Competitiveness Of Land Rental Market And Productivity Growth In Ukrainian Agriculture

Land market in Ukraine is yet emerging. Despite the establishment of private property for land and 25 years of reforms, it is not fully functional. Its ‘rental’ arm has been the main farmland transaction channel for farmers and landowners. Its ‘sales and purchases’ arm is virtually dysfunctional due to the farmland sales ban or moratorium. The moratorium was introduced in 2001 as a temporary measure, but since then it has been extended 8 times. Yet expectations of lifting the moratorium for farmland sales in Ukraine (expected from the January 1st 2018) escalate a debate on conditions and restrictions of rental and sales market for agricultural land. Some restrictions such as possible caps on the size of land holdings are yet debated, other restrictions such as imposing 7 years floor on duration of rental contracts, payments in cash only and regulations on size of rental payment are already in place. While the scope of debated land market regulations is wide, almost no evidence exists on their economic implications in agricultural sector. In this paper we look at the competitiveness of the local farmland market and the state of the land governance, and how it affects local productivity growth.