Wednesday, March 12, 2008

Wrecking Ukraine's farming potential

This from today's London "Times":

Bread basket that is left to grow weeds

They could feed the world or at least a good part of it. Millions of hectares of valuable farmland are lying fallow in Eastern Europe and the former Soviet Union but tariffs and protectionism are keeping these countries from bringing more food to the table.

Since the collapse of communism, some 23 million hectares of prime cropland, an area almost as large as the United Kingdom, is growing weeds. With the world wheat price up 118 per cent in a year, you might have expected a scramble to plough the black soil of Russia and Ukraine but there are problems. Both countries have erected export barriers to secure domestic food supplies and stem price inflation.

In London this week, the European Bank for Reconstruction and Development joined forces with the UN's Food and Agriculture Organisation and a host of agribusiness companies to call for less protection and more investment....

Politically inspired barriers to trade are a blight on the world. The market clamours for more cereals, yet Ukraine, once touted as Europe's bread basket, is missing an opportunity to exploit its advantage. Huge investments in farm machinery and infrastructure are needed to put the former Soviet republic into export mode but there is a catch.

You cannot buy farmland in Ukraine, a law passed in 2001 prohibits its transfer to anyone, foreigner or Ukrainian - a bizarre and misguided attempt to protect the nation's rural heritage is wrecking the country's farming potential....

LEvko thinks if Ukrainian politicians don't "get their finger out" now and start looking to the future, they never will..


Anonymous said...

As for the land market the Pres and NUNS are the only ones trying to revoke this law - BYUT and POR have continually combined to keep it in place. Why?

Anonymous said...

The above question is a key question to ask to enable changes.

It is critical to understand the rationales for the protections to be able to find ways to change your country's int'l commercial policy.


LEvko said...

Ownership of land is a 'sticky' subject in a country where land-owners were vilified for over 70 years, so politicians stick with what is politically expedient. As far as I am aware, more and more owners of small plots would like to cash in..
And hey, one thing Ukraine is not short of is I believe it is merely a matter of time before laws are changed.

elmer said...

I'm not sure I understand.

Oligarchs own land - millions of hectares of it, whether personally, or through corporations.

Or through fictitious "leases" with the government.

So only oligarchs are permitted to own land in Ukraine?

The rationale given previously was that the government wants to protect "stupid farmers" from selling their land to sharp speculators.

But people borrow money, and then let the mortgage go into default deliberately - to get around the ban on sale of agricultural land.

This is yet more bizarre, twisted logic.

Help me understand, please.