Moratorium on selling farmland in Ukraine results in the lowest yields in Europe

Yields in Ukraine remain one of the lowest in Europe due to the ban on the sale of agricultural land, writes Bloomberg.

''Ukraine tallied USD  13 billion in agricultural exports in the January to September period, equal to about 40 percent of total exports. The country is among the world’s top producers of sunflower oil, barley, wheat, and corn. Still, there’s  huge untapped potential: While Ukraine boasts one of the world’s richest concentrations of fertile black soil, its crop yields are among the lowest in Europe,'' the article informs.

Though agriculture is the largest single contributor to goods sold abroad, a World Bank report published on October 3 said that farm productivity and yields in Ukraine are a fraction of what they are in other European countries, blaming the land law. Wheat yields are less than half of those in Germany, it noted.

Nevertheless, calls to rescind the moratorium are getting louder as Ukraine’s economy continues to lag such other former communist countries as neighboring Romania and Poland.

The government has been under pressure from the International Monetary Fund and companies such as Mriya Agroholding to lift the ban.

''This is a huge challenge for all of us,'' says Simon Cherniavsky, Mriya’s Chief Eexecutive Officer. ''We are all farming on short-term leases, which is not in line with the long-term returns that everyone expects to get in agriculture.''

Myronovskiy Hleboproduct SA, poultry producer that also grows wheat, sunflowers, and other crops, says the cost of having to manage hundreds of individual leases is a drag on investment, particularly at a time when wheat prices are depressed.

''Given the present level of grain prices, the cost of leasing land, and the headache associated with extending lease agreements, it’s very expensive to expand the areas we farm,'' says Yuriy Kosyuk, its CEO. As long as the ban remains in place and the wheat market stays depressed, the company is unlikely to expand its farming operations, he says.

Agrotrade Group in Karkhiv lost 120 hectares of arable land in 2017 because of the vagaries of the leasing system, says CEO Vsevolod Kozhemyako. Hired thugs have been known to strong-arm small land owners into switching partners on leasing contracts, giving rival companies and local political officials tied to them an unfair advantage, he says.

''But people are not getting the money they are entitled to if they could sell the land.''

Reference: on January 2, 2018 the President of Ukraine Petro Poroshenko signed the law on the extension of the moratorium on selling farmland in Ukraine.