Ukraine To Lease Out The Black Earth

KIEV, Ukraine -- Ukraine, already one of the world’s top producers and exporters of grain, is floating a bold plan to boost domestic harvests by offering to lease out millions of hectares of unused, government-owned farm land.

Ukraine's black earth

Billed by authorities in Kiev as Ukraine’s response to rising concerns over global food security, the project could lure in billions of dollars in investments, helping Ukraine achieve its much-hyped goal of harvesting more from its famously-rich black earth by doubling yields and annual crop volumes.

Mykola Prysyazhnyuk, Ukraine’s agriculture minister, said that, this year and next, investors would be offered 50-year leases, tax free status and unlimited export rights for crops farmed on 2m to 4m hectares of arable land not currently being used.

If the pilot project proves successful, the country could offer more land in future.

“Our nation today has about 10m hectares of land” which is not being farmed at all, or not being used effectively, Prysyazhnyuk said.

“I am confident this project will be realised within two-three years.”

About 15m hectares of land is currently being farmed in Ukraine.

Details are still being worked out but a government presentation says investors would be invited to toil fresh farm land through production-sharing agreements or public-private partnership.

Prysyazhnyuk said the arrangements would give Ukraine the option to lay aside a share of crops harvested by investors for emergency reserves, or a share of profits generated from exports.

“Investors will be given government guarantees that exports will be unrestricted. The state will ensure that its land is farmed with the highest of technologies. It will get investment and a share of the profit either as goods, to protect domestic food security when needed, or as cash,” Prysyazhnyuk said.

Ukraine expects to have more than enough crops to share with the world in the future, according to Prysyazhnyuk.

The nation would likely export more than 20m tonnes from this year’s harvest, which he predicted would tally in at 47m tonnes.

Harvests could double in future if modern farming technologies are introduced and increased acreage is farmed.

Legislation to allow farm land tenders is being drafted by Volodymyr Ignashchenko, an advisor to Ukraine’s government.

He prepared legislation for a series of on- and offshore hydrocarbon exploration tenders held this year, that were won by the likes of Chevron, ExxonMobil and Royal Dutch Shell.

Having succeeded in bringing in big investors to its under-invested energy sector, Ignashchenko said the country’s leadership was dedicated to replicating this success in agriculture.

He said farming companies and financial investors were expected to take part in the new tenders in partnership with each other.

“The most interested big investment funds, including state ones, could be from China, Arab countries and the like. There is also interest from American and European investors,” Ignashchenko said, following a visit to Washington, DC, where the plan was presented to investors and US government officials.

He said the project had earlier been presented to major agribusinesses operating in Ukraine, including Cargill and Bunge.

But agriculture insiders in Ukraine have expressed concerns about the project.

One fear is that domestic oligarchs could, by partnering up with “investors”, use it as a means of snapping up the nation’s remaining farm land.

That could strengthen their grip over Ukraine, already viewed by many as an oligarch-captured economy.

There are also concerns that tax and other privileges will give new investors an unequal advantage over other farming businesses already toiling the land.

Prysyazhnyuk was short on detail about how such concerns would be addressed.

But he said efforts were under way to establish a “balance” that would put all market players on an equal footing.

Source: Earth's Currency


Anonymous said…
This is the tragic story of Russia and Ukraine. The wealthy sold the lands and not one penny went to the people. Sadly, capitalism is not much different than communism.
Seeker said…
Why does the Gov't even own any of this farm land? Why wasn't it privatized years ago?

We are to expect the State to ensure the latest technologies will be used? You mean companies that operate for a profit don't already do this, e.g., ADM in the U.S. which I am sure is one of the investors that was spoken to in the U.S.

Why does the State still want to maintain a "partnership" with investors? What guarantee do we have that the Gov't won't in the end nationalize it all and take it back? What guarantee that nepotism and cronyism will not run rampant in an already corrupt Ukraine that has already driven foreign investors out? How do we know that one of the oligarch's won't use the Gov't to take your business away? How do we know the law will be fairly implemented in a country were the President can in fact remove judges at a whim?

I could go on but any foreigner who invests here does so at their won risk and is frankly a fool. That is what the honest banks and real estate managers here will tell you.

Until the Ukraine leaves a managed economy (Soviet Communism) behind and becomes something resembling a Democracy (capitalism without gov't interference) then YOU should stay out. After all did not the current President imprison his main rival JUST BEFORE the elections? Are you next because you are in the way of one of his Donetsk buddies or Oligarch friends?
Anonymous said…
Countries such as Poland and the Czech Republic initiated “peace and reconciliation” tribunals in the 1990s in an effort to make peace with their past and shed the vestiges of their communist histories.

In contrast, suspects in Ukraine have even received awards and decorations for their past “achievements and contributions” to statehood while others continue to hold power in the upper echelons of government.

And Ukraine’s wealthiest individuals, including Kuchma’s son-in-law, Victor Pinchuk, have held on to multi-billion-dollar assets grabbed at rock-bottom prices during the years of crony capitalist privatization.

“There is no political will to solve these cases now because many in power fear the disclosure of ‘kompromat’ [compromising information] and the potential political blacklist this can produce,” said Taras Berezovets, who runs the Politech political consulting company, which has advised Prime Minister Yulia Tymoshenko’s bloc.

The nation’s awful hangover from the Kuchma era, which became synonymous with murder, graft and corruption, lingers today. The ex-president, now 70 and living comfortably in retirement, doesn’t appear to be in any danger of having his deeds or alleged misdeeds investigated by the current government.
Fly said…
Ukraine has a great cuisine! Borscht, varenyky, cakes, salads, sausage… It is very cheap and so tasty! When you go to Ukraine you definitely should pay more attention to local dishes: Ukrainians also like to drink gorilka, but it can not be called traditional Ukrainian drink :)