Oleksiy Vadaturskyy Comments on the Introduction of the Land Market

In the 90th according to the Order of the President of Ukraine, the land was shared among people, saying that they will be happy. However, I added many times that, unfortunately, they have forgotten to give a thousand cubic meters of air and “to cut” rivers for everyone to make them happy. Since then nothing has been done to defend people’s rights. Neither the state nor deputies have presented any constructivism to adopt laws. Many people died and didn’t exercise their rights to manage the land plots. I don’t observe any initiative to solve the problem. Once a year the state raises a question whether to extend the moratorium on sale of agricultural land in Ukraine or not. That’s it, our politicians don’t do anything more.
I raised the question of the land market regulation and functioning in the presence of the President of Ukraine Viktor Yushchenko in 2008, in Cherkasy. I noted that, first of all, we needув to adopt a series of laws and only then to introduce the land market. I emphasized that up to 30-40% of Ukrainian agricultural land plots have been resold and belonged to other owners.
A different model of land market regulation started to be implemented in Ukraine after change of power. In particular, there was established the State Land Bank. It was assumed that this governmental entity will be the only entity which has the right to buy land. It was done to privatize the most precious heritage of the Ukrainian people – land – by ¨family¨. In the end, nothing civilized was done during that period. Thus, the time has been lost.
Analyzing the current situation I have a lot of questions.
Is an investor who cultivates land protected? No, he isn’t. 
Is an investor who has signed land lease agreement for 5-10 years protected? No, he isn’t. The agreements can be terminated at any time as a result of, for example, land plots exchange, when a new owner appears and refuses to work with the investor who is cultivating the land plot.
Have you ever thought that one field is a chessboard with 50-100 landowners? What will be the result of the chaos existing in this sphere? For example, 10 % of these landowners will decide to sell their land plots to other companies. But 90 % of them say, “No, we will sell our land plots in 10 years for more attractive price”. Such a situation can lead to a war for every land plot. All agricultural production will be stopped as one should pave an independent way to every land plot to bring machinery, etc.
Of course, every landowner has a right to use his property as he wishes. But if you are a co-owner of a huge tract of land you have to take into account the opinions and interests of everyone, as a decision made by one person automatically affects the other owners of this land plot or field. Ignoring the interests of others can lead to irreversible consequences and unpredictable events.
One should take into account that there was formed a large scale production in Ukraine. If we do not adopt an appropriate legislative framework to provide a reasonable and transparent mechanism of transition to market relations, we will be back to land cultivation by “slivers”. Large tracts of land will be scattered, thereby significantly reducing the efficiency of agricultural land plots use.
Does every landowner have a lease agreement in case of lease? No.
Can the landowners be sure that they have the property right to land? No, they cannot.
Does anyone have the information or documents of the inventory made certifying the fact who cultivates a land plot or who is its real owner? The answer is no. A lot of land plots are being cultivated even having no idea who the owner is. Moreover, there are many land plots that are supposed to be cultivated by one company, but in fact the company has resold its rights to other 10 companies. We know nothing about consequences of this transaction, about the ultimate beneficiary of the land and its cultivation, or, I wouldn’t be surprised, the owner.
Are the issues on land lease completely addressed? For example, in respect of land lease for 10-25 years. – No, they aren’t. One shouldn’t ignore these questions as it is also an effective way to attract additional investment. 
It is necessary to protect investors, because a landowner can ask to pay lease payment for the entire term of the lease agreement, i.e. 10-20 years in advance. Having received the lease payment, he can sell his land plot to another company as there is no clear mechanism of lease payment. As a rule, a landowner is interested in getting money in advance, but a land tenant can have no opportunity, in terms of risks, to pay a huge sum of lease payment at once.
To solve this question the state should adopt a law that envisages the right to transfer land plots to a long term lease (for 20-25 years and more) with the right to receive lease payment for the entire term of the land lease agreement beforehand, assuming a possibility for long-term loan to land tenants secured against property rights to land lease. Thus, the landowner will immediately receive a significant sum of money for his land plot remaining its owner, while the land tenant can use credit to pay the lease payment.
Lease relations should become transparent both for land tenants, for landowners, and for the state. It should provide an effective protection of their rights, including cases of early termination of lease agreements.
Did anyone restore order in land cadastre? No one did it. Thus, land tenants/investors and landowners are unprotected. This is not a rare case when a few companies at the same time have property right to one land plot; the cadastral numbers are being changed. These techniques remained from previous government; it’s a kind of illegal seizure of land.
While registering there are the other problems – organizational ones. Thus, the registration authorities are not able to register land lease agreements in time because of lack of employees. There are always crazy queues and corruption.  So, while a person is waiting for his turn, his land is being cultivated without proper registration.
Is a manufacturing cycle of a company taken into account? No, it isn’t. This is a question of great importance in order to avoid the situation when one company sowed and another one will harvest because a landowner has resold his land plot. So, how should one decide who is the owner of crop and who will harvest? 
