Kareli Method "Comprehensive Land Reform"

Preface. While starting this work I was aware of a huge responsibility. When publishing articles on different sites, I have received letters and feedback, they provided the impetus for the implementation of my long - standing ideas- this project is the presentation of ideas from all my articles and accumulated ideas.

For your consideration, I offer

I hope for your activity in your feedback and I thank

The project is aimed at legislators and specialists of the land industry, land share owners, and a wide range of readers interested in land relations

Kakhaber Kareli

Doctor of economic Sciences,

expert on land issues,

Georgia (nationality) / Ukraine (permanent residence)

email: [email protected]

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©.K.Kareli.2016. All rights reserved.  

Dedicated to all the mentors in my career -                                                       my best friends and teachers

The project

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  Kareli Method "Comprehensive Land Reform"

A set of measures contributing to the completion of land reform and launch of a full-fledged land market in Ukraine

 

1. The relevance of the project

The end of the 20th century was full of historical events, the main of which was the collapse of the USSR and the socialist system as a whole. In the past, the former Soviet republics taking into account the common state interests, had common development strategy, and after independence, they began to choose the development priorities of their own state.

New historical realities brought new requirements, it was necessary to conduct many reforms. One of the most important

processes is considered the land reform with its final result- the formation of   a free land market. If one of the greatest achievements of the Soviet power, was the collectivization of land, after the collapse of the Soviet Union, in the same domain is considered the process of privatization of land and land reform.

In Ukraine, the beginning of the land reform was announced while being in the Soviet Union: according to the Resolution of the Verkhovna Rada of the Ukrainian SSR  “On land reform" (18.12.1990 dated March 15, 1991)  all the lands of Ukraine were declared the object of land reform. This item can be considered a gross error that led to today's existing problems and prevents the completion of land reform; it was already possible then to predict the current impasse.

Agriculture in Ukraine is a priority sector. It produces more than 3% of the world's supply of grain and provides 10% of world exports

, occupies a leading position in the worldwide production and export of

sunflower oil to 4.5 million tons, 55% of world exports. It ranks second in the world in producing and 4th place in the export

of barley, the 3rd largest producer and 4th largest exporter of corn. Availability of arable lands of Ukraine in Europe is in 1st place, and the area of black earth occupies 3-rd place in the world (25% of the world total). The Land code of Ukraine noted the special significance of the land, and that it is under state protection. The first article of the first Chapter (General provisions) of the first section (General part) of the Land Code of Ukraine stresses: "the land is the main national wealth”

Land reform is a long and complex process that needs to take account of the political and economic conditions of the country. It requires major changes in the existing, and creation of a new legislative framework. Land reform is the only basis for the formation of a civilized land market. 

There are no democratic and highly developed countries in the world, where there are no market relations, among which a land market occupies a special place. A free land market is not only the attitude of the parties of purchase and sale contract. It is also a powerful impetus for the economy as a whole: the revitalization of the banks, lawyers, cadastral companies, attorneys, notaries, intensification of existing and creation of new large and small agricultural enterprises, the basis of the brand new structure of the registration service of property and property rights, extra jobs. The existence of ownership and protection of the rights of the owners by the government are among the major indicators of democracy and civilization of the state. 

In the course of the land reform in Ukraine, 7 million citizens received 28 million hectares of land in the form of land shares, with an average of 4 hectares. The given area is 48 percent of agricultural lands of the country. Considering the importance of agriculture for Ukraine, the free transfer to the population of such an impressive area of fertile land was a hasty step and (so far) uncorrectable error. 

Despite the given above statistics of the outcome of the Land reform, for more than 30 years since the beginning of the process, the effort to divide land shares and start a full-fledged land market have failed. This is because of the moratorium on sale, alienation and change of purpose of agricultural land. 

Long before the land reform, the shadow land market, i.e. a hidden form of purchase and sale of real estate, existed and functioned brilliantly in the Soviet Union, despite the fact that it was punishable by law. Then, in the role of notaries were the heads of agricultural companies and local councils, and the Chairpersons of the garden associations (in the late 1970-ies, when urban residents started to get garden plots of 0.06 hectares, they were given "Gardener’s books "). The mechanism of the sale/transfer of land was as follows: in the first case, heads of the enterprises gave the villagers the permission to lease the land in a Free Land Fund, and immediately passed it to another interested person, i.e. the seller. In the second case, everything was very simple: "Gardener’s books" of the old users were just destroyed, and new ones, for the "new" members were made. These operations were conducted only after the prior consent of the parties to the transaction. In both cases, of course, the right of perpetual use of land was transferred. Oddly enough, the market of garden plots in the same scheme is working in Ukraine nowadays. 

Shadow transactions, contrary to the legislation, are to this day. Today, the current moratorium is not an obstacle for trading of land shares: in 2004-2009, bypassing the moratorium, 4.7 million hectares of land were sold as shares (“The good boys. During 5 years bypassing the moratorium in Ukraine 4.7 million hectares of land shares were sold ", svdevelopment.com, 08.05.2009). 

The moratorium was legalized by the Land Code of Ukraine (25.10.2001), according to which: "Prior to the entry into force of the law on turnover of lands of agricultural purpose, but not earlier than January 1, 2016, are not allowed": the sale, alienation and changing the purpose of land (transitional provisions, section 10, p. 15). 

A paradox, but true: along with the moratorium, there were and there are in force, adopted in different years (before and after) laws and legislations, which guarantee both the protection of property rights and the rights of a stockholder. Some of them are: the Land Code of Ukraine (art. 25, 3(4), 32(1), 31(d), 87(1.a), 88(3,4), 121(1,8); the Law of Ukraine "About property" (07.02.1991); the Law of Ukraine "On forms of land ownership" (30.01.1992); Decrees of the President of Ukraine "On urgent measures to accelerate land reform in agricultural production (10.11.1994) and "On the procedure sharing mechanism of land transferred into collective ownership of agricultural enterprises and organizations (No. 720, 08.08.1995); Resolution of the Cabinet of Ministers of Ukraine "On approval of the form of the Certificate on the right to land (share) and the sample of registration books of certificates on the right on a land part (share)" (12.10.1995), the Law of Ukraine "On the procedure for allotment in kind (on locality) of land plots to owners of land shares (shares)" (05.06.2003): the Law of Ukraine "On alienation of land plots and other immovable property for public purposes and for reasons of social necessity" (2010). According to the article 14 of the Constitution of Ukraine, the right of ownership of land is guaranteed, and article 41- "The right to private property is inviolable". Clarification of ownership rights in the Land Code of Ukraine: "the Right of land ownership is the right to possess, use and dispose of land plots" (article 78), the law "On amendments to some legislative acts of Ukraine on determining the content and order of approval of land management documentation" (06.06.2015). 

In the coalition agreement of the current Verkhovna Rada, the readiness to enter the land market was marked, at the same time, the government envisaged the extension of the moratorium until 2018. I wonder how it will be possible to compare two radically different concepts - the market and the moratorium. This was the reason for the ridiculous comparison. Anders Aslund (senior scientific officer of Peterson Institute for international Economics, member of the expert Council under the Ministry of economy of Ukraine,) in his article "Your policies are stuck in the outdated picture of the world", said: "This project of the coalition agreement reminded me of the speech of Leonid Brezhnev at the XXVI Congress of the CPSU in 1981," (liga.net) 

The inconsistency in the legislation, which many Ukrainian officials complain about, is one of the reasons for the stagnation in land relations. One, but not the only one. Prime Minister of Ukraine Volodymyr Groysman during a visit to the USA said, "We have three enemies: Russia, corruption, populism. They are major enemies, which now hinder development of Ukraine" (obozrevatel.com, 18.06.2016. During the same visit of the Prime Minister, the Vice-President of the USA John Biden stressed the importance of reforms: "...not the last chance for Ukraine, but the last in order to get it right" (nv.ua, G. 01.07.2016). 

