AgroInvest Paper: Review of the Draft Law on Land Circulation

This paper summarized the results of a nearly year-long analysis of the draft land circulation law under consideration by the Ukrainian Parliament. The current review of an April 2013 translation of the draft Law of Ukraine on Agriculture Land Circulation began in September 2013. The author Traveled to Kiev in early November 2013 to gather data, and interview stakeholders, experts and policy makers.

The draft law on agriculture land circulation was under active consideration by the Ukrainian Parliament until the political events of November 2013 and the subsequent change in government led to the suspension of this and many other policy debates. Despite these political events, data collection, literature review and analysis of the experiences of other countries continued through June 2014.

Even though the debate on the agriculture land circulation policy is currently suspended, the assessment of the alternatives facing Ukrainians as Ukraine establishes sales and rental markets for agricultural land will be useful to policy makers. This report describes the basic principles governing efficient land markets, identifies and explains options for satisfying these principles, reviews the experiences (both positive and negative) of other countries with alternative land market policies, and lists the advantages and disadvantages of alternative policies in the Ukrainian context. For these reasons this report is relevant for Parliament as it writes or rewrites a land circulation law.

This report begins with a discussion of the role that an efficient agricultural land market could play in Ukraine’s future. When compared to other developed and developing countries, Ukrainian agriculture has an opportunity to contribute much more to the country’s economy especially through improvements in productivity. A key step in increasing the productivity of Ukraine’s agriculture is to establish an efficient market for agricultural land.

In the following two sections the paper describes the conditions necessary to assure an efficient land market and the potential role of policy in achieving these conditions. The most important conclusion is that policy must assure that there are many buyers and sellers with equal access to information and market institutions.

Finally the paper assesses specific provisions in the draft law on land circulation. Each provision is evaluated with respect to the principles developed earlier and with the experiences of other countries with similar law and regulations. The report identifies potential advantages and disadvantages for each policy alternative. It is hoped that these assessments will be useful to Ukrainian law-makers as the draft a new law on agricultural land circulation.

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