special report for INTERNATIONAL CONFERENCE ON LAND REFORM POLICIES IN TRANSITION ECONOMIES October 28-29, 2005 Ulaanbaatar, Mongolia Presented by Maxym Fedorchenko, LL.M UKRAINE’S EXPERIENCE IN THE FIELD OF LAND REFORM Center for Land Reform Policy in Ukraine

LAND RESOURCES OF UKRAINE Ukraine’s total land stock - 60 mln. ha Agricultural lands - 43 mln. ha (71,6%) Productive agricultural lands 41,764 mln. ha (69,6%) Ploughed lands 32,4 mln. ha (54%) Favorable climate conditions. Cross-road of transit routes. Border with the EU. Normative value of productive agricultural lands USD 1729 / 1 ha

Land reform: options for transition economies THE GOAL: NEW STRUCTURE OF LAND OWNERSHIP WAYS:  To distribute land among ALL CITIZENS;  To distribute land among THOSE WHO PROCESS LAND;  To create prerequisites for transfer of land to EFFECTIVE OWNERS/USERS.

Land reform in Ukraine: essence and milestones Land reform is a process of transition from exclusive state ownership over land resources to a complex land ownership structure with simultaneous redistribution of land resources between new owners and users. Principle of redistribution: land is transferred to those who process land. January 1, 1991 – new Land Code of Ukraine March 15, 1991 – formal start of land reform in Ukraine August 24, 1991 – declaration of independence of Ukraine – transition from kolkhoz system to the system of collective agricultural enterprises with collective ownership over land 1994 – declaration of certificate privatization and virtual sharing of agricultural lands (without allocation of land in kind) 1994 – 2001 – free trade with land certificates 2000 – start of land sharing and mass certificate privatization 2000-till present – exchange of land certificates for land titles February 16, 2001 – January 01, 2007 – moratorium on trade with land certificates January 1, 2002 – new Land Code of Ukraine

Land reform: stage 1 Conversion of kolkhoz into collective agricultural enterprises (CAE), cooperatives and farms. State agricultural lands were transferred into collective ownership of CAE. Former members of kolkhoz became members of CAE and collective owners of agricultural lands.

Land reform: stage 2 Virtual privatization (sharing) of collective agricultural lands. Members of CAE received certificates confirming their ownership over certain share of land without allocation of land parcels in kind. Free trading with land certificates. Chaotic land market.

Land reform: stage 3 Land titling – issuance of land titles with allocation of land parcels (shares) in kind. Moratorium over trade with land shares. Development of the concept and legal framework for the functioning of land market.

Land reform: results-1

Land reform: results-2 New strata of the society – private land owners. 11,5 million persons privatized land parcels for housing, gardening, garage construction and other similar purpose. 6,9 million persons acquired property rights over 27,7 million ha of agricultural lands.

Land reform: results-2.1 Comparative table: European countries ranked by GDP’04 (output approach) with reference to area and population Country Area, thsnd sq.km To Ukraine’ area Popula- tion, mln. To Ukraine’ population GDP, USD mlrd. Ratio of GDP to that of Ukraine Germany France UK Italy Spain Poland Sweden Ukraine

Land reform: problems 1 PARCELIZATION of agricultural lands. Average size of a land share is 4 hа. It varies from 1,1 ha to 9 ha. According to estimation of Ukrainian experts, the optimal size of a farm is 300 ha. MONOPSONIC leasehold market. INCOMPLETE titling: 6,9 million owners of land certificates received 5,55 million land titles during ,5 million citizens who privatized land parcels for non-agricultural use received 3,68 million land titles during

Land reform: problems 2 Most owners of land titles are not able to process their land parcels (because of age, illness, lack of knowledge or funds). They are not allowed to sell the land. Most land shares are in lease (20 million ha). Ground rent is very low (USD 24 for 1 ha per annum at the average). Significant social and economical deterioration of rural areas. People are moving to cities.

Land reform: problems 3 No single concept of a land market. Moratorium on sale of agricultural lands is effective from January 18, 2001 till January 1, No land market. No market price for land. No possibility to find effective owners for agricultural lands. No corollary for funding.

Land reform: problems 4 No full-fledged land cadastre. Underdeveloped system of registration of rights over land and limitations thereof. Conflicts between laws regulating land relations (first of all between Land Code and Civil Code).

Land reform: perspectives 1)Completion of land titling (planned for January 1, 2005 – unrealistic); 2)Opening of land market (strong opposition in the Parliament – Communists, Socialists); 3)Mass sale of land shares (first round); 4)Formation of market for agricultural lands; 5)Second round of sale of agricultural lands (search for effective land owners).

Land reform in settlements 1)Delimitation of boundaries of settlements; 2)Demarcation and separation of state and municipal lands; 3)Cadastral inventory of land; 4)Privatization of land; 5)Transition from permanent use to leasehold and privatization.

Land reform in settlements See the publication of Center for Land Reform Policy in Ukraine (available in English). This publication was made possible through financial support provided by Poland-America- Ukraine Initiative for Cooperation (PAUCI) financed the U.S. Agency for International Development (USAID). g

Contact information Center for Land Reform Policy in Ukraine Contact persons: Olexij Yanov, Max Fedorchenko Address: Office 12, Narodnogo Opolchennya str. 3, Kyiv, 03151, Ukraine Phone/fax: +38 (044) URL: