Member Article

As the market is structured agricultural land in Ukraine? What is it different compared to European countries?

- In the agricultural land market in Ukraine more clearly manifest tendency to increase the bank's large agricultural holdings of land. The purpose of these actions - building its own production and raw material base and obtaining synergies from the presence of different crops in the sales portfolio. Large Ukrainian agro holdings are trying to increase their own land banks in anticipation of entering the domestic market the world's leading players in the agricultural industry. Interest in buying agricultural holdings are showing Chinese and Japanese investors who plan to expand the resource base and to introduce more advanced technology.

Now in Ukraine in certain markets agricultures (sunflower, sugar beet, etc.) can be traced monopoly of certain players. At the same time, the feature of the European market (countries outside the EU) is a large number of small and medium-sized farms.

- What forms of organizatsionno_pravovye prefer to use Ukrainian and European agricultural companies?

- Twenty years ago, Ukraine had a large number of inefficient, loss-making state-owned collective farms, which have in the management of large land holdings. Then the land had been dispersed through more effective corporate groups - for example, JSC, JSC. And for the last 10-15 years, Ukraine has made a significant step towards the creation of a civilized land market - starting procedure for the provision of land shares to citizens engaged in agriculture. However, implementation of large-scale project to establish an effective land market has been frozen due to the adoption by Parliament of the moratorium on the alienation of agricultural land. The only option possible for commercial land use, rental unit was land. This prompted businesses to look for alternative ways to create agricultural holdings. The most simple to manage, and less expensive were a limited liability company, which began to accumulate and allotments. Official statistics do not exist, but according to our calculations, the land banks of approximately 90% is concentrated in the framework of the organizatsionno_pravovoy form.

This can be explained convenient procedure corporate decision-making (convening a general meeting of members, the establishment of joint executive bodies, etc.), easy to change the membership of the society, and the lack of legal requirements for minimum capital. If we consider the practice of raising finance Ukrainian agricultural holdings in international stock markets, it can be concluded that the limited liability company are sufficiently clear structures for foreign investors. It should be noted that European farmers are mainly focusing their counterparts in the land of limited liability companies, as well as within individual farms.

- What is the legal basis for the differences purchase and lease of agricultural land in Ukraine and Europe?

- In general, the domestic market is very similar to the markets of agricultural land in the member countries Evrocoyuza. Both in Ukraine and in Europe there was a tradition of collective land use. However, to date, the European market has seen a number of significant changes, which resulted in many of the large collective enterprises have been reformatted to small and medium-sized farms.

While European farmers prefer to lease plots of land on a long term basis, directing financial resources into circulation.

As already noted, the sale of agricultural land market in Ukraine is not functioning because of the existing moratorium. In turn, the EU sale or lease of agricultural land available in almost all stranah_chlenah. At the same time, the number of "new" stran_chlenov there are restrictions on foreign ownership of agricultural land by persons. For example, the Czech Republic, Bulgaria, Estonia, Latvia and Lithuania have introduced restrictive measures on the subjects of foreign land ownership rights over the seven-year period from the date of entry into the European Union. In Poland, these are the limits on 12_letny period. In addition to these measures, some EU member states introduced restrictions on the ownership of a legal or natural person a certain amount of the farmland. In Hungary, for example, the government has decided to ban the ownership of agricultural land by legal entities, thereby stimulating competition among small farmers.

- How do these limitations affect the dynamics of the European agricultural market?

- Regardless of the limitations of existing agricultural land market in the European Union is more transparent and predictable, as set clear rules for selling land (in the absence of national restrictions). The process of selling or leasing does not require multiple approvals from different government departments, regulatory bodies and the interference is minimized. For example, in France, the authorized state body (SAFER) negotiates a line of a transaction for the sale or lease of land parcels market price level. In Ukraine, the process of registration of land use (rent) is associated with a time-consuming procedure, often associated with corruption component.

- And what about the market access to information on land users?

- The vast majority of EU member states are pursuing a policy of open access to the base of land users. Many European countries - Lithuania, Sweden and Finland - have created a public cadastral maps, where each person wishing to enter into a transaction with a particular land user can check its legitimacy. Ukraine has also adopted a number of regulations to validate the presence in the system of land cadastre. However, access to it to third parties, except for certain situations not provided. This is a serious shortcoming in the protection of the interests of foreign and domestic investors.

- Is Ukraine ready to transition to a full-fledged relationship, adopted in the European market of agricultural land?

- In general, Ukraine is sufficiently prepared in terms of legislation. It remains to make transparent the process of registration and transfer of ownership (right of use) on the allotments. Critical in anticipation of the adoption of the Law on turnover of agricultural land and the lifting of the moratorium on their sale is also the distinction of state and municipal property, which would resolve many conflicts. Furthermore, it should provide public access to data on land users to third parties.

Now in a transition to a deeper integration with the EU Member States is necessary to determine the correct restrictive measures - the minimum price of land, the size limit for the possession of one person, the rules of the sale of agricultural land to non-residents, etc. If it is possible to resolve these issues in the near future, then the Ukrainian and foreign banks will have additional incentives for lending to the economy, as they will have a huge resource of a security in the form of a pledge of property rights on agricultural land. In turn, Ukrainian holding companies will be able to expand the market and upgrade production facilities.