To the list of "enemies" of the state, in the context of land relations, it would be possible to add more, not less "dangerous": confusion and indecision. 

But can corruption and populism be the cause of long-term moratorium and mirage prospects of launching a full-fledged land market? 

Corruption is a universe-size disease: there is no country in the world where it did not exist. Countries only differ in its level. According to Transparency International, Ukraine among 167 countries is on the 130-th place, with Ghana (56), Zambia (76), Gabon (99), Mozambique (112), the least of the EU members in the list – Bulgaria is 69-th. But this fact can not be the reason of inaction. To defeat corruption, for more effective fight against it, a streamlining of the legislative framework is required to make corruption needless - the faulty laws in land relations and years of unsolved problems is the most fertile soil for corruption, they breed corruption. 

Speaking of corruption, it is necessary to remember an interesting fact. The former President of Ukraine Viktor Yushchenko considered the moratorium as the main cause of corruption and hoped for its abolition in 2008, but Parliament has not taken any action in this direction, and the head of the presidential Administration Boris Lozhkin to get rid of the disease suggests that “the land market should appear very quickly". Andrew Martin (Vice-Chairman of the Association "Land Union of Ukraine") considers that the interference in the process of purchase-sale affects the process: "Let them agree among themselves to set prices, sell, buy. Any additional regulation often harm rather than help the normal development of market relations" ("Expert: land is a commodity, and often it is the nurse of corrupt officials", rian.com.ua, 18.03.16. 

Populism manifests itself on different levels. When there is no ground for valid conclusions and promising prospects, it can sometimes   be wishful thinking. Sergey Lobasyuk (member of the parliamentary Committee on land relations and agrarian policy), at the end of 2014 suggested that in 2015 the government could lift the moratorium. In addition, he saw the land as the most possible resource to compensate for the existing "holes in the budget" ("In 2015, the Ukrainian government may lift the moratorium on sale of agricultural lands" ukragroconsult.com, 31.12.2014). In the same 2014, the former Chairman of the State Agency of land resources Sergei Timchenko said that in Ukraine, the land reform is almost completed, it remains only to adopt the law "On land turnover" (unian.ua, 29.01.14). The lack of this law is the only obstacle to the introduction of the land market. In the editorial publication of the site newsradio.com.ua under the headline: "Ukraine is in a hurry to introduce the land market. One more law is needed: "On turnover of agricultural lands" (12.03.2013 g), one can see an interesting fact that the situation is assessed as "in a hurry". In fact, according to the legislation, this law is really a stumbling block for many years. But the heightened attention attracts the statement of the Head of Gosgeokadastr Maxim Martynyuk   on Ukraine's readiness for the opening of the land market ("Ukraine is ready for the opening of the land market - Martynyuk", latifundist.com, 01.02.2016.) 

The Director of the Department for international cooperation and the land market of the State service for geodesy, cartography and cadastre Rostislav Shmanenko, cited statistics that: "If you reformulate the question slightly differently, namely - whether there are enough completed inventory to start the land market, then the answer is Yes. By now, the occupancy of the cadastre with information about the land plots of various purpose is more than 70%, including agricultural land  approximately 65%" ("70% of the plots are added in the land registry data- the Gosgeokadastr", ukragroconsult.com, 13.04.2016 G.). The head of the Department noted that in Georgia by the time of launch of the land market the inventory was completed by only 17%. Comparing these statistics (70 and 17), he declares his readiness to launch a land market. But, a clear advantage in numbers cannot guarantee the success of the long-awaited launch of the market. The success of the land reform in Georgia was caused mainly by two factors: the coincidence of desire for reforms of both the government and people as well as the fact that all land still belonged to the state agricultural enterprises - the state farms and collective farms, i.e. the transfer of land to the land Fund of the reform was not problematic. And again, you cannot compare today's "digital" inventory with the more than 30-year-ol d "antediluvian" inventory. 

The moratorium, the validity of which expired on 1 January 2016, was extended until 1 January 2017. In the spring of last year the Verkhovna Rada of Ukraine registered a bill (draft No. 2791, 08.05.2015) with a proposal: to extend the moratorium until 2020 and on the website of the President of Ukraine registered the petition (No. 22/006064-EP. 10.09.2015) on "About a moratorium on sales of agricultural land until 31 December 2025’. In their appeal to the President of Ukraine, the Agrarian party suggests the same date of the moratorium. Strange but true: with such expectation and national importance of this bill the government itself are unable to draft a seminal law until the promised date of 1st March 2016 (Million hectares of PR: how much land can be sold in Ukraine", liga.net that 01.03.2016. 

People's Deputy of Ukraine Andrey Vadatursky suggested that next year again will be the decision to extend the moratorium for another year. He also proposes immediately to extend a moratorium for 4 years, for the solution of all problems ("People’s deputy: The opening of the land market needs 4 years", agroportal.ua, on 20.11.2015. Against the lifting of the moratorium is the Minister of agrarian policy and food Taras Kutovoy, who is the author of a bill to extend the moratorium. In connection with the terms of extension of the moratorium, he noted that, "Some want to extend the moratorium until the next presidential election, others for 20 or 30 years, but no one says why such a period is selected. Evaluating the lifting of the moratorium itself, he makes a comment that it is a painful question, "... but no time left to hide from it anymore." ("Kutovoy against lifting the moratorium on sale of agricultural land", biz.censor.net.ua, 15.04.2016. A realistic assessment of the situation. 

Uncertainty in resolving the issue affects planning in agribusiness. The press service of Association "Ukrainian club of agrarian business" even appealed to the Central authorities with a request to provide information on the future extension of the prohibition of alienation of agricultural land. This fact clearly indicates lack of informational communication between the legislators and the people. Farmers think: "Now for the agricultural business it is not so important, what is a consensus decision on this issue, but it is important a long-term vision for the next three to five years of development of land relations in Ukraine" ("Ukrainian farmers are haunted by uncertainty, ubr.ua that 01.05.2016. Assessing the current situation, the former Prime Minister Arseniy Yatsenyuk said, "On the basis of the existing legislative framework not land market but land bazaar will start by 2016”.

Ex-Prime Minister Arseniy Yatsenyuk in order to run the land market in the form of an experiment first proposed to sell 11 million hectares of land, and later the area was reduced to 1 million hectares. According to him, "we need to continue land reform. I think that you need to sell on the open transparent auction 1 million hectares of state land, which is located in a shady and corrupt turnover." Expected revenue from the sale of agricultural land, according to various experts, was estimated within 2-11 billion usd, but the ex-Minister of agrarian policy and food Alex Pavlenko believed that Ukraine from the sale of land could receive about 100 billion usd (ukrinform.ua). 

The current government intends to launch the land market in two stages. This action plan was announced by the Head of the State service of geodesy, cartography and cadastre Maxim Martyniuk in the article "Land reform: a compromise scenario" (gazeta.zn.ua, 16.10.2015.). According to first person of land service, the government for running the land market "offers a two-stage variant. The first stage - from 1 January 2016, involves the sale of agricultural land of state ownership" and "after the first phase is successful, risks will be identified and mitigated, and the price of land will rise until the market price, it will be possible to open access to the market for citizens. We prescribe the provision that certain articles will take effect from 2019 - in our opinion, this can be considered a working option for the start of a full-fledged land market." 

