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11.10.2016 21:09

Kareli Method "Comprehensive Land Reform"

Доктор економічних наук, експерт із земельних питань, Грузія / Україна

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

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

For your consideration, I offer mythoughts on existing problems in the legislation, and the state of affairs inland relations and suggest ways of solving them. Actually, the problem is more profoundand multifaceted than a simple "open or not land market." I am suremy ideas would have the opposite opinions, as "for" and "against",I will be equally happy because it can be the basis for beginning a deeperdiscussion of such pressing issues and problems.

I hope for your activity in yourfeedback and I thank you in advance.
In the project Kareli Method "Comprehensive land reform" activitiescontributing to the completion of land reform and launch a full-fledged landmarket in Ukraine are discussed (48 pages A4).
The project includes 2 bills

The project is aimed at legislators andspecialists of the land industry, land share owners, and a wide range ofreaders 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


. . .

 Kareli Method "Comprehensive Land Reform"

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


1. The relevance of the project

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

Newhistorical realities brought new requirements, it was necessary to conduct manyreforms. One of the most important processes is considered the land reform withits final result- the formation of   a free land market. If one of the greatestachievements of the Soviet power, was the collectivization of land, after thecollapse of the Soviet Union, in the same domain is considered the process ofprivatization of land and land reform.

InUkraine, the beginning of the land reform was announced while being in theSoviet Union: according to the Resolution of the Verkhovna Rada of theUkrainian SSR  “On land reform"(18.12.1990 dated March 15, 1991)  allthe lands of Ukraine were declared the object of land reform. This item can beconsidered a gross error that led to today's existing problems and prevents thecompletion of land reform; it was already possible then to predict the currentimpasse.

Agriculturein Ukraine is a priority sector. It produces more than 3% of the world's supplyof grain and provides 10% of world exports, occupies a leading position in theworldwide production and export of sunflower oil to 4.5 million tons, 55% ofworld 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 areaof black earth occupies 3-rd place in the world (25% of the world total). TheLand code of Ukraine noted the special significance of the land, and that it isunder state protection. The first article of the first Chapter (Generalprovisions) of the first section (General part) of the Land Code of Ukrainestresses: "the land is the main national wealth”

Land reform is a long and complex process thatneeds to take account of the political and economic conditions of the country.It requires major changes in the existing, and creation of a new legislativeframework. Land reform is the only basis for the formation of a civilized landmarket. 

There areno democratic and highly developed countries in the world, where there are nomarket relations, among which a land market occupies a special place. A freeland 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 ofthe banks, lawyers, cadastral companies, attorneys, notaries, intensificationof existing and creation of new large and small agricultural enterprises, thebasis of the brand new structure of the registration service of property andproperty rights, extra jobs. The existence of ownership and protection of therights of the owners by the government are among the major indicators ofdemocracy and civilization of the state. 

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

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

Long beforethe land reform, the shadow land market, i.e. a hidden form of purchase andsale 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 notarieswere the heads of agricultural companies and local councils, and theChairpersons of the garden associations (in the late 1970-ies, when urbanresidents started to get garden plots of 0.06 hectares, they were given "Gardener’sbooks "). The mechanism of the sale/transfer of land was as follows: in thefirst case, heads of the enterprises gave the villagers the permission to leasethe land in a Free Land Fund, and immediately passed it to another interestedperson, i.e. the seller. In the second case, everything was very simple: "Gardener’sbooks" of the old users were just destroyed, and new ones, for the"new" members were made. These operations were conducted only afterthe 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 ofgarden plots in the same scheme is working in Ukraine nowadays. 

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

The moratoriumwas 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 ofagricultural purpose, but not earlier than January 1, 2016, are notallowed": the sale, alienation and changing the purpose of land(transitional provisions, section 10, p. 15). 

A paradox, but true: along with themoratorium, there were and there are in force, adopted in different years(before and after) laws and legislations, which guarantee both the protectionof property rights and the rights of a stockholder. Some of them are: the LandCode of Ukraine (art. 25, 3(4), 32(1), 31(d), 87(1.a), 88(3,4), 121(1,8); theLaw of Ukraine "About property" (07.02.1991); the Law of Ukraine"On forms of land ownership" (30.01.1992); Decrees of the Presidentof Ukraine "On urgent measures to accelerate land reform in agriculturalproduction (10.11.1994) and "On the procedure sharing mechanism of landtransferred 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) andthe sample of registration books of certificates on the right on a land part(share)" (12.10.1995), the Law of Ukraine "On the procedure forallotment in kind (on locality) of land plots to owners of land shares(shares)" (05.06.2003): the Law of Ukraine "On alienation of landplots and other immovable property for public purposes and for reasons ofsocial necessity" (2010). According to the article 14 of the Constitutionof Ukraine, the right of ownership of land is guaranteed, and article 41-"The right to private property is inviolable". Clarification ofownership rights in the Land Code of Ukraine: "the Right of land ownershipis the right to possess, use and dispose of land plots" (article 78), thelaw "On amendments to some legislative acts of Ukraine on determining thecontent and order of approval of land management documentation"(06.06.2015). 

