There is muted excitement in Ukraine that the authorities may soon bring forward proposals to allow the sale of agricultural land, either later this year or in early 2012. Although most agricultural land in Ukraine has been privatised in some form or other, a moratorium on sales of agricultural land remains in place.
The combination of the moratorium; a land privatisation model which left millions of small-holders with tiny plots; and economic policies (eg grain export quotas) that deter long-term investors, has resulted in great swathes of land in Ukraine lying fallow. In addition, it is difficult to use land as collateral for loans for agricultural investment.
Proponents of lifting the moratorium argue that it would release a flood of investment, boost output and land prices and increase GNP growth by up to 2%. But others argue liberalisation is risky because foreigners might buy the land and might exploit it without regard for wider considerations, such as the environment. Some politicians therefore argue that land sales should be subject to tough conditions: for example, limiting sale to Ukrainians or imposing strict rules about land use.