The outgoing year of 2012 has not brought Ukraine closer to the completion of the land reform, the final chord of which should have been the introduction of the agricultural land market. Let's remember that the Land Code of Ukraine (prior to changes made in November 2012) clearly established that a ban on agricultural land sale and purchase can be removed only if the laws on the state land cadaster and the land market are adopted. And if the first document was successfully adopted by the parliament in July 2011, the second one has not come to the session hall of the Verkhovna Rada.

MARKET IN LAW

On December 9, 2011, the Verkhovna Rada at first reading passed a draft law on the land market, which, as expected, had to be approved as a whole in 2012. The document caused a storm of criticism from the side of lawyers and large landowners. The first stated that most provisions of the bill ignore or violate the Constitution, they are not consistent with other laws and each other, and admit corruption. The latter were dissatisfied with the planned ban on the purchase of agricultural land by legal entities and "foreigners," as well as the norm restricting land rent.

The matter is that the initial wording of the law on the land market contained a norm, under which one person, either an individual or a legal entity, cannot rent more than 6,000 hectares of land in one district and over 5% of agricultural land in one region. However, under the text of the document prepared for second reading, which has not been considered by MPs, the total area of agricultural land leased to one person cannot exceed 10% of land on the territory of one district and 100,000 hectares on the territory of Ukraine.

Many agricultural holdings openly opposed the initiative. In particular, in February 2012 Nibulon Director General Oleksiy Vadatursky expressed opinion that the introduction of "non-motivated" restrictions on farmland rent would affect the market capitalization of public companies and deter foreign investors. According to Board Chairman of the Ukrtsukor National Association of Sugar Producers Mykola Yarchuk, the restriction of the maximum area of land leased in one district does not allow sugar refineries to create a base of raw materials and may lead to the closure of more than 40 such companies.

EXTENSION OF MORATORIUM

As over the entire year of 2012 the MPs had not agreed on the mechanism of land sales and control over these operations, the state considered the cancellation of a moratorium on the sale and purchase of agricultural land premature, extending it until January 1, 2016.

Thus, in October this year, Agricultural Policy and Food Minister Mykola Prysiazhniuk at one of the briefings stated a lack of legal grounds for the introduction of the agricultural land market from January 1, 2013. According to him, the bill on the land market prepared for second reading cannot be passed in such wording. The minister said that the farmland market would start operating only when guarantees for the protection of farmers' rights to land are created.

"We cannot open the land market now. There is no room for error. The land reform is very important for people and the country, so we should not rush. People can either earn money if a transparent market is created or lose if the rules are imperfect," chairman of the Regions Party parliamentary faction Sergiy Tigipko said.

Thus, on November 20, 2012 the MPs, though at the second attempt, passed the law extending the moratorium on the sale and purchase of agricultural land until the law on the turnover of farmland comes into force, but not earlier than January 1, 2016. The law came into effect on December 20.

The experts do not rule out that the term stipulated in the law might be revised. In particular, Head of the State Agency for Land Resources Serhiy Tymchenko has informed the public of his intention to convince the president of the need to introduce an indefinite moratorium until the law on the turnover of agricultural land, which stipulates the rules of turnover, is passed.

AGROHOLDINGS BUILDING UP MUSCLES

Fearing the introduction of restrictions on agricultural land rent, many agricultural holdings did not risk to fully implement ambitions to expand their land bank. However, there were some companies that did not limit their appetites. For example, Ukrlandfarming, the largest Ukrainian agricultural holding, in summer announced the increase in the area of land cultivated from the beginning of 2012 to 532,000 hectares from 508,000 hectares through land purchases in Donetsk region and Crimea.

Another agricultural holding with assets in Ukraine, KSG Agro (Luxembourg), over the first nine months of 2012 increased its land bank by 50.8%, from 61,000 hectares to 92,000 hectares.

IMC Holding decided to keep up with its competitors and in November 2012 reported on the work on the largest acquisition in the history of the group, which would allow it by the end of 2012 to increase its land bank from 86,000 hectares to 120,000 hectares.

Currently Ukrainian agricultural companies are working under the terms of farmland rent. And it seems that many of them are satisfied with the current market rules. They do not plan to buy large land plots if the moratorium on farmland sale is cancelled.

"I do not know what to do with it. We cultivate it and that's enough," Agrotrade Director General Vsevolod Kozhemiako said.

Director General of France's AgroGeneration with assets in Ukraine Charles Vilgrain is also not interested in land purchases.

"We do not want to own land. We feel comfortable renting farmland. We would like to rent land for long-term cooperation," he said at a press conference at Interfax-Ukraine in December 2011.

STATE LAND BANK

The only thing that was done by the state within the land reform was the creation of public joint-stock company State Land Bank of Ukraine. The government approved a relevant resolution on July 2 this year. In October, President of Ukraine Viktor Yanukovych signed the law on its legal status, and the parliament appointed members of the supervisory council.

It is assumed that the charter capital of the Land Bank will be formed by the Cabinet of Ministers using money contributions, as well as those in the form of land plots. In addition, the State Land Bank of Ukraine is entitled to perform operations with land plots and property rights to them.

The Land Bank will provide agricultural producers and farmers with loans at low rates under the collateral of land. At the same time, Head of the State Agency for Land Resources Serhiy Tymchenko said that the Land Bank would be able to start working after the land market is opened.

WHAT WILL 2013 BRING?

Will the land market be introduced next year or will the moratorium be valid for the whole term? According to Agricultural Policy and Food Minister Mykola Prysiazhniuk, the state should in 2013 complete the implementation of the land reform in Ukraine. The minister is expecting Ukraine during this period to "legislate the turnover of agricultural land, the formation of the State Land Bank, the terms of cooperation between land owners and agricultural producers."

By the way, according to the law extending the moratorium, the Cabinet of Ministers should within six months from the date of its entry into force, i.e. on December 20, develop and submit to the parliament a draft law on the turnover of agricultural land.