Against the background of the recent legislative changes in the Ukrainian agriculture, special attention should be paid to innovative solutions and strategic planning in agribusiness.
In particular, the new Land Code of Ukraine and legislative changes aimed at improving the conditions of agricultural land circulation are important.
One of the key initiatives was the national economic strategy for the period until 2030, which is of crucial importance for the agro-industrial sector. As part of this strategy, a comprehensive approach to supporting the agricultural sector, stimulating innovation and developing modern technologies in agriculture is considered.
A significant step towards ensuring the sustainable development of the agricultural sector was the order of the Cabinet of Ministers of Ukraine on the approval of the Irrigation and Drainage Strategy for the period until 2030. This opens up new opportunities for improving irrigation systems and water resources management, which will contribute to increased yields and cost optimization.
The activity plan of the Ministry of Agrarian Policy and Food of Ukraine for 2024 is another key detail in the context of agrarian reforms. Its implementation involves the drafting of regulatory acts projects aimed at improving the regulatory environment for agrobusiness, considering the modern challenges and needs of the industry.
These initiatives are key steps in the direction of sustainable development of the agricultural sector of Ukraine, creation of favorable conditions for farmers and support of innovative technologies. Attracting financial resources and partnership with the private sector will be important factors for the successful implementation of these strategies and legislative changes in agrosphere.
Dynamics and prospects of land reform in Ukraine
The land reform in Ukraine, launched starting from July 2021, went through the first stage, where the opening of the land market was limited. However, with the beginning of 2024, the second stage of the reform came, which opened up new opportunities and defined new rules for market participants.
At the first stage, restrictions on the land market were determined by the size of citizens' ownership and the prohibition of land sales to legal entities. During this period, sales accounted for only 1% of the total land area, but 99.5% of these transactions stayed in agricultural production.
From January 1, 2024, the second stage of the land reform began, which provides for:
- legal entities received the right to purchase agricultural land
- only private land plots with a total area of no more than 10 thousand hectares can be purchased
- sale of communal and state land is still prohibited
- natural and legal entities cannot own more than 10,000 hectares
- foreigners have no right to either sell or buy land
- minimum price for the purchase of agricultural land must not be lower than the NMV (normative monetary value)
- tenants retain the preemptive right to purchase the land plot.
During the period of operation of the land market, starting in 2023, the weighted average price of agricultural land increased by 10.4%, reaching UAH 38.5 thousand/ha, which led to an increase in market capitalization by UAH 115.1 billion. These trends testify to the positive impact of the reform on market dynamics.
The second stage of land reform is expected to increase competition, increase the value of private agricultural land and provide additional income to landowners. The implementation of the reform will also open the possibility for Ukrainian agricultural producers to receive bank loans secured by land, which will strengthen the financial stability and innovative development of the agricultural sector.
Conclusions from BDO in Ukraine
The second stage of land reform in Ukraine, introduced from January 2024, brought about significant changes in the conditions of the circulation of agricultural land. According to the government's estimates, this stage of the reform will help increase the value of private agricultural land, increase the income of landowners, and increase revenues to local community budgets.
An important step is also to provide Ukrainian agricultural producers with the possibility of obtaining bank loans secured by land. This can contribute to the improvement of financial sustainability and the development of innovations in agriculture.
However, it is important to consider that part of the agrarian business expresses indignation about the sale of land to legal entities during the military conflict. This is especially true for owners of shares in the frontline areas, where the value of the land is significantly lower than the market value. It also indicates a decrease in the volume of lending by banks to clients during martial law.
In this regard, the effective implementation of the second stage of land reform requires a careful consideration of various aspects, considering the specifics of different regions and effective dialogue with all interested parties to ensure justice and sustainable development of the agricultural sector in the conditions of the current economic and social situation in the country.
If you have any additional questions or need advice on land reform in Ukraine or other matters, feel free to contact us. Our specialists are ready to provide you with the necessary information and assistance. We are always open for cooperation.