By now, the main tenants of the shares are different agricultural enterprises. After the government begins to sell the fertile land, the tenants will prefer to buy land in the property, and it is natural, moreover, "the first wave is going to be the most massive, in terms of supply, and it will be characterized by low prices”. But, if auctions are going to be held (as planned), then we can only speak about the minimum starting price , which during the auction grows significantly, and the final price is impossible to predict. 

The result of this may be that agricultural enterprises which can not keep newly acquired private and leased land, will start to dissolve the lease contract that is a painful blow to the pockets of the villagers, this also will cause a temporary disruption of agricultural production, the duration of which cannot be predicted. It would be better, in the case of the legalization of procurement r to afford renters to buy land, leased for years, from the peasants. But the main problem is that there is no confidence in the successful outcome of the process, and it is very dangerous, "If we see that the model does not work, it will be a question of expanding the circle of buyers." From the above it is the impression that the auction will be conducted for a limited number of customers, which then in case of failure of the first stage can be expanded. I wonder why wait for the failure and why not hold auctions without restrictions that can be a guarantee of more income than in the case of restricted auctions. According to the Head of Gosgeokadastr, by now "the price of land will rise to market price"; the price of land is the market price, which, according to many circumstances and the proportions of the offers/demands is constantly changing. The free market establishes prices. They may be only acceptable or unacceptable to the parties. The market is difficult to break mechanically, but if you really try, it is only for a short time. The market and the price must be free. 

Price fluctuations, at a reasonable formation of the starting price at auctions of the first stage will be only with a plus. After the government sells huge amounts on the first stage of the reform, and thus all the major clients acquire land, the second stage will indeed be accompanied by price fluctuations. By this time, on the market will remain a small number of large, mostly medium and small, as well as newly created agricultural enterprises and private entrepreneurs. It is necessary to consider that the price per hectare of large, medium and small arrays differ from each other, outdated procurement auction price of the first stage of the reform is unlikely to be useful for orientation in the second stage. Prelaunch price may change immediately after the market launch: a sharp oscillation can only occur up, and in the case of reduction, this will happen gradually/smoothly. Both sellers and buyers will be confused: the initial stage of all processes characterized by a certain euphoria. To clarify the situation and stabilize the market, in a favorable external environment, it will take 6-12 months, after which prices stabilize, and possible future fluctuations will be caused by objective reasons (the political and economic situation in the country, the implementation of a significant project in a particular area, etc.). 

According to the Head of Goszemagenstvo (State Land Agency), the government considers it necessary, before thousands of sellers enter the market and for alternatives to "big money", the presence of state-owned operator, which will buy the land at a fixed price "for the protection of the citizens". He also believes that people should be given the opportunity to sell their share by market price to the state operator. Thus We will derive them from the pressure of agricultural holdings", and as "a state agent it is considered one of the state banks that have the resources for ransom plots, though, taking into account the negative experience of the Land Bank, he himself expresses concern. 

The statements above generate a lot of questions that must be answered. 

1) So at what price will the state operator purchase plots: at a fixed or market ? If fixed , then who is going to install it (to process/approve) in the case of price fluctuations on the market, how quickly it will be possible to correct them? And if market , how much from a commercial point of view is justified the risk from the Bank? The opinion of the author of the project: considering the state bureaucracy, in the case of fixed prices, it will be difficult to respond immediately on the processes of market and fixed prices will diverge. This will cause a temporary suspension by the part of the land owners of sale that will definitely cause permanent passivity/activity in the land market, and it is highly desirable, and the price will be biased. But the purchase of the plots at market price is almost eliminated - the operator is unlikely to purchase as many plots (with a long-term perspective of profit), to influence the land market. Most likely it will be a single procurement. This idea is no different from the Land Bank, which ignominiously lasted only two years (2012-2014).g.). So it is obvious: this idea is fundamentally defective and unacceptable. 

2) The emerge of a new player in the land market in the form of the state operator- would it not be "a burden" for the cost of the plot? The opinion of author of the project: naturally, the Bank (even the state) will try to obtain some benefit, which will automatically raise the price for subsequent buyers. 

3) How was chosen the state agent on behalf of the state Bank, and was at least a rough budget determined for this purpose? Can single Bank cope with the huge size of the market? The opinion of the author of the project: the ransom of all the plots is absolutely impossible, for this purpose, we need a lot of money, and from commercial point of view, for the Bank is not attractive and dangerous. And if redemptions are made by the individual, this will be the reason for the emergence of another corruption segment. Considering the fact that the Bank name is still not disclosed and the negotiation process is on, a doubt about the impartiality and objectivity of the process remains. 

The attempt to re-develop already failed Land Bank points to the confusion of legislators and lack of insight on the past mistakes. And, unfortunately, this is not the only case. For example, there have been talks about the need for adoption of laws "On land consolidation" and "On land market", along with the law "On land turnover". 

The Scottish scholar Adam Smith considered state intervention in market relations unacceptable. The launch of full-fledged land market will not only nullify the corruption in land relations, but also is a natural catalyst in the process of consolidation of land. It is necessary to note that in 2013 there was the unsuccessful attempt of adoption of Law of Ukraine "On land consolidation". 

The head of the Goszemkadastr in the article above notes with regret that the law "On land market" died in Parliament". It should be noted that unsuccessful attempts of adoption of this law were in 2002, 2008 and 2012. The actual now bill was equally actual about fifteen years ago, the Chairman of the Verkhovna Rada Committee on agrarian policy and land relations Ivan Tomich, then in 2002, announced the adoption of a people-accepted law "On land market". It should be noted that sales are mentioned in: Chapter 20 of the land code of Ukraine (articles 127-139, "Selling land plots or rights to them on the basis of civil law contracts"), and Chapter 16 of the civil code of Ukraine (articles 202-236, "Transactions"). According to the ex-speaker of the Verkhovna Rada Volodymyr Groysman, today in Parliament six bills related to the land market are registered. 

The law "On land turnover" remains a stumbling block in the legislation. It should be noted that Ukrainian experts, recognized the bill as "raw". In the bill many of the items of the laws "On notary", "On land lease", the land code, tax code and civil code relating to the activities of a notary, determine the heirs of the property, fiscal policies, pricing, etc. are duplicated, they have no place in this legislation. According to the article 13 "Procedure for the sale of land for agricultural purposes under private ownership" (consisting of 15 points), in the process of sale, several formal structures are involved. What is more, it is proposed a two-period sales cycle of three months (2+1) – "exposition term of land - validity of the proposal of the seller to sell it or the rights on it on certain conditions". That will certainly make the process long and also can raise the price of the cost of land, taking into account the current level of corruption. 

Laws "On land turnover", "On land market and land consolidation" relate to the same theme. Given the importance of the law "On land turnover", it would be better to handle it with such a view, that would include all the desired points of all three laws. Fragmentation of laws and copying, and especially contradictions - a fertile ground for corruption. Many questions that are duplicated in different laws, contain the danger that, in case of any change in law, the same changes will be made in all other laws, the omission of such details may cause the legislative incident. For your notes: Georgia after the beginning of land reform since 1992, passed about 100 laws and regulations, but forgot to abolish the Land Code of the Georgian SSR, and the new one, due to the suspension of the development process has not been adopted. 