Ukrainian agricultural production is based on use of more high-capacity machinery and land tracts consolidation. If one splits the land, the investment for purchase and renewal of modern high-capacity agricultural machinery will be inefficient and lost.
Furthermore, who will compensate investors’ expenses for creation and maintenance of the infrastructure related to agricultural production or money invested in the land amelioration? For example, a land tenant invests huge funds in land that has not been cultivated for years and has turned into a forest to make it suitable for cultivation, thereby increasing soil fertility and investment attractiveness of the land. Nobody will compensate him these expenses. Moreover, the villagers will be unemployed.
What if we talk about livestock complexes? There can appear a risk that a livestock complex will be left without fodder. Once I had a conversation with the former Minister of Agrarian Policy and Food of Ukraine on this issue. He said, “It doesn’t matter. Egypt buys Ukrainian grain for its poultry plants and livestock complexes. So you will buy grain from Eastern Ukraine and will bring it to Western Ukraine.” But wait, it significantly affects the production prime cost. Eventually, our citizens pay for this.
The question of right to buy land is still open: whether legal entities, individuals or foreigners, or anyone without any restrictions, including fronts will have this right. The limit of land to buy isn’t also determined.
Regarding the cost of land. At present our company pays lease payments at a rate of 7-10% of estimated land value. So, in fact, getting such a charge for 10 years a person receives the full value of his land. But leasing it out a person will remain the owner of the land, and its cost can significantly increase for 10 years.
There are people or families who own up to 100 hectares of land. In such a way, people afford to buy a personal residence in a few years or to solve any questions, not having a need of additional job placement and living due to their own land.
In view of my speech, I would like to address to our people`s deputies, ¨Stop playing the game ¨To lift the moratorium on land sale in Ukraine or not to lift¨. Concentrate all your attention on protection of landowners, land tenants, and investors. Prepare bills, promulgate them, engage public representatives and experts in public discussion. Listen to people´s opinions. Only after that, render balanced decisions¨.
In this regard I support the Prime Minister of Ukraine. I agree with Mr. Hroisman that we need to do a huge amount of preparatory work, in particular, to prepare an appropriate legislative framework, to discuss all the questions, and only after that – to introduce the land market. No one would prove their case without a proper legislative framework, even in court. Do our law enforces have enough people for every field to control the process and find out who is right and who isn’t in situations when there are two owners for one land plot? Of course they don’t. It means that there will be anarchy, spontaneous showdowns with unexpected consequences. A lot of land disputes serve as examples of anarchy. It is not a secret that nowadays the country cannot cope with raider conflicts which take place quite often in Ukraine. Who will protect ordinary people? Will it be our judicial system?
Let’s remember the conflict which has lasted for a few years in Pervomaisk district (Mykolaiv region) between the agricultural company and the public sector worker who got the right of ownership to land but cannot use it even after intervention of the President of Ukraine.
If IMF wants to introduce the land market in Ukraine, then, in my opinion, it should get this process and its transparency under control. Unfortunately, I don’t trust to politicians because they give us anything except populism. There are few people among politicians who are really specialize in these questions or have dealt with landowners` problems, but they shape the future of millions of people. This is an image of our country, an image of deputy corps, and your corporative responsibility for inactivity. Nowadays there is a disorder in the questions of the land market, but it should be the last extension of the moratorium.
I support the market but transparent and addressed one. Eventually, the land market should be introduced in Ukraine but only when we have a proper investment climate, when the state has transparent/legal current assets to buy land. It shouldn’t be in such a way things are now in Ukraine. Billions of dollars are transferred offshore illegally and different abuses take place.
I think that the landowners whose land plots are leased by our company will support our position.
The issue is extremely complicated and it will not be resolved without political will of the top officials, central government authorities, constructive and goal-oriented work of deputy corps of all levels. Instead of this, the problem will be driven to a standstill, as it has been done for decades. Ukraine will become prosperous and the best agricultural country in the world only if we put the state interests and protection of landowners’ rights to the top.
For my part, I and the specialists of our company are ready to contribute to find solutions to these problems and to protect civilized land market relations in Ukraine.  

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Андрій Вадатурський

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Андрій Вадатурський став генеральним директором «НІБУЛОНу» після понад 15 років роботи в компанії — в липні 2022 року.

Він прийняв цю посаду після трагічної загибелі свого батька та засновника «НІБУЛОНу» Олексія Вадатурського разом із матір’ю Раїсою Вадатурською під час російського ракетного удару по їхньому дому в Миколаєві.

З 2014 до 2019 рік був народним депутатом України від одномандатного округу в Миколаївській області та членом Комітету з питань аграрної політики. У 2017 році створив і очолив велику міжпартійну групу, яка виступала за розвиток українських річок як транспортного засобу.  

Має ступінь магістра електротехніки Українського державного морського технічного університету та ступінь магістра економіки промисловості Лондонської школи економіки. У 2009 році за вагомий внесок у розвиток агропромислового комплексу України був нагороджений Президентом України, йому присвоєно звання «Заслужений працівник сільського господарства».

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