Land reform and farm restructuring in Ukraine

Under legislation adopted in 1992, Ukrainian law recongnizes private ownership of agricultural land, as well as collective and state ownership. Also in 1992, a program to transfer land from state ownership to collective and individual ownership was initiated on a large scale, along with procedures to restructure collective and state farms. The transfer of land ownership and restructuring of traditional farms create opportunities for private farming to develop in the Ukraine after decades of collective management of agriculture. The impact of these developments at the farm level is examined in the present study by evaluating responses of 2500 participants in the process. Functioning land markets have not begun to develop in the Ukraine due to slow documentation of individual ownership and a moratorium on sales. The share of state-owned land shrank in January 1994, but most of the land remains in collective tenure. Three quarters of large farm enterprises in the Ukraine reorganized, but the preferred new form is that of limited liability partnership or collective enterprise, which in many cases involves little change from the predecessor, the state or collective. Most employees at present do not seek to leave the collective to start a private farm. The main obstacles reported by the respondents are insufficient capital, difficulty obtaining machinery and farm inputs, and legal and political uncertainty. Distribution of farm products is still dominated by state procurement, which is the main outlet for both large-scale farms and private farmers. Alternative trade channels are not well developed. Input supply is similarly dominated by the state, although private suppliers are beginning to emerge. Further progress toward improved efficiency in Ukrainian agriculture requires continued restructuring of farm enterprises into smaller autonomous units based on private ownership of land and assets, clear formulation of procedures that allow exit of individuals and small groups with shares of land and assets, development of land markets, and establishment of functioning market infrastructure for competitive input supply, marketing services, and financial services.