The market price is data, which is constantly changing. The free market establishes prices, they may be only acceptable or unacceptable to the parties. Closely located the same areas may be exposed to the market at different prices. This is how of the famous scientist Bill Williams characterized market relations: "All commodity markets are created by people whose opinions differ on the value, but there is agreement in price!!!!" ("Trading chaos"). 

The relationship of market activity and the political and economic situation is clearly visible from the table (# 1) showing the number of registrations in 2008, before and after the August Georgian-Russian war. As a result of the fighting, the active real estate market throughout Georgia fell by half, and the price of real estate fell: cheap and average- priced land by 20-25%, and expensive - 35-40% or sale was nearly to a halt. It took less than a year for the number of registrations to come to the previous level, and as for the settlement of prices on the market, it took more than a year to get out of a state of shock. 

                                                                                                         Tab. # 1

If the state carries out  the pilot market launch by auctioning of public lands (as planned 1 million hectares), before the lifting of the moratorium and without share division of private land, it can cause major discontent (to put it mildly)of the population who were patiently waiting for years. In the case of the implementation of land-share division process not less serious problem can be leases for the units that would have to be cancelled, that, probably, will not pass without numerous court interventions. About the dangers of financial intervention from the outside complains Yan Belogolovy (lawyer on land issues, "On consideration of the issue over the sale of 1 million hectares of public lands", liga.net that 01.03.2016

There are a lot of thought about shares and allocation of shares. According to the people's deputy of Ukraine Arkady Kornatsky: "if he (the owner of the unit – author’s note) sells the land (to the state – author’s note) at a price close to the minimum reasonable for investment to be justified, then this peasant, in addition to the price, must get the rent during all his lifetime". (112.ua, 15.09.2015).

The questions arise: how much it will cost to the government the lifetime allowance to shareholders, is it reasonable to pay the owners of the units during their lifetime for ordinary yet even solid profit? Who will install "close to the minimum feasible price: the state or audit? If the state- does it have the necessary number of qualified personnel? If the audit - who will pay for its services? Are reasonable and market prices two different things? What if it is used on the part of the functionaries to pressure on shareholders? There are a lot of questions, their number must be reduced to a minimum.

The desire of the owners of shares after the lifting of the moratorium to sell their lands is one of the arguments against the alienation of shares. In various Internet publications, there is different data about the number of people willing to sell their land. For example, M. Martyniuk cites that "According to the polls, 20% of unit holders have allegedly declared  their desire to sell it" ("Head of Gosgeokadastr: 20% of unit holders have indicated their desire to sell" zn.ua, 16.10.2015.), there is a little less quantity, according to the publication segodnia.ua- 10-15% ("Land reform: does global redistribution threatens Ukraine," 15.05.2015). But   the People’s deputy of Ukraine from the fraction "Petro Poroshenko’s Block," the head of Committee on agrarian policy and land relations Taras Kutovoy expressed the view that: "no matter what anyone said, many owners of units today want to sell these units " ("Kutovoy: many owners want to sell shares" agroportal.ua, 16.01.2016. The impression is that the desire to implement their own shares is seen as a negative term of land share division, that the owners of the units want to do something illegal...

It should be noted that a million out of seven million shareholders have died, approximately 30% are elderly people, and about 12-15% are city dwellers. One of the main factors of the statistical treatment  of the units (by area) is  availability of agricultural equipment, information about which is clearly disappointing: according to state statistics, one third of rural households treat the land in fatherly way - with horses, and only 17% of households have equipment for field work (unian.net  04.03.2016. The same issue laments the head of the women farmers of Ukraine L. Klebanova, who notes that because of the small amount of allocated funds the money is enough for the purchase of 1-1.5 tractors for the region (infoindustria.com that 30.09.2015).   

The rent of agricultural machinery for processing of 4 hectares (according to Internet sites, the price of land cultivation alone starts from 240 UAH/ha), cost of seeds and chemicals may be unaffordable for many of the shares owners (especially pensioners), and city dwellers may be "should not" exercise such an investment. Who knows now, how they and other shareholders will behave after the lifting of the moratorium? A lot might depend on activity of real estate firms as for volume and activity of the sale of land.    

Today it is impossible to specify even the approximate number of sellers of units, it can be significantly more of the above data. And the question itself: "how much will be sold " is incorrect, because it does not specify the interested period of the activity of the process, because the real estate market is like a perpetuum-mobile - once taking the start, does not stop, as long as not being interfered.

Among other things, the moratorium is a bright revealing social injustice in relation to the shareholders: at the time, when urban dwellers could privatized their leasehold apartment, and fully got the rights of owners, shareholders still lack this opportunity.

According to the National Institute for strategic studies of Ukraine, after privatization of the housing stock, 95% of households have their own housing. With such an impressive figure, Ukraine is a leader among European countries by number of owners of apartments. Interestingly, in this category of the socio-economic aspects on the leading positions are representatives of the former socialist countries - Bulgaria - 87%, Poland - 75%, Czech Republic - 55%, in Sweden the number of happy homeowners is 17% and in the Netherlands is just 5%. It is noteworthy that the number of Ukrainian citizens wishing to improve their living conditions by help from the state is more than one million ("Ukraine leads in the number of homeowners in Europe" obozrevatel.ua, 17.07.2013). 

Rural residents, creating products and paying taxes to the state budget, contributed to the economic growth of the country. All those houses, which the city dwellers privatized, were built on budget funds. It is impossible to compare the value of apartments obtained in the property, with the cost of land units, it would be incorrect, because urban studio apartment (albeit on the outskirts), costs as much as a few tens of hectares. To try to observe social justice at a cost of privatized assets (house/land) would be more than foolish, but to prevent division of villagers’ shares is really unfair.

Another argument against the launch of land market - the low price of land, and authors to justify their reasons make parallels to the data of foreign countries. Taking into account the fact that according to Ukrainian legislation, only citizens of Ukraine have the right to purchase agricultural land as property, such comparisons are inappropriate. It should be noted that different sites presented different statistical data on average revenue and cost per hectare of land (tab. # 2).

The table shows the countries with properly functioning land market, despite the fact that the prices differ significantly. To launch the land market it is not necessary to wait for economic progress of the country- with Spanish or French level.

Tab. #2

The market always and everywhere sets the prices by itself, they differ both among countries and within countries. In Ukraine, the price of land varies: one hectare of agricultural land in Zhytomyr region is 200 usd, Cherkasy - 800 usd, and in Tarashchansky area - 1100 usd. Prices for apartments in Kiev (center/suburbs) are in 4-10 times different from each other, but that does not give anyone the motive to suspend the apartment market.

The delay in solving of land issues for an indefinite time would only worsen the problem. The extension of the moratorium is not a solution to the problem. It is the same as taking painkillers during the incurable disease. When and what consequences this can have, it is better to predict in advance. The value of reforms for Ukraine was clearly expressed by former US Ambassador in Ukraine, research scientist of  Brookings institution Steven Pifer, who said at the Kyiv security forum: "If you get engaged in political games instead of reforms, you could be in a situation when the West will turn away from you. ... that the patience of the West runs out, it is not unlimited" (If the reforms in Ukraine will not take place, the West can turn its back on Ukraine – Pifer, nv.ua

You can't accept the fact that the moratorium serves to exercise the mind, to find ways to bypass it. A good example of a legitimate violation of the law gives Victor Kobylyansky: the seller and the buyer after a pre-made agreement, execute a mortgage agreement for the land share, after the debt is not returned, the case is referred to court. During the process, the parties conclude a settlement agreement under which ownership rights to the unit are transferred to the mortgagee-buyer (LAFAZAN, LAKAREN andt MORATORIUM, liga.net, 06.06.2016). Andrew Koshil (Chairman of the Association "Land Union of Ukraine", "How to buy land for a garden in Ukraine", infoindustria.com.ua that 22.01.2016.) and Artem Repenko (Doctor of law, lawyer, Alienation of land: problems and solutions". liga.net that 01.04.2016. also complain about mazes in land laws.

Given the depth of the problem, that can not be resolved for more than 30 years, the parties of land relations should be aware of the almost hopelessness situation, and go on mutual concessions. The state must analyze its miscalculations in determining the maximum rate of the unit, and the owners of the units - the absolute impossibility of obtaining the position of the shares in full. Only in case of reaching a compromise, it is possible to complete the land reform initiated in the 90s of the last century and run a full-fledged land market.

The author of the project is a supporter of the free market. But the launch of the land market today, under the existing legislative framework, taking into account the wishes of the government to carry out the opening of the market by experimental auctions, he considers it a hasty step and a threat to the economy of Ukraine and stability of the country as a whole

Ukraine, seeking to join the common European family, will have to adopt the universal European values, and in Europe, the protection of property rights valued not less than the protection of human rights in General (Kakhaber Kareli "Will  the EU close eyes on the non-existence of a land market in Ukraine", liga.net that 14.06.2015.)

In March of this year the President of Ukraine Petro Poroshenko urged the political forces and the public to discuss the formation of a land market in Ukraine. The lifting of the moratorium on sale of agricultural land and the launch of the land market is one of the requirements of Ukraine's key creditor – the International monetary Fund ("the Sale of land and other terms and conditions IMF: would the Ukraine for tranche", business.vesti-ukr.com, 20.05.2016.

The problem of land relations is old but urgent, the delay of ordering of problems, magnifies it. The problem should be addressed comprehensively, after thorough analysis, to detect errors and mistakes made in the process, and to identify ways of solving them. A clear and proper goal setting will guarantee to achieve the final desired result. And most importantly: the people must believed in the impartiality and objectivity of such an important process, so they should become a direct performer of the whole process. Speaking about reforms, the U.S. permanent representative to the UN, Samantha Power noted that many of the reforms remained "still on paper" and "it is Important that the Ukrainian people remained involved in reforming" ("Samantha power urged Ukraine to reform "not on paper", G. 11.06.2015 tsn.ua).

It is necessary to make decisive steps (even unpopular, first of all, to admit mistakes and miscalculations), the importance of which must be reasonably and objectively proved. The confusion and indecision of action provide stable stagnation of accumulated problems; correct vision of causes of these problems (but not declaring problems as they are) would greatly facilitate the search of ways out of existing maze.  

By having prolonged the moratorium for a year, the government has made another mistake. Without a clear plan and with vision problems, it would be better to extend the moratorium for 2-5 years, than by annual renewal attract the attention of its own population, as well the global community that will have to wait for the onset of the1st January 2017 with one question: what will happen to the moratorium. It casts a shadow on the state itself, on its unwillingness to reform and the ability of qualified Ukrainian experts, whose voice should be heard. Taking all circumstances into account, we can foresee that a moratorium will again be extended. 

The present problems is a natural outcome of mistakes and miscalculations made in the early years. This project is an attempt to address those mistakes, to draw conclusions and identify ways to eliminate/reduce problems. The variety of terms offered by the government for the redemption of unit sections, can cause confusion and distrust to the evaluation of units. Use of annual land rent as a unit for counting the purchase price of the shares proposed by the project is an unbiased method that does not leave questions or doubts.

Comprehensive Land reform is seen as the only impartial, transparent, objective and reasonable method for the solution of long-standing problems, existing today in the land legislation of Ukraine.

  2. The purpose of the project

The aim of the project is:

• Preparation of recommendations for changes to the legislative framework with the aim of completing the land reform and launch of a full-fledged free land market.

• The establishment of the civil right of land ownership.

• To demonstrate positive and negative aspects of the moratorium on selling agricultural land

• Eliminating the shadow land market and corruption in land relations as a whole, providing move of all the shadow relations in civil.

• Transparency, democracy and accessibility for all stakeholders in the process of comprehensive land reform.

• Involvement of local administrations and the shareholders, cadastral companies and notaries in the implementation of comprehensive land reform.

• Streamlining of reliable information of land use.

• To demonstrate a high level of democracy and transparency of the process, permanently to inform the public about the work done,through the media.

• Identification of resources for the revitalization of land relations on the civic level.

3. The goal of the project

The objective of the project is:

• A model for the completion of land reform.

• The establishment of initiative groups of shareholders who together with local authorities will implement a comprehensive land reform.

• According to the final data of the integrated land reform in a particular village, to analyze for generalization for all land shares.

• Creation of conditions for launching a full-fledged, democratic and transparent land market.

• To demonstrate the economic effect for the state treasury and the development of different structures, both public and private sectors.

• At the end of the work, to publish a manual for conducting similar work throughout the territory of Ukraine, in parallel with work to conduct extensive outreach.

4. Strategy and method of the project.

4.1. The strategy of the project is:

• A set of forms of land ownership: common ownership (articles 86 of Land Code of Ukraine) and personal farm (article 25 of the LCU).

• Joint work of all public and private entities that have contact and experience in land relations,

• Collection and elaboration of information about the actual situation in land relations;

• Comprehensive land reform - a set of forms of ownership of private farm (Art. 25LCU) and common ownership (article 86 of the Land Code of Ukraine).

• From the total square of share unit, 1.00 hectare is transferred to the owner for personal use, and the remaining land of the area of the unit is transferred to common ownership.

• Create an array of common ownership for the lease.  

4.2. Method of implementation of the project.

The project is implemented by the initiative group, created by the author of the present project, in close liaison with the regional service of the Ministry of agrarian policy and food of Ukraine, initiative group of shareholders and the local administration, cadastral company (running 3-4 groups), the notary.

All work is performed in strict compliance with the Ukrainian legislation.

During the implementation of the project, the main priorities are the interests of both the state and the shareholders. In the event of any dispute through joint discussions of the problems to find common ground that will serve as a basis for the desired positive outcome of the process.

All decisions are taken by absolute consensus. In the case of the hopelessness of the problems (ideological confrontation), it is recommended referral to the court.

Everyone who wants to disengage the share unit, has to appeal to the local administration.

For the efficiency and transparency of the process, it will be created an initiative group by the shareholders, whose members will represent the interests of the members of the subgroups (based on quarters of the array). The initiative group will be based in the building of the local administration.

Each stage of the implementation process will be discussed in the meetings of the initiative group of shareholders. The frequency of meetings of group members with the shareholders of the sub-groups can be held due to the situation, but at least once every two weeks. The  representatives of the subgroups will be required to inform the members of the subgroups about the taken decisions.

Meetings of the initiative group both with shareholders and other parties of the process, will be organized according to the situation, but at least once per month.

If necessary, the act can written on the results of meetings, which is certified by signature and seal of the head of the local administration.

Laboratory work with the documentation is conducted- the number of units and their total area is studied.

After concordance of positions, the arrays for division are selected.

Selected array is placed on the existing in the local administration map, and is certified with the seal and signature of the head of administration. The act is written. The act together with a map, is sent to the regional Department of the Ministry of agrarian policy and food.

Plots of land for citizens’ private ownership are allocated strictly on the outskirts of that land mass, part of which these sites are.

The promising location of plots is selected according to the proximity of residential houses of a stockholder, or other area (if there is one, on his or her choice).

Selected on the map array is divided into prospective areas, and each site is given an individual number. Allocation of plots is produced exclusively by drawing lots. After the findings, on the basis of mutual consent, it is possible to exchange plots among the shareholders. The Final outcome is proved by an act.

Out of the total area of the unit, 1.0 ha is allocated for transfer to private property (plots of land for subsidiary farming).

According to the Land Code of Ukraine, public act is made for every part of a farm for transferring  into ownership, and for plots of land of common ownership the certificate is made. The old certificate of the land share is cancelled.

Transfer of the act, which shows the boundaries of the land parcel, is made directly on the plot.

5. Estimated project development time

The terms of project development are designed for work in particular administrative unit, with the number of share units 300-400.

• Work with the local population and the administration - clarification and coordination of positions, in the event of a dispute- making appropriate suggestions - 5-10 working days (hereinafter-w/d);

• Office work with documents - 10-20 w/d;

• Visual inspection of the territory - 5-10 w/d:

• Final coordination of positions of the local population and administration - 5-10 w/d:

• Field topographic surveys, demarcation of units with fixed borders (3-4 working group) - 20-30 w/d;

• The draw for the parcel of shares between shareholders, making the final act (quarterly) - 5-10 w/d;

• Notarization of the deed of purchase and sale between the owners of the units and the state- 10-25 w/d;

• Preparation of documents and transfer of plots to the owners-10-25 w/d;

The implementation of this project in a particular village, with the number of units of 300-400, needs 70-140 working days. The ideological confrontation of the population (including shareholders) and meteorological conditions may have an impact on the observance of the work schedule

6. The economic effect of the project

To prove the effectiveness of the project, the author calculated the cost of the disengagement of the units to be transferred to private property of citizens (7 million units), purchase of shares by the state (27 million hectares), as well as the income received by the state by transferring these lands to the lease.

6.1. Cash costs for the project

6.1.1. The purchase of shares.

The question of the purchase of part of a unit by the government may be evaluated as the dictates of the state, and then be compared with the nationalization of the land.

To avoid this impression, the state must provide acceptable conditions to the owners of the units.

Today, the rent for land plots of agricultural purpose is defined by a presidential decree (02.02.2002) and is not less than 3% of the value determined by the Goszemkadastr. She, the national average is about 400 UAH/ha.

The calculations were made based on the purchase of 21 million hectares of land, with taking to account the attached draft Law of Ukraine "On completion of land reform by means of complexity".

Purchase by the government of 1.0 hectares, taking into account the purchase price of 400 UAH/ha, 20 times multiple of the payment, will cost about UAH 168.000.000.000:

21.000.000 X 400 X 20 = 168.000.000.000 UAH

6.1.2. The cost of notarial services.

Expenses on registration of contracts of sale (including 6% of the total amount) will be approximately 720 000 000 UAH

6% of 168.000.000.000 = 10.080.000.000.

Note: tender can significantly reduce costs.

6.1.3. The cost of cadastral work.

Costs for cadastral works on demarcation of plots (fixation of borders), taking into account that the demarcation of one area will cost 300 UAH for each phase (7 million)and  would be 2 100 000 000 UAH.

7.000.000 X 300 = 2.100.000.000.

Note: tender can significantly reduce costs.

6.1. 4. Total expenditure on purchase of land.

All expenses of the government for the purchase of 21 million hectares will cost about UAH 180.180.000.000:

168.000.000.000 + 10.080.000.000 + 2 100 000 000 = 180.180.000.000.

6.1.5. The cost of the project

The cost of the project will be presented/discussed in details if you are interested in the project.

6.2. Funds received by the state

6.2.1. By selling 1 million hectares of land

From the sale of 1 million hectares of public land experts estimate income from 2 to 11 billion usd. Such a large scatter is due to the fact that area for sales has not been chosen yet.

6.2. 2. By rent of 27 million hectares

The procurement by the government of the former unit areas (27 million ha) makes it the lessor, and the annual revenues will be around UAH 10.800.000.000:

27 000 000 X 400 = 10 800 000 000.

6.2. 3. By taxation of 7.0 million hectares of private land ownership

After the transfer of 7 million hectares into the property, the state Treasury will receive in the form of taxation about 21.000.000.000-28.000.000.000 UAH:

7.000.000 X 3.000 (4.000) = 21.000.000.000 (28.000.000.000)

6.2. 4. Profit as a consequence of income taxes (from the funds of the cadastral companies, notaries and banks)

 After the registration of contracts of sale, in the form of taxes, the state Treasury will receive about 1948800000 UAH in the form of one-time premiums.

  6.3. The economic effect.

Purchase of 27 million hectares of land by the government will cost 180.180.000.000 UAH, which is about 7.21 billion usd.

According to various estimates, from the sale of 1 million hectares of land it is possible to obtain from 2 to 11 billion usd. When you consider the selection of land plots for auctions, it is possible to cover the cost of the purchase fully, and in the form of taxes the state Treasury can receive about 1948800000 UAH.

The government, having obtained 27 million hectares of land, from the rent of these lands will annually receive 10.800.000.000 UAH. Today, there is rate which sets the rent at least 3 % of the cost. It is  stipulated in the presidential decree of Ukraine from 02.02.2002 G. It should be noted that the Verkhovna Rada registered a bill No. 3345 "About protection of the rights of owners of land shares" (authors - O. Lyashko and O. Kuprienko, Lyashko Radical Party), which suggests rents of not less than 10% of the value of land, that will be about 1330 UAH/ha. In the case of the adoption of this bill, the state from the lease of 27 million hectares of lands will annually receive about UAH 35.910.000.000.

The state, after the transfer to citizens of 7 million hectares of land as shares in private property, each year will get profit from 21.000.000.000 to 28.000.000.000 UAH in form of taxes to the budget.

From the calculations of costs and profits above it is obvious that the balance of the economic effects of comprehensive land reform is definitely positive.

But, in addition to economic positive effects, comprehensive reform has a great moral and political effect.

Note: all the calculations were made taking into account the possibility that the state share parcels will be purchased at 20 times the annual rent. Of course, the real situation will be different from the situation of the proposed project. Part of the units will be purchased in 10 fold volume, and some even will refuse to sell. It is absolutely impossible to predict the behavior of shareholders. On this basis, actually necessary and predicted by this draft amount for the purchase of unit sections will be different, also there may be a difference between the data actually received to the state Treasury funds and predictable. The calculations were made in order to prove the positive effect of the project.

7. The cost of the project

The cost of the project, with a detailed calculation will be presented if there is the interest in the project.

The cost of the project will include:

7.1. Hiring by the author of the project a working group for the implementation of the project.

7.2. The works of comprehensive land reform in the administrative division were 300-400 units land units are located, hiring of 2-3 lawyers, 2 specialists in measuring. Costs for the purchase of the units and services of notaries, cadastral companies and banks are not provided.

7.3. The involvement of advanced students (8-12) from  legal, geodesic and land management faculties for practice on land relations, scholarship provided.

7.4. According to the obtained results, the publication of a manual (with a circulation of 2-5 thousand, depending on demand), on a comprehensive land reform. The guide will thoroughly describe the details of the whole process, including large text and graphic material.

7.5. Blank certificates and state Acts on land of common ownership and private ownership.

7.6. Advertising is the process of comprehensive land reform in the media.

8. Thesis of the project

8.1. The government's acknowledgement of mistakes and miscalculations in the process of land reform.

8.2. The transfer of agricultural land in private property of citizens in whose legal use they are.

8.3. Division of area unit into plots of private farms and common property.

8.4. Transfer into property 1.0 hectare (or smaller) square of land shares.

8.5. The multiplicity  of sums for the acquisition of shares, depending on the date of conclusion of the sale contract.

8.6. The use of annual land rent as a unit for counting the purchase price of the shares.

8.7. Non-assignability of the shares in the inheritance.

8.8. For maximum transparency and reliability of the whole process, the involvement of both the public and private entities, and the shareholders.

8.9. No sale (by auction) of state agricultural land before the process of demarcation of the units.

9. Final provisions of the draft

The author of this project has extensive experience in land relations:

• diploma with honours in specialty "Land Surveyor", agricultural Institute (1983);

• work experience over 30 years associated exclusively with land issues: the positions from engineer land surveyor at the design Institute, to the head of district registration service of the National Agency of Public Registry of Georgia, in different years was the chief of the three regional services;

• experience in land reforming: from the beginning of the land reform process in Georgia, was the curator of the 4 areas;

• experience of work in international organizations - the project of the world Bank (WB) and the international organization for agriculture development (IFAD)- the chief of the district registration service (8 years);

• the theme of doctoral dissertation- "The results of the land reform and ways of its improvement by the example of Kvemo Kartli region", 2004.);

• participant of international conference of students (Academy of Agriculture, Jelgava, Latvia, 1982);

• training at the design Institute in the city of Kalinin (now Tver, Russia, 1982.);

• participated in the development of laws, legislation and benefits for land reform and registration;

• organization of 3 meetings/conferences at district enrollment services; participant of many national conferences.

• took a course on land and real estate registration in the UK;

• author of numerous scientific articles and publications in print and online publications, including on the Ukrainian sites;

• in Ukraine, participated in many meetings related to land issues, including the Verkhovna Rada of Ukraine;

• was invited to the international conference "Support for Ukraine" April 28, 2015.

Based on the foregoing, the author of the project on his own experience clearly sees the problems that exist today in land relations and offers solutions to them.

According to the author of the project, the government must recognize the gross errors and miscalculations that were made at the initial stage of the land reform in Ukraine, which are the causes of today's problems. This may be unpopular, but a bold step could be the basis of positive goodwill and trust of the population to the government with solutions to land issues.

The author believes that today’s situation is a set of problems, and must be addressed comprehensively. Those agricultural lands, which are in lawful use of the citizens of Ukraine, must be declared their private property; for the full functioning of civilized land market, to make the demarcation of land shares to plots of personal peasant farms (article 25 LCU) and common ownership (article 86 of the Land Code of Ukraine).

The author is an adherent of the free land market, but the launch of the market under the current legislation is a greater error than the effect of the moratorium. Years of unresolved problems even more aggravated and put vital necessity of solutions to these problems on the agenda. Moreover, in his opinion, market launch by a pilot sale of one million acres of public land fertile (as it is foreseen by now) before the process of disengagement of shares, is fraught with great danger, both economic and political, and for the stability of the state as a whole (Kakhaber Kareli "Time bomb under the code name of a MORATORIUM", blog.liga.net).

According to the author, today's attitude towards land issues is too passive and straight. Despite numerous meetings at different levels, the lack of direct dialogue with the public (shareholders) is felt, as well as the ability of the government to admit their mistakes, or of legislators to vary in solving the problem.

The author of the project believes that both sides of the relationship, the government and population must realize the hopelessness of the current situation today. The owners of the units do not have discretion to dispose their own property or own their land shares in full, and the government can not carry out either action without the consent of the owners of the units and because of the inevitability land share division. That is why only the mutual concessions from both sides will allow positive solutions for many existing problems in land relations.

The Project

© .К.Ка reli .2016. All rights reserved

The law of Ukraine "On declaring agricultural land as the private property of the citizens in whose lawful use they are’’

Article 1. General provisions

The population of Ukraine uses the land for agricultural purposes for many years on legal grounds. These lands have not  been fully transferred to their property yet, and are public property, which negatively affects both the country's budget and objective and reliable information on land use in the country as a whole.

The current Government of Ukraine selected democracy based on European values, where the priority is respect for and protection of the rights of the owners, as the course of development of the country.

Considering the interests of both the state and the population, it is necessary to regularize land tenure in the country and to make the legalization of these lands as private property. That will be a step which encourages the free land market

Article 2. The procedure for transferring land plots into private property

Agricultural land, which as of 1 January 2016 is legally used by citizens of Ukraine, to declare their private property.

Land is transferred to Ukrainian citizens as private property free of charge.

Article 3. The scope of the law implementation

The effect of the recognition of property rights apply to the land gardening, horticulture, country and personal farm. All the above land is described as plots of land to private ownership for agricultural purposes.

Article 4. The purpose of the homestead lands of private ownership

When using plots of private property for agricultural purposes, there is no need for changes in purpose within the categories of agricultural land.

Transferring of plots of private property into other categories and changing their purpose are implemented in accordance with the Land code of Ukraine (article 20).

Article 5. Documents certifying the lawful use of land plots

Documents certifying the legality of land ownership are the following: an extract from the family/house book from the local, extract from the land-corded book of the agricultural enterprise, a certificate from the archives, certificate from the Bureau of technical inventory, Books of the members of garden association, the court's decision.

Article 6. The procedure of land registration

The state service of Ukraine for geodesy, cartography and cadastre (Gosgeokadastr), register as private property household land, when applying, attaching relevant documentation and measuring of the drawing.

The state tax service must make the appropriate changes in the tax base.

Article 7. The lack of restrictions on parcels acquired by the present law

Land, declared the property of the citizens by this law and registered by Gosgeokadastr as private property, is not the subject to the moratorium on sale of agricultural land.

Article 8. Final provisions

This Law enters into force at the date of its publication.

The Cabinet of Ministers of Ukraine within two months from the date of entry into force of this Law provides for changes in the legislation of Ukraine, also in the regulatory framework of the relevant structures.

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The project

©.K.Kareli.2016. All rights reserved.

The law of Ukraine "On completion of land reform by means of completeness"

Article 1. General provisions

This Law determines legal, economic and organizational arrangements for the completion of the land reform and launch of a full-fledged land market and protection of rights of land owners by the state.

Land reform held in Ukraine was accompanied by errors which led to today's existing problems, the main of which is the moratorium on sale of agricultural land. Because of the moratorium, Ukraine has failed to form a civilized and transparent land market, which is one of the main characteristics for a modern and democratic state.

In the course of the land reform, 28 million hectares of agricultural land were allocated to 7 million citizens of Ukraine. Free transfer of such amount of fertile land into the property is impractical- it would adversely affect the agriculture, the economy and the stability of the Ukrainian state as a whole.

 To complete land reform, which began more than three decades ago and to launch a civilized land market, the process must be carried out by means of complexity.

Article 2. The scope of the law.

This Law regulates relations related to the demarcation of parts of the area of the unit, provided for the transfer to the private property of citizens for private farming (Art. 26-8 of the land code of Ukraine), common ownership (article 86 of the land code of Ukraine) and the purchase by the state.

Article 3. The completeness of land reform.

Comprehensive land reform provides for the completion of land reform by means of completeness - aggregate of private (private farm) and common forms of land plots ownership that represent the parts of land units.

Article 4. Areas foreseen for the partition of the units

Out of the total area of the unit, 1.0 ha of land is allocated to unit holders for personal farming free of charge; the remaining area of the unit is credited to the area of common ownership or is purchased by the state.

If the area of the unit is 1.0 hectare and less, the land share is transmitted entirely into the property.

Article 5. The parties and the participants of the process, their powers

1. Powers of the Ministry of agrarian policy and food of Ukraine

(a) the state represented by the Ministry purchases unit areas.

b) the Ministry performs the selection of banks, notary and cadastral companies in each district for work. The selection is made solely by means of tender.

C) to observe and be a direct participant in the whole process.

g) At any stage to demand from the local administration and initiative group to acquaint it with the progress of work, to make its comments and recommendations.

d) to control the actions of notaries and the cadastral companies, the compatibility of their work with the conditions described in signed with them contract.

(e) After the signing of the contract of purchase and sale with the shareholder, to make money transfer.

g) to apply with a statement to the registration service for the registration of land acquired as public property.

2. The powers of the local administration

a) to observe and be a direct participant in the whole process.

b) if necessary to ascertain the acts and protocols of different meetings and the meetings of Ministry representatives, members of initiative groups and shareholders.

c) if necessary and at the request of the initiative group to present the necessary documentation for work.

g) together with the initiative group to choose an array for transfer to the property for personal farming.

d) at any stage of the work to require from the initiative group to inform on the progress, provide comments and recommendations.

3. The powers of the initiative group and its members

a) In a particular administrative division for review and the transparency of the process, the initiative group is created. Shareholders quarterly select members of the initiative group, who will complete the initiative group. The work of initiative group members is not paid.

The initiative group will be located in the building of the local administration.

The choice of the members of the initiative group for the transfer of powers is made by will of the shareholders. It is drawn up, signed and confirmed with the seal of the administration.

b) The member of the initiative group protects the interests of shareholders who delegated him. At the meeting of the parties he voices the opinion of shareholders and after meeting acquaints them with the decisions.

c) Each stage of the process is discussed in the meetings of the initiative group of shareholders. Frequency of meetings of the group member with the shareholders of the sub-groups is due to the situation, but at least once in every two weeks.

Conduct laboratory work with the documentation - to study the number of shares in the units and their total area.

Together with the local administration to select the array to separate into sections by 1.0 ha each, for transfer to the property under the personal peasant economy.

Based on laboratory and field works, to ensure the drawing of lots among the shareholders of  divided in advance sites.

d) the group must ensure delivery of shareholders in the notary office for the registration of contracts of purchase and sale as well as the presence of shareholders of  allocated areas for the delivery of land and transfer of land Act.

Meeting of the initiative group, both with its shareholders and other parties of the process will be convened at the request of the situation, but at least once per month.

If necessary, the meetings shall be drawn and certified with signature and seal of the head of the local administration.

4. Powers of cadastral companies

a) Cadastral companies act strictly according to the items described in the contract concluded with the Ministry of Agrarian policy and food of Ukraine.

b) The Company carries out the measuring and measured work on the site, selected for this purpose. When performing work it is guided by the cadastral data, as agreed between the parties.

c) The Company carries out the disengagement of the sections, and the fixing of boundaries for the identification of objects (columns). Based on the obtained result, presents the map to parties for the draw.

d) The Company is present during the draw of areas and, if necessary, gives explanations.

e) The Company is directly involved in the delivery of the parcels to owners at the place, using the data of the draw.

5. The powers of notaries

Registration of contracts about purchase of a share is notarized, by the notary office, selected by tender. Payment for notarial services must be made by the state.

In the case of the requirement of a stockholder, a contract can be  produced by another notary, payable to the shareholder

6. The powers of the Bank

Granting funds for shareholders is done by the bank selected by tender.

If required by the shareholder, to take advantage of other bank, in this case payment of bank services is made by the shareholder.

Article 6. Shares purchase, the amount of purchase and form of payment

The purchase agreement for the unit is between the owner of the unit and the state represented by the district service of the Ministry of agrarian policy and food of Ukraine, on the basis of the statement of the unit holder. The application is the only basis for the signing of the contract. Contracts are drawn up by a notary.

a) For agreements of purchase and sale entered into before 1 January 2018, the purchase amount per hectare of the unit is 20 times the amount of the annual rent specified in the lease. For treaties concluded after the aforementioned date, the purchase amount of one ha unit is 10-times the amount of rent. The contract can be concluded at any date, upon receipt of a statement of the unit holder. In the case of a contract signing after receipt by the shareholder of the annual rent, the amount shall be deducted from the total amount.

Those unit holders who do not take advantage of this law, shall receive an annual rent, in an amount according to the lease agreement.

After the death of the owner of the unit, the land unit is not transmitted by inheritance, and is transferred to the state land Fund.

b) payment of the purchase price to be single, within 30 calendar days from the date of registration of the contract.

c) the owner of the unit, when receiving the amount for the sale of the unit to the state, shall be exempt from taxation, provided the tax code.

d) payment is made by bank transfer to the unit holder account. For a comfortable maintenance for the population and reduce the cost of banking services, the bank - partner will be determined by tender.

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Article 7. Documentation on sites

The plots generated after the disengagement of unit areas, in accordance with Ukrainian legislation need:

• The state Acts on the passed in property areas of a farm,

• Certificates in the areas of common ownership.

When the new State Act and Certificate are issued, pre-existing Certificate to the unit will be cancelled.

Article 8. The division of shares and amendment of lease

The work of delimitation of cadastral units is performed by certified companies that are selected by tender.

For the purpose of rational use of land and prevention of fragmentation of land areas, land plots for personal peasant economy are allocated strictly on the outskirts of that land mass, part of which these sites are.

The demarcation and allocation of plots is produced exclusively after the harvest by the tenant  or by monetary compensation of the harvest costs by a shareholder to the tenant on the basis of mutual agreement between them.. .

The division of the area (s) of the unit is not allowed to be withdrawn or transferred into ownership, when:

• the lessee made capital investments under the lease agreement and carried out in strict accordance of the project (construction of a building or structure, planting perennial crops, etc.). The restriction does not apply to illegal structures, if the legislation does not provide other;

• tenant does actions of national strategic importance.

If necessary, in some cases, it is allowed the allocation of equal-area plot to a private farm, from the lands of communal property of the corresponding administrative division (article 12 of the land code of Ukraine).

After the disengagement of the units and the allocation of the plot out of shares, the appropriate changes to the lease are made from the adjustment area of sub-rented plot and cadastral maps.

About changes in the lease, it is reported to the tax office.

Article 9. Abolition/suspension of obligations the adoption of the Law of Ukraine "On land turnover"

For work on delimitation of parcels of shares and transfer of part of the area in the property, to abolish/suspend the obligation of adopting the Law "On land turnover" as unnecessary and inhibiting factor of such an important reform.

Article 10. Final provisions

1. This Law shall enter into force on the date of its publication.

2. Within two months from the date of entry into force of this Act, to provide:

a) for the Cabinet of Ministers of Ukraine, changes in Ukraine's legislation, also in the regulatory framework of the relevant structures.

b) for the Ministry of agrarian policy and food of Ukraine, development and approval of instructions, with a detailed description of the activities to carry out the relevant works.