In the coalition agreement of thecurrent Verkhovna Rada, the readiness to enter the land market was marked, atthe same time, the government envisaged the extension of the moratorium until2018. I wonder how it will be possible to compare two radically differentconcepts - the market and the moratorium. This was the reason for theridiculous comparison. Anders Aslund (senior scientific officer of Peterson Institutefor international Economics, member of the expert Council under the Ministry ofeconomy of Ukraine,) in his article "Your policies are stuck in theoutdated picture of the world", said: "This project of the coalitionagreement reminded me of the speech of Leonid Brezhnev at the XXVI Congress ofthe CPSU in 1981," (liga.net) 

Theinconsistency in the legislation, which many Ukrainian officials complainabout, is one of the reasons for the stagnation in land relations. One, but notthe only one. Prime Minister of Ukraine Volodymyr Groysman during a visit to theUSA said, "We have three enemies: Russia, corruption, populism. They are majorenemies, 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 JohnBiden stressed the importance of reforms: "...not the last chance forUkraine, but the last in order to get it right" (nv.ua, G. 01.07.2016). 

To thelist of "enemies" of the state, in the context of land relations, itwould be possible to add more, not less "dangerous": confusion andindecision. 

But cancorruption and populism be the cause of long-term moratorium and mirageprospects of launching a full-fledged land market? 

Corruptionis a universe-size disease: there is no country in the world where it did notexist. Countries only differ in its level. According to TransparencyInternational, 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 inthe 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 ofthe legislative framework is required to make corruption needless - the faultylaws in land relations and years of unsolved problems is the most fertile soilfor corruption, they breed corruption. 

Speakingof corruption, it is necessary to remember an interesting fact. The formerPresident of Ukraine Viktor Yushchenko considered the moratorium as the maincause of corruption and hoped for its abolition in 2008, but Parliament has nottaken any action in this direction, and the head of the presidentialAdministration Boris Lozhkin to get rid of the disease suggests that “the landmarket should appear very quickly". Andrew Martin (Vice-Chairman of theAssociation "Land Union of Ukraine") considers that the interferencein the process of purchase-sale affects the process: "Let them agree amongthemselves to set prices, sell, buy. Any additional regulation often harmrather than help the normal development of market relations"("Expert: land is a commodity, and often it is the nurse of corruptofficials", rian.com.ua, 18.03.16. 

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

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

The moratorium, the validity of which expired on 1 January2016, was extended until 1 January 2017. In the spring of last year theVerkhovna Rada of Ukraine registered a bill (draft No. 2791, 08.05.2015) with aproposal: to extend the moratorium until 2020 and on the website of thePresident 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 thesame date of the moratorium. Strange but true: with such expectation andnational importance of this bill the government itself are unable to draft aseminal 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 thatnext 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 thesolution of all problems ("People’s deputy: The opening of the land marketneeds 4 years", agroportal.ua, on 20.11.2015. Against the lifting of themoratorium is the Minister of agrarian policy and food Taras Kutovoy, who is theauthor of a bill to extend the moratorium. In connection with the terms ofextension of the moratorium, he noted that, "Some want to extend themoratorium until the next presidential election, others for 20 or 30 years, butno one says why such a period is selected. Evaluating the lifting of themoratorium itself, he makes a comment that it is a painful question, "...but no time left to hide from it anymore." ("Kutovoy against liftingthe 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 inagribusiness. The press service of Association "Ukrainian club of agrarianbusiness" even appealed to the Central authorities with a request toprovide information on the future extension of the prohibition of alienation ofagricultural land. This fact clearly indicates lack of informationalcommunication between the legislators and the people. Farmers think: "Nowfor the agricultural business it is not so important, what is a consensusdecision on this issue, but it is important a long-term vision for the nextthree 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 Yatsenyuksaid, "On the basis of the existing legislative framework not land marketbut land bazaar will start by 2016”.

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

Thecurrent government intends to launch the land market in two stages. This actionplan was announced by the Head of the State service of geodesy, cartography andcadastre Maxim Martyniuk in the article "Land reform: a compromisescenario" (gazeta.zn.ua, 16.10.2015.). According to first person of landservice, the government for running the land market "offers a two-stagevariant. The first stage - from 1 January 2016, involves the sale ofagricultural land of state ownership" and "after the first phase issuccessful, risks will be identified and mitigated, and the price of land willrise until the market price, it will be possible to open access to the marketfor citizens. We prescribe the provision that certain articles will take effectfrom 2019 - in our opinion, this can be considered a working option for the startof a full-fledged land market." 

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

The resultof this may be that agricultural enterprises which can not keep newly acquiredprivate and leased land, will start to dissolve the lease contract that is apainful blow to the pockets of the villagers, this also will cause a temporarydisruption of agricultural production, the duration of which cannot bepredicted. It would be better, in the case of the legalization of procurement rto afford renters to buy land, leased for years, from the peasants. But themain 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 willbe a question of expanding the circle of buyers." From the above it is theimpression that the auction will be conducted for a limited number ofcustomers, which then in case of failure of the first stage can be expanded. Iwonder why wait for the failure and why not hold auctions without restrictionsthat 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 willrise to market price"; the price of land is the market price, which,according to many circumstances and the proportions of the offers/demands isconstantly changing. The free market establishes prices. They may be onlyacceptable or unacceptable to the parties. The market is difficult to breakmechanically, but if you really try, it is only for a short time. The marketand the price must be free. 

