On January 23 the First Vice Prime Minister of Ukraine Stepan Kubiv signed the conclusion of the Ministry of Economic Development and Trade of Ukraine on the Law of Ukraine No. 22666-VIII, extending prohibition on the alienation of agricultural lands until January 1, 2020. In the conclusion, the Ministry of Economic Development and Trade of Ukraine proposes the President of Ukraine to put veto.

According to Article 41 of the Constitution of Ukraine, everyone shall have the right to own, use, or dispose of his property. The right for private property (including to the land plots) shall be immutable. In addition, the European Court of Human Rights recognized that the absolute prohibition on sale or any other way of alienation of agricultural land in Ukraine violates the provisions of the Convention on the Protection of Human Rights and Fundamental Freedoms.

At the same time, according to the World Bank, the introduction of the land market would create opportunities for the growth of Ukraine’s GDP each year by additional 0.6-1.6 percentage points and would attract about USD 1.5 billion of additional investment per year and give impetus to the development of agricultural and financial sector and rural regions.

On the other hand, the lack of the land market worsens the welfare of 6.9 million Ukrainian owners of land shares. Under the conditions of weakened competition due to the lack of the land market, the land owners receive a lease fee which is 5 times less: USD 50 per ha a year instead of USD 250 per ha similar to Bulgaria or Poland.

In addition, the lack of the land market prompts farmers to invest in growing predominantly annual crops – sunflower or rape significantly depleting land. In the period from 2004 to 2012, Ukraine lost about 43 thousand hectares of perennial crops. According to the World Bank’s estimates, by investing in annual crops instead of perennials, the farmer loses about USD 1 thousand of added value per ha each year.

Finally, according to the estimates of the economic strategy center, the local communities and the state budget lose about UAH 2.8 billion of tax revenues each year due to the lack of legal registration of transactions for actual sale of land.

In view of the above, the Ministry of Economic Development and Trade of Ukraine proposed to the President of Ukraine to put veto on the Law No. 2666-VIII.