On Thursday, July 1st, 2021, Ukraine enacted a historic law on land reform that was decades in the making.
The rich black soil and expansive wheat fields in Ukraine have earned it the title of “Breadbasket of Europe.” Ukraine is home to 25% of the world’s reserves of black soil with 41.5 million hectares of agricultural land. Agriculture is Ukraine’s largest export, and in 2019 the agriculture sector generated approximately 9% of Ukraine’s GDP. According to data provided by the World Bank, Ukraine reported that agricultural employment was 14% of the labor force.
In Ukraine, the sale of private agricultural land has been banned since 2001. On March 31st, 2020, The Verkhovna Rada adopted a historic law reforming the agricultural land market reform in Ukraine. This law took effect on July 1st, 2021.
Preceding Ukraine’s independence in 1991, the state owned most of the land and property. After gaining its independence, land previously owned by collective farms was distributed to collective farm workers. Only a quarter of agricultural land remained in possession of the state. The Verkhovna Rada of Ukraine adopted a land code to regulate land use in 2001. However, some Communist MPs blocked this by creating a moratorium preventing land sales, to remain in effect until the passage of a new law. The moratorium was extended nine times, and the Rada was unsuccessful in overturning the ban. As a result, large farms were forced to depend on land leases, discouraging long-term investment in critical irrigation and drainage systems.
Land reform has been a top priority of Zelenskyy’s administration and is predicted to dramatically increase the productivity of the agricultural sector. The land reform law that took effect on July 1st, 2021, gives agricultural landowners the right to sell and buy land. Ukrainian leaders supporting land reform hope that this will incentivize farmers to invest more in equipment and infrastructure and narrow the gap between the potential and actual production volumes. The World Bank estimates that the opening of the land market could lead to incremental GDP growth of over 2.0 percent per annum over the next several years.