Pricefluctuations, at a reasonable formation of the starting price at auctions ofthe first stage will be only with a plus. After the government sells hugeamounts on the first stage of the reform, and thus all the major clientsacquire land, the second stage will indeed be accompanied by pricefluctuations. By this time, on the market will remain a small number of large,mostly medium and small, as well as newly created agricultural enterprises andprivate entrepreneurs. It is necessary to consider that the price per hectareof large, medium and small arrays differ from each other, outdated procurementauction price of the first stage of the reform is unlikely to be useful fororientation in the second stage. Prelaunch price may change immediately afterthe market launch: a sharp oscillation can only occur up, and in the case ofreduction, this will happen gradually/smoothly. Both sellers and buyers will beconfused: the initial stage of all processes characterized by a certaineuphoria. To clarify the situation and stabilize the market, in a favorableexternal environment, it will take 6-12 months, after which prices stabilize,and possible future fluctuations will be caused by objective reasons (thepolitical and economic situation in the country, the implementation of asignificant project in a particular area, etc.). 

Accordingto the Head of Goszemagenstvo (State Land Agency), the government considers itnecessary, before thousands of sellers enter the market and for alternatives to"big money", the presence of state-owned operator, which will buy theland at a fixed price "for the protection of the citizens". Healso believes that people should be given the opportunity to sell their share bymarket price to the state operator. Thus We will derive them from thepressure of agricultural holdings", and as "a state agent it isconsidered one of the state banks that have the resources for ransom plots,though, taking into account the negative experience of the Land Bank, he himselfexpresses concern. 

Thestatements above generate a lot of questions that must be answered. 

1) So at what pricewill 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 pricefluctuations 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 therisk from the Bank? The opinion of the author of the project: considering thestate bureaucracy, in the case of fixed prices, it will be difficult to respondimmediately on the processes of market and fixed prices will diverge. This willcause a temporary suspension by the part of the land owners of sale that willdefinitely cause permanent passivity/activity in the land market, and it ishighly desirable, and the price will be biased. But the purchase of the plotsat market price is almost eliminated - the operator is unlikely topurchase as many plots (with a long-term perspective of profit), to influencethe land market. Most likely it will be a single procurement. This idea is nodifferent from the Land Bank, which ignominiously lasted only two years(2012-2014).g.). So it is obvious: this idea is fundamentally defective andunacceptable. 

2) The emerge of anew player in the land market in the form of the state operator- would it notbe "a burden" for the cost of the plot? The opinion of author of theproject: 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 thestate agent on behalf of the state Bank, and was at least a rough budget determinedfor this purpose? Can single Bank cope with the huge size of the market? The opinionof the author of the project: the ransom of all the plots is absolutelyimpossible, for this purpose, we need a lot of money, and from commercial pointof view, for the Bank is not attractive and dangerous. And if redemptions aremade by the individual, this will be the reason for the emergence of anothercorruption segment. Considering the fact that the Bank name is still notdisclosed and the negotiation process is on, a doubt about the impartiality andobjectivity of the process remains. 

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

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

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

Thelaw "On land turnover" remains a stumbling block in the legislation. Itshould be noted that Ukrainian experts, recognized the bill as "raw".In the bill many of the items of the laws "On notary", "On landlease", the land code, tax code and civil code relating to the activitiesof a notary, determine the heirs of the property, fiscal policies, pricing, etc.are duplicated, they have no place in this legislation. According to thearticle 13 "Procedure for the sale of land for agricultural purposes underprivate ownership" (consisting of 15 points), in the process of sale,several formal structures are involved. What is more, it is proposed a two-periodsales cycle of three months (2+1) – "exposition term of land - validity ofthe proposal of the seller to sell it or the rights on it on certainconditions". That will certainly make the process long and also can raisethe price of the cost of land, taking into account the current level ofcorruption. 

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

The market price isdata, which is constantly changing. The free market establishes prices, theymay be only acceptable or unacceptable to the parties. Closely located the sameareas may be exposed to the market at different prices. This is how of thefamous scientist Bill Williams characterized market relations: "Allcommodity markets are created by people whose opinions differ on the value, butthere is agreement in price!!!!" ("Trading chaos"). 

The relationship ofmarket activity and the political and economic situation is clearly visiblefrom the table (# 1) showing the number of registrations in 2008, before andafter the August Georgian-Russian war. As a result of the fighting, the activereal estate market throughout Georgia fell by half, and the price of realestate 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 ofregistrations to come to the previous level, and as for the settlement ofprices on the market, it took more than a year to get out of a state of shock. 

                                                                                                         Tab. # 1








Registration in total







Buying/selling reg.







Mortgage reg.







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

There are a lot ofthought about shares and allocation of shares. According to the people's deputyof Ukraine Arkady Kornatsky: "if he (the owner of the unit – author’snote) sells the land (to the state – author’s note) at a price close to theminimum reasonable for investment to be justified, then this peasant, inaddition 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 forordinary yet even solid profit? Who will install "close to the minimumfeasible price: the state or audit? If the state- does it have the necessarynumber of qualified personnel? If the audit - who will pay for its services? Arereasonable and market prices two different things? What if it is used on thepart of the functionaries to pressure on shareholders? There are a lot ofquestions, their number must be reduced to a minimum.

The desire of theowners of shares after the lifting of the moratorium to sell their lands is oneof the arguments against the alienation of shares. In various Internetpublications, there is different data about the number of people willing tosell 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 unitholders have indicated their desire to sell" zn.ua, 16.10.2015.), there isa 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 policyand land relations Taras Kutovoy expressed the view that: "no matter what anyonesaid, 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 isseen as a negative term of land share division, that the owners of the unitswant to do something illegal...

