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Expert from the Center for Economic Strategy Dmytro Yablonovsky predicts the open land market will become a stimulus for investment in agrarian projects with a long payback period and for the cultivation of more complex, high-margin crops.
"Even if a farmer has a plot of land in a long lease today, there is no incentive to grow complex crops, plant a garden, etc. If the farmer becomes the owner of the land, the incentive will obviously appear," the expert said at a roundtable titled "Can the land market significantly increase the number of farms and strengthen their economic situation?"
In his opinion, the formation of full-fledged land ownership will help to borrow bank loans, using this asset as collateral, and spend the funds on the development of investment projects, in particular, on facilities to process farm produce. "Processing adds value that enables the transition from exports of raw materials to value-added exports," he said.
Yablonovsky notes that the market situation – both external and internal – is favorable for sales of farm produce originating from Ukraine.
Read alsoLand reform to let farmers buy land on favorable terms – economist"Recently, we have seen a steady economic recovery, which means that domestic demand is also recovering," Yablonovsky said. "Regarding external demand, previously oil and gas were key geopolitical resources, but their value begins to lessen due to renewable energy sources, then food is going to be a new key geopolitical resource. It is a very good opportunity for Ukraine in the long term, and we shouldn't miss it."
In total, there were 33,682 operating farms in Ukraine at the end of 2016, with an arable land bank of 4.438 million hectares, or 22.3% of the total area used by agricultural enterprises. On the average, there are 131.7 hectares of agricultural land per farm.