies will start to leave."

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