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World Bank: Value of Ukraine’s land to triple if farmland sales permitted

The value of Ukraine’s land will triple, to $3,500 per hectare, if Ukraine cancels restrictions on land ownership, the World Bank believes.

Satu Kahkonen, World Bank country director for Belarus, Moldova and Ukraine, told news agency Bloomberg in a story published on May 7 that the country’s budget is losing billions of dollars because of the moratorium on sales of farming land, which prevents Ukrainians from selling their land to investors and forces them to rent it out instead.

However, Ukraine’s authorities do not want to cancel the moratorium for political reasons, such as the upcoming presidential elections in 2019, she said.

The Verkhovna Rada on Dec. 7 delayed land reform by another year, extending the moratorium at least until Jan. 1, 2019. This was despite the fact that agricultural land market reform is one of the areas in which Ukraine’s financial backers, the International Monetary Fund and the World Bank, have hoped to see progress since last year.

Pavlo Koval, the general director of the Ukrainian Agrarian Confederation, a nonprofit that promotes the interests of Ukrainian farming businesses, including major agricultural companies, agreed with Kahkonen’s prediction that prices will rise if the moratorium is lifted, but told the Kyiv Post that prices of between $2,000 and $2,500 per hectare are more realistic.

Ukraine’s former Agriculture Minister Oleksiy Pavlenko (2014-2016) who now currently heads the Program for Agricultural Industry Development, a non-profit, says that land prices depend on many factors. Currently, the price of renting a hectare of farmland varies between $400 to $1,300 in Ukraine depending on the quality of land in the region and the length of the contract, which could range from three to 49 years, he said.

“After the cancellation of the moratorium, the prices will rise, and, most likely, will be similar to prices in other Eastern Europe countries that have already undergone such reform,” Pavlenko told the Kyiv Post. For example, land in Romania sells for 4,500-5,000 euros per hectare.

“Once the land market is launched, the price will continue to grow over the following six months,” Pavlenko said.

The price will generally depend on each regions’ conditions and specialization. For example, Ukraine’s southern regions specialize in vegetable crops and horticulture. A hectare of land will also cost more if it is irrigated.

“(A hectare of) irrigated land with sandy soil in Kherson Region will be worth one-and-a-half times more than a hectare without irrigation,” Pavlenko said.

The price will also depend on who – individuals, legal entities and/or foreigners – will be allowed to purchase land in Ukraine, Koval said.