The draft law ‘On Circulation of Agricultural Lands’ restricts considerably the activities of legal entities in the sphere of land relations.

Concept of the draft law ‘On Circulation of Agricultural Lands’ was considered on May 16 at the meeting of working group on land relations reforming under the Ministry of Agrarian Policy and Food with participation of representatives from the World Bank and the International Monetary Fund. Remarks submitted by UCAB to the concept of the draft law elaborated by StateGeoCadastre concerns inexpediency of prohibition for legal entities to purchase agricultural land; limiting of the use of agricultural lands within a certain territory at the level of 35%; restriction for legal entities to acquire agricultural land after lifting moratorium.

Pursuant to the bill, legal entities are actually excluded from participation in the land market since they are deprived of the right to acquire land in the ownership in any manner including via purchasing. UCAB believes that exclusion of agricultural enterprises from the land market constitutes a discrimination of the main agricultural producer as well as the largest taxpayer of agricultural sector. For example, in 2015 the enterprises produced 86% of the total agricultural products in monetary terms. Attraction of additional investments into the sector with opening of the land market will be also impossible without participation of the legal entities therein. Moreover, this provision violates the Constitution of Ukraine which guarantees to legal entities the right to own land pari passu with other subjects of property.

According to the experts of UCAB, limiting of the land plot that can be leased by the farm bears significant corruption risks and impediments to business development. Proposal to limit the amount of land to be used up to 35% within a district and / or united territorial community will lead to raidership, improprieties and blocking of enterprises activity. In addition, the rights of tenants and landlords are infringed as well according to the civil law relations (agreements) in terms of obstruction of free expression of the will. Settlement of monopoly risks does not fall within the competence of this bill and has been clearly stipulated by the existing law ‘On Protection of Economic Competition’.

Another controversial issue is deprivation of legal entities of the right to lease land plots with the intended purpose for carrying out rural farming. The problem of use of land plot with specified purpose for commodity production had existed before. However, it was qualified as the one that impeded development of economic activity and created excessive overregulation and, therefore, on February 12, 2015 it was amended by approval of the law ‘On Amendments to Some Legislative Acts of Ukraine on Simplification of Doing Business (deregulation)’.

‘At present there is no need and strong arguments to limit the right of citizens to lease their private land to the enterprises if the land is not processed by them personally - says Taras Vysotskyi, General Director of the Association ‘Ukrainian Agribusiness Club’ - this submitted bill ‘On Circulation of Agricultural Lands’ actually offers to return excessive over-regulation in the industry hindering development of economic activities and fostering corruption. Complete ban on participation of all legal entities in the land market will lead to development of new shadow schemes and complicate the problem of attracting investment’.