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Land market: pro or contra?


MyLand - 08/07/2011:


On July 7, 2011, in Kyiv, the capital of Ukraine, a roundtable took place. The discussion was focused on the question: whether Ukraine has to open farmland market. Agrarians, officials, experts and media took place in the debates. Please avail ourselves of the conspect of our speech:

Land Market: pro or contra?
The question whether Ukraine has to open its farmland market has only one question: yes, it does. There is no other choice.
Will it be useful? – Yes, in long-term perspective it will have positive influence upon economy. The country and the people will become richer, to a certain extent.
But from the social point of view it is going to look unattractive. But - фпфшт -  there is no other choice.
Why is it going to look socially unattractive? – Because engagement into market circulation of land owned by the poorest will lead to redistribution of land in favour of the richest. Land, eternal thing, fixed asset, will be exchanged for money – perishable thing due to inflation, theft, economic crisis, spending etc.
Possessing of real property is beneficial only in the long run. Long-term investments is an option open for the rich only. The poor cannot afford long-term possession of property, they cannot afford accumulation of income generated by the property over generations. That is why peasant will be selling land – to pay for medical treatment, for education of children, to move to urban areas, to burry their dead etc.
Land ownership would be attractive and enjoyable for Ukrainian peasants if they had permanent job with decent wages, or decent pensions, or savings. But there is no job, pension is nothing, savings have been stolen.
They say: but rural households secure nearly a half of the total agrarian output of Ukraine! Ain't it job, ain't it money? – Yep, this is the truth, but only by 25%. Rural household are the primary consumers of their own produce. It is subsistance farming.
So, who will benefit from the opening of farmland market? – it is doubtful that peasants will.
The main and the gravest danger is fairy-telling of the authorities. They are telling stories about happy rural life upon lifting of moratorium.
Why Ukraine is plagued with devastation of social infrastructure in rural as well as in urban areas? Why water pipes are broken, why storm water drainage does not work, why roads are worn down, why there are no hospitals, schools, clubs, cinemas, libraries and energy supply? Why Ukrainians are getting extinct?
Why, is it really because of the absence of land market? – No. Developed social infrastructure of rural areas is a very expensive thing, Ukraine cannot afford it. Ukraine is a very poor country, in terms of two indicators: firstly, GDP per capita, and secondly, imbalanced distribution of GDP (lion share of it is owned by several families).
With such a low GDP per capita and so unfair distribution of GDP there will be no social development. So, the government has to tell people the truth: improvement of rural life is possible in longer term perspective and it takes much deeper reforms than just lifting of moratorium.
As regards the draft law on land market

It seems that this law has been copied from the legal system of some other country, which has strong and long-standing traditions of farmership, where farmers are the main agricultural producers. Well, in Ukraine it is not so, completely different situation exists. The draft disregards the relations of land ownership and production relations which developed in the agrarian sector of Ukraine. To say the least, it does not meat expectations of investors who worked for decades in Ukraine’s agriculture, as well as expectation of those waiting for opportunity to invest in Ukraine.
In few word, this is a draft for some other country.
In fact, the draft is securing further alienation of producers from means of production. It is not justified from economical point of view, but it looks very attractive from the social point of view. It looks like drafters followed the slippery way of pre-election populism.
At the same time, in view of impoverishment of peasants and devastation of rural areas we may expect that land will be conveyed to more wealthy citizens. And that may well turn economicall unjustified and socially unattractive.
As regards the role of the state.
It looks like the draft law on land market in this part shall be named "on support and development of corruption in land relations".
The draft provides for such an extensive role of the state on the land market that we may conclude that it creates prerequisites for manually-driven and controlled alienation of public lands in favour of few chosen (or elected?).
Besides, the state is going to play a very active role on the market of private land, due to its super pre-emption right. Without clear criteria for realization of pre-emption right of the state it turns into a tool of corruption.
Let us foresee the corruption based on pre-emption right.
If there is no demand for land, a land owner will bribe officials for realization of pre-emption right.
If there is high demand, land owners or potential buyers will bribe officials for waiving of pre-emption right.
If local authorities have identified themselves with local farmers, the state will be keeping "neutral" position. Ain't it an abuse?
On request of interested persons the state will be able to accumulate tracts of land for transfer to long-term leasehold. Does it constitute an abuse or not?
Does anybody see here any farmland market?
While we still have some time, it is necessary to elaborate the draft to prevent it from crossing out the firm answer "yes" to the question whether Ukraine has to open its farmland market.


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