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Natalia Mamonova: The development of large-scale agriculture in Russia and Ukraine follows a very similar trajectory despite legislative, institutional and political differences

10 December 2018

Russia and Ukraine are often compared to each other with regard to their agricultural and rural development. These countries are the region’s major agricultural producers, in which farmland is the target for national and international capital investments. Despite the slightly different institutional design and the speed of the post-Soviet land reforms in Russia and Ukraine, the results were very much the same: the former large collective farms were transformed into even larger agricultural enterprises (often known as agroholdings), while the majority of the rural population continue being dependent on semi-subsistent farming at their household plots. We addressed the dualistic structure of agricultural production in Russia and Ukraine in the first part of our interview with Dr. Natalia Mamonova, Research Fellow at the Russia and Eurasia Programme, Swedish Institute of International Affairs (UI). Today, we continue our discussion with Dr. Mamonova to get more insights in the development of large-scale farming in these two countries.

Your research focuses on agrarian transformations in Russia and Ukraine. In your opinion, what are the main similarities between these two countries with respect to large-scale agriculture?

There is a growing interest of international agricultural actors to invest in Russian and Ukrainian agriculture, although this interest has slightly declined after 2014 because of the geopolitical crisis and unstable economic and political situations in both countries. However, from my knowledge, the majority of land investments in Russia and Ukraine are made by domestic actors. The dominance of domestic investments is especially profound in Russia, where the attractiveness of the Russian economy for foreign investors has been significantly reduced due to the ongoing sanctions.

The domestic investors are often represented by oligarchs or family members of government authorities. The merger between large businesses and the state apparatus is a common practice in Russia and Ukraine. For example, the family members of Aleksander Tkachev – the Russia’s agriculture minister until May 2018 – own the Tkachev Agricultural Complex that, according to different estimations, controls from 150,000 ha to 500,000 ha of land and over 30 enterprises, including poultry plants, meat and dairy processing plants. Likewise, the Ukrainian president Petro Poroshenko is the owner of the holding Ukrprominvest-Agro, which includes several agricultural enterprises with acreage of more than 120,000 ha that are specialized in crop production (sugar beet, wheat, soybean, corn, and sunflower), as well as livestock and flour production. The personal interest in large-scale agriculture of the key Russian and Ukrainian authorities essentially influences the state policies that promote and support large-scale agricultural development.

What about the differences? Are there any stark distinctions between the two countries?

Certainly, there are also differences between Russian and Ukrainian agriculture. For example, Russia has a relatively free land market – its agricultural land may be sold or purchased by citizens and legal entities, except foreign citizens and companies. Foreigners can buy the land if they establish Russian subsidiaries or find Russian representatives. In Ukraine, the agricultural land is under the moratorium, which forbids citizens and companies to sell or buy farmland plots. Thus, the majority of Ukrainian land is still officially in ownership of rural dwellers, who rent their land plots to large agricultural enterprises. The moratorium was introduced in Ukraine in 2001 and has already been extended several times (until2008, 2012, 2013, 2016 and 2019).

The ongoing process of the European integration of Ukraine requires liberalization of the Ukrainian land market, which will force the Ukrainian government to lift the moratorium. International observers have advised the Ukrainian government to cancel the moratorium in a phased manner with the application of the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests. However, I do not foresee a drastic change in land use, as large agricultural companies already control the majority of Ukrainian farmland. The moratorium cancellation will mainly ensure land property rights of current land users.

To be continued