Ukraine’s national parliament, the Verkhovna Rada, has passed historic legislation that will legalize the sale of farmland for the first time in nearly two decades, unleashing the potential for billions in investment capital to enter the market.
The law, which was passed by parliament on March 31, 2020 after months of debate and amendments, lifts a moratorium on selling more than 32 million hectares of farmland currently owned by roughly 6–7 million small farmers. A handful of Atlas Network partners, including EasyBusiness and Ukrainian Economic Freedoms Foundation, have been working toward the abolition of the moratorium and the liberalization of the market for several years. In May 2018, following a successful legal challenge brought by EasyBusiness and the Ukrainian Helsinki Human Rights Union, the European Court of Human Rights ruled that the moratorium violated the human rights of the farmers who were unable to sell the land in order to benefit from the their property rights. Atlas Network recognized the efforts of Ukrainian Economic Freedoms Foundation with the 2017 Europe Liberty Award for their work advancing incremental reform that required public auction of escheat land; and EasyBusiness with the 2019 Europe Liberty Award for their successful legal challenge of the ban to the ECHR.
While much is still to be done to bring about a fully liberal land market in Ukraine, this incremental step in the right direction will allow for sales of farmland beginning in July 2021—which will allow the over 6 million Ukrainians who received small parcels of land from their government in 2001 to do so if they choose.
Atlas Network’s Ukrainian partners provided context for the reform and what it means for the future of their country:
Hlib Vyshlinksy, Executive Director of Centre for Economic Strategy:
Centre for Economic Strategy was one of the most active members of the Civic Coalition for Cancelling Farmland Sales Moratorium in Ukraine. Our think tank was a formal signatory of official letters sent by the coalition to the Ukrainian authorities. We did a lot to explain to Ukrainians that farmland now is the only resource in Ukraine that is underused and could give a push to the economic growth in the country.
Cancelling a farmland sales ban is a strong signal mostly from a human rights perspective. Prohibiting Ukrainians to sell their farmland was the only restriction of such sort existing in Ukraine. The European Court of Human Rights decided in 2018 that this ban violates human rights and requested the Ukrainian authorities to cancel it.
However, the format of initial land market for 2021-23 will not bring expected positive effects on the economy. Only Ukrainian physical persons could buy up to 100 hectares each, and sales to legal entities as well as sale of state-owned farmland will be still prohibited. This will bring only marginal effect on the agriculture. Only niche producers like wineries or fruit-growers will benefit from this while the grain sector dominated by the large-scale producers will not get the needed investments.
Dmytro Lyvch, Head of Analytics at EasyBusiness:
We have a truly historical moment in Ukraine—the Verkhovna Rada (Ukrainian Parliament) adopted the Law on Agricultural Land Turnover. The Law has lifted the moratorium on the sale of agricultural land; the farmland market will start functioning from the second half of 2021. Thus, the main goal of land reform in Ukraine has been achieved.
One of the most important things about this reform is that Ukrainian landowners finally receive the right to dispose of their private property, which is crucial in the fulfillment of economic freedom. It is critical for EasyBusiness—a free-market think tank that values an ownership right as one of the fundamental rights.
Apart from that, there are other encouraging updates from European Court of Human Rights (the main advocacy tool that has been used in our case). Last week, we received positive news—the ECHR published judgment on 20 February 2020 regarding the case of 55 Ukrainian landowners against Ukraine. ECHR stated that in the previous case (Zelenchuk & Tsytsyura against Ukraine) the Court already found a violation regarding property rights. In the new case, ECHR supported the previous statement and holds that there has been a violation of Article 1 of Protocol No 1 of the European Convention of Human Rights. The vast majority of landowners, mentioned in a recent judgment, have been directly or indirectly supported or informed by EasyBusiness in the process of filing their appeals.
Finally, I want to thank the entire Atlas Network team for the endless inspiration and critical support in the difficult process of the land reform. This is a big victory not only for our organization, but also for Ukraine as a whole.
Mykhailo Lavrovsky, Executive Director of Ukrainian Economic Freedoms Foundation:
It’s definitely a historical event not only for Ukraine but also for our organization. Lifting the moratorium was one of our main priorities for a while.
Our team started working on this issue far ago before I joined it, in 2013. Since then we have had time to work with three different Parliament assemblies. The UEFF team also worked directly on the main bill which allowed to open the land market.
Of course, this is the first step and the market will open gradually. The regulatory framework will be improved in the process but adopting the bill is already a huge step forward and I am proud that our team helped to implement it.
And even though we didn't get even half of what we wanted—the law includes a lot of regulations, for example we still can’t sell land to foreigners—this step is important, and I could say that it is a huge win for Ukraine. And even though the bill was temporarily blocked, I'm sure the process is irreversible. And we will continue to work to make our country freer and Ukrainians richer.
From Daniil Lubkin, CEO of Ukrainian Students for Freedom:
First of all, it is important to mention that huge reforms like this one are not only about the economy or investments, but about rights and human dignity. Our revolution of 2014 was rightfully named as the Revolution of Dignity and this law is a restoration of rights that were taken from Ukrainian landowners for more than 100 years. Communistic oppression was not only about destroying opposition or repressing capitalists but destroying the whole idea of private property. Ukraine was a big and rich farming country with powerful people, who had fought against new the communistic regime. And only by brutal force and genocide were Ukrainians were enslaved, our land was taken into Kolgosps, our property was nationalized and our dignity was vanished.
Among several activities, during our big conference Student Model of Congress (basically youth parliament of Ukraine), we passed a law which launched land reform, which was important because we showed the position of young people: Ukrainian youth is for the market.
We will liberalize Ukraine even more. We will open our markets, will free our people from populists and governmental oppression. But as Tom Palmer once told me: ‘Keep freedom and you will not lose your way, young man.’