Three days into his second term, President Leonid Kuchma on Dec. 3 issued his first major decree, which tackles the thorny issue of agricultural reform. However, agriculture analysts quickly warned that the decree may not be the answer to all the troubled sector's problems.
Under the decree, the government is ordered to break up Ukraine's collective farms, dividing their property among individual farmers. The process is to be completed by April of 2000, by which time the collective farms are to be transformed into private farms and cooperatives 'on the basis of private land ownership.'
The decree allows farmers – if they so choose – to break away from collective agricultural enterprises, taking with them a share of their former employers' land and assets, with the aim of setting up private agricultural enterprises.
'The decree does not mean ruining collective farms, but building new large [farms] on the basis of private ownership,' Acting Agriculture Minister Mykhailo Hlady told a press conference after the publication of Kuchma's decree.
The decree comes after years of sluggish efforts by the government to reform its more than 12,000 Soviet-era farms, which in Soviet times relied on heavy government subsidies.
In independent Ukraine, the cash-strapped government has found itself increasingly unable to subsidize the giant state farms, most of which have gradually fallen into ruin, unable to pay their employees or even cultivate all of their land.
This year alone, the government pumped Hr 4.7 billion into the agriculture sector, but 86 percent of the country's collective farms are still expected to post losses. The farm sector accounted for Hr 2 billion of the Hr 6.6 billion in wage debts that the state had run up by November, according to government figures.
At the same time, Ukraine's 1,400 private farms recorded a collective profit of Hr 26 million last year.
'[The decree] is a really radical step. Now everything must change in our agriculture,' Hlady said.
However, agricultural experts gave the decree a more cautious reception, saying that it added little to a 1994 government order that also allowed farmers to break free of their collective enterprises, and did little to promote private agricultural enterprises.
Although the new decree grants agricultural workers the right to buy additional land from the state on top of their share from their collective farms, it said nothing about their right to sell land or use it as collateral to secure bank loans.
That could leave many farmers with no effective way to raise capital to start their farming business, which in turn could make them think twice about leaving the fold of the collective farm, analysts said.
'It's a major step to say publicly that you want to reform, but what will it do to farmers in practice?' said Leah Soroka, manager of the International Finance Corporation's Land Privatization and Farm Reorganization Project in Ukraine.
Agricultural officials also acknowledged that the decree fails to resolve the issue of the collective farms' mounting debts, specifically, if they are to be divided among farmers who withdraw from their collective.
In addition, the government will have to overcome strong opposition to the decree by collective farm directors, who have previously blocked all attempts to reform the sector, fearing that they will lose their lucrative positions, Hlady said.
Besides the obvious lack of clarity on key land reform issues, the success of the decree may also be jeopardized by parliament's large leftist factions, who are staunchly opposed to privatization of land.
Kuchma's opponents in the legislature and some independent legal experts have already dubbed the decree illegal, insisting that only parliament is authorized by the constitution to rule on land issues.
'This decree is a shady thing, and I don't know who is going to support it. The president simply needs to show the International Monetary Fund that he is continuing reform,' said Serhy Dovhan, leader of the leftist Peasant Party.
But Kuchma's administration countered that the constitution also supports the decree's legitimacy.
'The [constitutional] right to own land cannot be limited,' said Petro Ostapenko, Kuchma's spokesman on presidential decrees.