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

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

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

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

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

Rural residents, creating products andpaying taxes to the state budget, contributed to the economic growth of thecountry. All those houses, which the city dwellers privatized, were built onbudget funds. It is impossible to compare the value of apartments obtained inthe property, with the cost of land units, it would be incorrect, because urbanstudio apartment (albeit on the outskirts), costs as much as a few tens ofhectares. 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 ofland market - the low price of land, and authors to justify their reasons makeparallels to the data of foreign countries. Taking into account the fact thataccording to Ukrainian legislation, only citizens of Ukraine have the right topurchase agricultural land as property, such comparisons are inappropriate. Itshould be noted that different sites presented different statistical data onaverage revenue and cost per hectare of land (tab. # 2).

The table shows the countries withproperly functioning land market, despite the fact that the prices differsignificantly. To launch the land market it is not necessary to wait foreconomic progress of the country- with Spanish or French level.

Tab. #2



salary usd.

Cost of 1 hect.



Salary usd.

Cost of 1 hect.














35 000























The market always and everywhere setsthe prices by itself, they differ both among countries and within countries. InUkraine, the price of land varies: one hectare of agricultural land in Zhytomyrregion 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 fromeach other, but that does not give anyone the motive to suspend the apartmentmarket.

The delay in solving ofland issues for an indefinite time would only worsen the problem. The extensionof the moratorium is not a solution to the problem. It is the same as takingpainkillers during the incurable disease. When and what consequences this canhave, it is better to predict in advance. The value of reforms for Ukraine wasclearly expressed by former US Ambassador in Ukraine, research scientistof  Brookings institution Steven Pifer,who said at the Kyiv security forum: "If you get engaged in politicalgames instead of reforms, you could be in a situation when the West will turnaway from you. ... that the patience of the West runs out, it is notunlimited" (If the reforms in Ukraine will not take place, the West canturn its back on Ukraine – Pifer, nv.ua

You can't accept the factthat the moratorium serves to exercise the mind, to find ways to bypass it. Agood example of a legitimate violation of the law gives Victor Kobylyansky: theseller and the buyer after a pre-made agreement, execute a mortgage agreementfor the land share, after the debt is not returned, the case is referred tocourt. During the process, the parties conclude a settlement agreement underwhich 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 tobuy land for a garden in Ukraine", infoindustria.com.ua that 22.01.2016.)and Artem Repenko (Doctor of law, lawyer, Alienation of land: problems andsolutions". liga.net that 01.04.2016. also complain about mazes in landlaws.

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

The author of the project is asupporter of the free market. But the launch of the land market today, underthe existing legislative framework, taking into account the wishes of thegovernment to carry out the opening of the market by experimental auctions, heconsiders it a hasty step and a threat to the economy of Ukraine and stabilityof the country as a whole

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

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

The problem of landrelations is old but urgent, the delay of ordering of problems, magnifies it.The problem should be addressed comprehensively, after thorough analysis, todetect errors and mistakes made in the process, and to identify ways of solvingthem. A clear and proper goal setting will guarantee to achieve the finaldesired result. And most importantly: the people must believed in theimpartiality and objectivity of such an important process, so they shouldbecome a direct performer of the whole process. Speaking about reforms, theU.S. permanent representative to the UN, Samantha Power noted that many of thereforms remained "still on paper" and "it is Important that theUkrainian people remained involved in reforming" ("Samantha powerurged Ukraine to reform "not on paper", G. 11.06.2015 tsn.ua).

It is necessary tomake decisive steps (even unpopular, first of all, to admit mistakes andmiscalculations), the importance of which must be reasonably and objectivelyproved. The confusion and indecision of action provide stable stagnation ofaccumulated problems; correct vision of causes of these problems (but notdeclaring problems as they are) would greatly facilitate the search of ways outof existing maze.  

By having prolongedthe moratorium for a year, the government has made another mistake. Without a clearplan and with vision problems, it would be better to extend the moratorium for2-5 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 the1stJanuary 2017 with one question: what will happen to the moratorium. It casts ashadow on the state itself, on its unwillingness to reform and the ability ofqualified Ukrainian experts, whose voice should be heard. Taking allcircumstances into account, we can foresee that a moratorium will again beextended. 

The present problems is anatural outcome of mistakes and miscalculations made in the early years. Thisproject is an attempt to address those mistakes, to draw conclusions andidentify ways to eliminate/reduce problems. The variety of terms offered by thegovernment for the redemption of unit sections, can cause confusion anddistrust to the evaluation of units. Use of annual land rent as a unit for countingthe purchase price of the shares proposed by the project is an unbiased methodthat does not leave questions or doubts.

Comprehensive Land reformis seen as the only impartial, transparent, objective and reasonable method forthe solution of long-standing problems, existing today in the land legislationof Ukraine.


 2.The purpose of the project

The aim of the project is:

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

• The establishment of thecivil right of land ownership.

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

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

• Transparency, democracyand accessibility for all stakeholders in the process of comprehensive landreform.

• Involvement of localadministrations and the shareholders, cadastral companies and notaries in theimplementation of comprehensive land reform.

• Streamlining of reliableinformation of land use.

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

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


3. The goalof the project

The objective of the project is:

• A model for the completion of landreform.

• The establishment of initiativegroups of shareholders who together with local authorities will implement acomprehensive land reform.

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

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

• To demonstrate the economic effectfor the state treasury and the development of different structures, both publicand private sectors.

• At the end of the work, to publish amanual for conducting similar work throughout the territory of Ukraine, inparallel with work to conduct extensive outreach.


4. Strategyand 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 privateentities that have contact and experience in land relations,

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

• Comprehensive land reform - a set offorms 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 remainingland of the area of the unit is transferred to common ownership.

• Create an array of common ownershipfor the lease. 

4.2. Method ofimplementation of the project.

The project isimplemented by the initiative group, created by the author of the presentproject, in close liaison with the regional service of the Ministry of agrarianpolicy and food of Ukraine, initiative group of shareholders and the localadministration, cadastral company (running 3-4 groups), the notary.

All work is performedin strict compliance with the Ukrainian legislation.

During theimplementation of the project, the main priorities are the interests of boththe state and the shareholders. In the event of any dispute through jointdiscussions of the problems to find common ground that will serve as a basisfor the desired positive outcome of the process.

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

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

For the efficiencyand 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 (basedon quarters of the array). The initiative group will be based in the buildingof the local administration.

Each stage of theimplementation process will be discussed in the meetings of the initiativegroup of shareholders. The frequency of meetings of group members with theshareholders of the sub-groups can be held due to the situation, but at leastonce every two weeks. The  representatives of the subgroups will berequired to inform the members of the subgroups about the taken decisions.

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

If necessary, the actcan written on the results of meetings, which is certified by signature andseal of the head of the local administration.

Laboratory work withthe documentation is conducted- the number of units and their total area isstudied.

After concordance ofpositions, the arrays for division are selected.

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

Plots of land forcitizens’ private ownership are allocated strictly on the outskirts of thatland mass, part of which these sites are.

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

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

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

According to the LandCode of Ukraine, public act is made for every part of a farm for transferring  into ownership, and for plots of land ofcommon ownership the certificate is made. The old certificate of the land shareis 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 projectdevelopment are designed for work in particular administrative unit, with thenumber of share units 300-400.

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

• Office work withdocuments - 10-20 w/d;

• Visual inspectionof the territory - 5-10 w/d:

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

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

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

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

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

The implementation ofthis project in a particular village, with the number of units of 300-400, needs70-140 working days. The ideological confrontation of the population (includingshareholders) and meteorological conditions may have an impact on theobservance of the work schedule


6. The economic effect of the project

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

6.1. Cash costs for theproject

6.1.1. The purchase of shares.

The question of thepurchase of part of a unit by the government may be evaluated as the dictatesof 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 landplots 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, thenational average is about 400 UAH/ha.

The calculations were madebased on the purchase of 21 million hectares of land, with taking to accountthe attached draft Law of Ukraine "On completion of land reform by meansof complexity".

Purchase by the government of1.0 hectares, taking into account the purchase price of 400 UAH/ha, 20 timesmultiple of the payment, will cost about UAH

21.000.000 X 400 X 20 = UAH


6.1.2. The cost of notarialservices.

Expenses on registration ofcontracts of sale (including 6% of the total amount) will be approximately 720000 000 UAH

6% of =

Note: tender cansignificantly reduce costs.


6.1.3. The cost of cadastralwork.

Costs for cadastral workson demarcation of plots (fixation of borders), taking into account that thedemarcation 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 =

Note: tender cansignificantly reduce costs.

6.1.4. Total expenditure onpurchase of land.

All expenses of thegovernment for the purchase of 21 million hectares will cost about UAH180.180.000.000: + + 2 100 000 000 =

6.1.5. The cost of the project

The cost of the projectwill 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 expertsestimate income from 2 to 11 billion usd. Such a large scatter is due to thefact 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 UAH10.800.000.000:

27 000 000 X 400 = 10 800 000 000.

6.2.3. By taxation of 7.0 million hectares of private landownership

After the transfer of 7 million hectares into the property, thestate Treasury will receive in the form of taxation about21.000.000.000- UAH:

7.000.000 X 3.000 (4.000) = (

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

 After the registrationof contracts of sale, in the form of taxes, the state Treasury will receiveabout 1948800000 UAH in the form of one-time premiums.

 6.3. The economic effect.

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

According to variousestimates, from the sale of 1 million hectares of land it is possible to obtainfrom 2 to 11 billion usd. When you consider the selection of land plots forauctions, it is possible to cover the cost of the purchase fully, and in theform of taxes the state Treasury can receive about 1948800000 UAH.

The government, havingobtained 27 million hectares of land, from the rent of these lands willannually receive 10.800.000.000 UAH. Today, there is rate which sets the rentat least 3 % of the cost. It is stipulated in the presidential decree of Ukraine from 02.02.2002 G. Itshould be noted that the Verkhovna Rada registered a bill No. 3345 "Aboutprotection of the rights of owners of land shares" (authors - O. Lyashkoand O. Kuprienko, Lyashko Radical Party), which suggests rents of not less than10% of the value of land, that will be about 1330 UAH/ha. In the case of theadoption of this bill, the state from the lease of 27 million hectares of landswill annually receive about UAH 35.910.000.000.

The state, after thetransfer to citizens of 7 million hectares of land as shares in privateproperty, each year will get profit from to UAHin form of taxes to the budget.

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

But, in addition toeconomic positive effects, comprehensive reform has a great moral and politicaleffect.

Note: all the calculationswere made taking into account the possibility that the state share parcels willbe purchased at 20 times the annual rent. Of course, the real situation will bedifferent from the situation of the proposed project. Part of the units will bepurchased in 10 fold volume, and some even will refuse to sell. It isabsolutely impossible to predict the behavior of shareholders. On this basis, actuallynecessary and predicted by this draft amount for the purchase of unit sectionswill be different, also there may be a difference between the data actuallyreceived to the state Treasury funds and predictable. The calculations weremade 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 theproject.

The cost of the projectwill include:

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

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

7.3. The involvement ofadvanced students (8-12) from  legal,geodesic and land management faculties for practice on land relations, scholarshipprovided.

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

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

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


8. Thesis ofthe project

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

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

8.3. Division of area unit into plots ofprivate 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 unitfor counting the purchase price of the shares.

8.7. Non-assignability of the shares inthe inheritance.

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

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


9. Finalprovisions of the draft

The author of this project hasextensive experience in land relations:

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

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

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

• experience of work in internationalorganizations - the project of the world Bank (WB) and the internationalorganization for agriculture development (IFAD)- the chief of the districtregistration service (8 years);

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

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

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

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

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

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

• author of numerous scientificarticles and publications in print and online publications, including on theUkrainian sites;

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

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

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

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

The author believes that today’ssituation is a set of problems, and must be addressed comprehensively. Thoseagricultural lands, which are in lawful use of the citizens of Ukraine, must bedeclared 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 freeland market, but the launch of the market under the current legislation is a greatererror than the effect of the moratorium. Years of unresolved problems even moreaggravated and put vital necessity of solutions to these problems on theagenda. Moreover, in his opinion, market launch by a pilot sale of one millionacres of public land fertile (as it is foreseen by now) before the process ofdisengagement of shares, is fraught with great danger, both economic andpolitical, 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'sattitude towards land issues is too passive and straight. Despite numerousmeetings at different levels, the lack of direct dialogue with the public(shareholders) is felt, as well as the ability of the government to admit theirmistakes, or of legislators to vary in solving the problem.

The author of the project believesthat both sides of the relationship, the government and population must realizethe hopelessness of the current situation today. The owners of the unitsdo not have discretion to dispose their own property or own their land sharesin full, and the government can not carry out either action without theconsent of the owners of the units and because of the inevitability land sharedivision. That is why only the mutual concessions from both sides will allowpositive solutions for many existing problems in land relations.

The author believes thatwith the current legislation, the situation is completely deadlocked, and themoratorium, last year extended until 01.01.2017, will not be the final. Withouta detailed awareness of the challenges and radical changes in legislation, themoratorium, after the specified date, will surely be extended once again.

According to the author, itis necessary to make more decisive steps in the legislation, and the adoptionof the Law "On land turnover", which is, according to the land codeof Ukraine, the main reason for the moratorium, must be suspended/abolished  on the law basis.

The author of the projectbelieves that the current draft of the Comprehensive land reform is a real stepto:

• launch a full-fledgedland market, and it makes the real estate bargain market value of the subject;

• solving numerouschallenges in land relations;

• elimination of the shadowland market and corruption in land relations;

• reduction/eradication ofshadow land use in general;

• ensuring of inflow ofpresent huge "shadow" funds into the state Treasury;

• streamlining of the realpicture of land use;

• increase of confidence tothe entire process, due to its transparency and democracy, by involving to thework both state structures and the stockholders, selection of the participants ofthe process - banks, notaries and cadastral companies, exclusively throughtenders.

• formation ofconsciousness of the population as for the possibility of implementing the mostimportant processes, with the absolute absence of corruption.

• shifts in land issues fromthe position of long-term stagnation in general.

·• changes of land issues from the position of long term stagnation in the overal. .


10.Strengths and weaknesses of the project.

10.1. The strengths of theproject:

10.1.1. The implementation ofthe integrated land reform at this stage does not require revolutionary changesin land legislation of Ukraine. It is a collection of articles of the land codeof Ukraine: article 25 - private farming and article 86- shared equityproperty.

10.1.2. By implementation of theproject, the government will be able to return to the state Fund the land areaof fertile land in the amount of 21 million hectares.

10.1.3. The adoption of the Lawof Ukraine "On declaring agricultural land as the private property of thecitizens in whose lawful use they are’’, will streamline land management in theprivate sector, the process will be completely free from corruption

10.1.4. The use of annual landrent as a stable value will leave no questions to pricing for the purchase ofland shares

10.1.5. Proof of the importanceof integrated land reform is based on: the analysis of articles and interviewsof officials and specialists of various levels, legislation, statistics, andfinancial calculations.

10.1.6. The government acting asa landlord, will annually receive huge sums of money in the state treasury.

10.1.7. Comprehensive landreform is the only way out of the impasse, having existed for over thirty yearsand obscuring the basis of civilized land relations.

10.1.8. The implementation ofthe project is the only way to launch a democratic and civilized land market.

10.1.9. After completion of thework, the result will not leave ground for corruption in the land market, thuscorruption will reduce in other segments of the business and trading activitiesindirectly related to land relations.

10.1.10. The research resultswill reveal the "shadow" area of agricultural land that willreduce/eradicate the existence of the black money transactions and ensurereceipt of these funds in the country’s treasury.

10.1.11. Collaboration withlocal governments and shareholders will be able to guarantee the successfulcompletion of the work and the absence of errors and doubts neither in thecourse of the process nor its results.

10.1.12. The adoption of the Lawof Ukraine "On declaring agricultural land as the private property of thecitizens in whose lawful use they are’’ will determine the ordering of land usein the private sector, and the implementation of the project will improve landuse planning across the country.

10.1.13. The project implementationwill contribute to enhancing the work of the notary, Bank and inventory structures.

10.1.14. Identifyingstakeholders (banks, notaries and the cadastral companies) solely by the tenderand the participation of the shareholders will increase the degree of democracyand impartiality of the project.

10.1.15. Transparency,democratic character of the process, the possibility of access to anyinformation for stakeholders will be a clear example of the ability of theglobal processes with the absence of corruption.

10.1.16. The economic effect ofthe project is calculated in details. Positive effect, purely economic, as wellas moral and political, has been proved.

10.1.17. The project implementationis transparent and democratic, with the absence of corruption, it will enhancethe credibility of Ukraine as a civilized European state, is a clear proof of theability and desire of the government to the reforms.

10.1.18. The completion of theproject will be an indicator of the willingness and ability of the state torespect the European values of private property and the rights of its owncitizens of being the owners of the land.

10.1.19. The farmers who are themain tenants of the unit, signing the lease with the state, but not with dozensor hundreds of shareholders, will feel safer and more comfortable.

10.1.20. Evidence aboutinadmissibility of carrying out of auctions on sale of state agricultural land,before share land division, as it can have unpredictable result.

10.1.21. Using the amount of theannual rent as a unit for calculating the purchase price of the share, wouldnegate all the shareholders' questions and hesitation as for the correctness ofthe assessment of the site.

10.1.22. The author refrainsfrom giving a specific date of completion of land reforms or launching of theland market. He just examines the timing of the Comprehensive land reform implementationin one administrative division, with the number of units of 300-400.

10.1.23. No arguments: the authorof the project completely abandoned them. All conclusions and calculations weremade solely on the bases of data analysis, interviews and articles on"land topic". Used by the author, the material is transferred in theform of a citation in order to avoid subjectivity, after each use of quotes, thesource of information is specified: publication title, indicating the site anddate. This fact points to the intransigence of the author to the PLAGIARISM.

10.1.24. If you are interestedin the project, the author can submit a "MANUAL FOR the WORK of theIMPLEMENTATION of the INTEGRATED LAND REFORM" in full.

10.2. Weaknesses of theproject

10.2.1. When compiling a projectall the material legislation, statistical data, interviews, articles, andconsultation with many specialists in different sectors (lawyers, surveyors,surveyors), were obtained from the Internet that does not exclude thepossibility of divergence between the given and real data.

10.2.2. During theimplementation of the units’ disengagement process, the need for changes in thelease agreement is inevitable, and that may cause the occurrence of litigation.

10.2.3. In the course ofdemarcation of the units, about 10-15% of the fertile land will go under theroad.

10.2.4. After the unsoldering ofthe lands and their transfer into ownership, it will be experienced a temporaryreduction in agricultural production on these lands.

10.2.5. With the launch of theland market, the market will be saturated with land, which would entail atemporary drop in real estate prices in general - both land plots andresidential apartments. But it is temporary and eventually the market will besettled.


11.The legality of the project, its replication

a) Kareli Method"Comprehensive land reform’ was registered in the National Center ofIntellectual property" Rospatent, in accordance with internationalstandards and it obtained the Copyright Certificate №6650/9, 27.07.2016.

Any use of the ideas andconcerns, expressed in the present draft, without the acknowledgement of theauthor/links to him, will be regarded as the fact of assignment of theintellectual property, and appealed in accordance with international law.

b) Project for itsreplication, will be sent to the addresses of many organizations: both thehighest state and legislative, public and representative offices ofinternational organizations in Ukraine, experts and specialists, the projectwill also be published on the website liga.net.

Correspondence will be sentboth in electronic and in written form with advice of delivery.


Project author: KakhaberKareli

Doctor of economicSciences, expert on land issues

Georgia (nationality) /Ukraine (permanent residence)

Email:[email protected]

©.K.Kareli.2016. All rightsreserved

The Project

©.К.Каreli.2016. All rights reserved


The law of Ukraine "Ondeclaring agricultural land as the private property of the citizens in whoselawful use they are’’


Article 1. General provisions

Thepopulation of Ukraine uses the land for agricultural purposes for many years onlegal grounds. These lands have not  beenfully transferred to their property yet, and are public property, whichnegatively affects both the country's budget and objective and reliableinformation on land use in the country as a whole.

The currentGovernment of Ukraine selected democracy based on European values, where thepriority is respect for and protection of the rights of the owners, as thecourse of development of the country.

Consideringthe interests of both the state and the population, it is necessary toregularize land tenure in the country and to make the legalization of theselands as private property. That will be a step which encourages the free landmarket


Article 2. The procedure fortransferring land plots into private property

Agriculturalland, which as of 1 January 2016 is legally used by citizens of Ukraine, todeclare their private property.

Land istransferred to Ukrainian citizens as private property free of charge.


Article 3. The scope of the lawimplementation

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


Article 4. The purpose of thehomestead lands of private ownership

When usingplots of private property for agricultural purposes, there is no need forchanges in purpose within the categories of agricultural land.

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


Article 5. Documents certifying the lawfuluse of land plots

Documentscertifying the legality of land ownership are the following: an extract fromthe family/house book from the local, extract from the land-corded book of theagricultural enterprise, a certificate from the archives, certificate from theBureau of technical inventory, Books of the members of garden association, thecourt's decision.


Article 6. The procedure of landregistration

The stateservice of Ukraine for geodesy, cartography and cadastre (Gosgeokadastr), registeras private property household land, when applying, attaching relevantdocumentation and measuring of the drawing.

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


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

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


Article 8. Final provisions

This Lawenters into force at the date of its publication.

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





The project

©.K.Kareli.2016.All rights reserved.


The law of Ukraine "Oncompletion of land reform by means of completeness"


Article 1. General provisions

This Lawdetermines legal, economic and organizational arrangements for the completionof the land reform and launch of a full-fledged land market and protection ofrights of land owners by the state.

Land reformheld in Ukraine was accompanied by errors which led to today's existingproblems, the main of which is the moratorium on sale of agricultural land.Because of the moratorium, Ukraine has failed to form a civilized andtransparent land market, which is one of the main characteristics for a modernand democratic state.

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

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


Article 2. The scope of thelaw.

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


Article 3. The completenessof land reform.

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


Article 4. Areas foreseenfor the partition of the units

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

Ifthe area of the unit is 1.0 hectare and less, the land share is transmittedentirely into the property.


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

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

(a) the staterepresented by the Ministry purchases unit areas.

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

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

g) At anystage to demand from the local administration and initiative group to acquaint itwith the progress of work, to make its comments and recommendations.

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

(e) After thesigning of the contract of purchase and sale with the shareholder, to makemoney transfer.

g) to apply witha statement to the registration service for the registration of land acquiredas public property.


2. Thepowers of the local administration

a) toobserve and be a direct participant in the whole process.

b) ifnecessary to ascertain the acts and protocols of different meetings and themeetings of Ministry representatives, members of initiative groups andshareholders.

c) ifnecessary and at the request of the initiative group to present the necessarydocumentation for work.

g) togetherwith the initiative group to choose an array for transfer to the property forpersonal farming.

d) at anystage of the work to require from the initiative group to inform on theprogress, provide comments and recommendations.


3. Thepowers of the initiative group and its members

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

Theinitiative group will be located in the building of the local administration.

The choiceof the members of the initiative group for the transfer of powers is made by willof the shareholders. It is drawn up, signed and confirmed with the seal of theadministration.

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

c) Eachstage of the process is discussed in the meetings of the initiative group ofshareholders. Frequency of meetings of the group member with the shareholdersof the sub-groups is due to the situation, but at least once in every twoweeks.

Conductlaboratory work with the documentation - to study the number of shares in theunits and their total area.

Togetherwith the local administration to select the array to separate into sections by1.0 ha each, for transfer to the property under the personal peasant economy.

Based onlaboratory and field works, to ensure the drawing of lots among theshareholders of  divided in advance sites.

d) the groupmust ensure delivery of shareholders in the notary office for the registrationof contracts of purchase and sale as well as the presence of shareholders of  allocated areas for the delivery of land andtransfer of land Act.

Meeting ofthe initiative group, both with its shareholders and other parties of theprocess will be convened at the request of the situation, but at least once permonth.

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


4.Powers of cadastral companies

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

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

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

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

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


5.The powers of notaries

Registrationof 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.

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


6.The powers of the Bank

Grantingfunds for shareholders is done by the bank selected by tender.

Ifrequired by the shareholder, to take advantage of other bank, in this casepayment of bank services is made by the shareholder.


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

Thepurchase agreement for the unit is between the owner of the unit and the staterepresented by the district service of the Ministry of agrarian policy and foodof Ukraine, on the basis of the statement of the unit holder. The applicationis the only basis for the signing of the contract. Contracts are drawn up by anotary.

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

Thoseunit holders who do not take advantage of this law, shall receive an annualrent, in an amount according to the lease agreement.

Afterthe death of the owner of the unit, the land unit is not transmitted byinheritance, and is transferred to the state land Fund.

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

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

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


Article 7. Documentation onsites

Theplots generated after the disengagement of unit areas, in accordance withUkrainian legislation need:

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

•Certificates in the areas of common ownership.

Whenthe new State Act and Certificate are issued, pre-existing Certificate to theunit will be cancelled.


Article 8. The division ofshares and amendment of lease

Thework of delimitation of cadastral units is performed by certified companiesthat are selected by tender.

Forthe purpose of rational use of land and prevention of fragmentation of landareas, land plots for personal peasant economy are allocated strictly on theoutskirts of that land mass, part of which these sites are.

Thedemarcation and allocation of plots is produced exclusively after the harvestby the tenant or by monetarycompensation of the harvest costs by a shareholder to the tenant on the basisof mutual agreement between them...

Thedivision of the area (s) of the unit is not allowed to be withdrawn or transferredinto ownership, when:

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

•tenant does actions of national strategic importance.

Ifnecessary, in some cases, it is allowed the allocation of equal-area plot to aprivate farm, from the lands of communal property of the correspondingadministrative division (article 12 of the land code of Ukraine).

Afterthe 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 ofsub-rented plot and cadastral maps.

Aboutchanges in the lease, it is reported to the tax office.


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

Forwork on delimitation of parcels of shares and transfer of part of the area inthe property, to abolish/suspend the obligation of adopting the Law "Onland turnover" as unnecessary and inhibiting factor of such an importantreform.


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, alsoin the regulatory framework of the relevant structures.

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

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