Farming and Rural Development in Ukraine: making dualisation work

Abstract

Rural economy 1. Following the decollectivisation of agriculture in Ukraine, the dualisation between very large commercial farms and small individual farms has become a prevalent trend in the rural areas of Ukraine. 2. Rural farm households would need larger plots. They could benefit from mechanization. 3. Yet, as their crop yields are low and lie close to those of large farms that use far more chemical inputs and machinery, the area expansion could be kept modest. 4. Distribution of land ownership rights and cadastral registration need to be supplemented by introduction and registration of other formal titles such as the right of passage and the user rights in commons. 5. Shareholders of a large farm do not need to know the precise location of their property within the farm. Explicit cadastral registration of parcels into units smaller than the individual field is wasteful. 6. Land users should be made to pay due rent to landowners, private (e.g. pensioners), and public (e.g. municipalities), and no longer predominantly in kind. This could improve social safety nets, stimulate activities in rural villages, and improve the fiscal revenue of local governments. 7. Corporate farms should pay corporate taxes. 8. Since growth in employment has been stagnating in urban areas, rural areas have to provide for it, partly in horticulture, animal husbandry and agricultural processing, and partly in expanded household farms, possibly as small multi-household enterprises or cooperatives, on land returned from commercial farms. Foreign trade 9. Access to exports should be made available to all who deliver goods of adequate quality, and not only to specific trading companies who can get access to export licenses. 10. Product labelling on exports, could with adequate inspections, with labels requiring satisfaction of social as well as environmental standards, provide effective means to complement and support local governance. 11. Ukraine has considerable scope to step up its exports of grain and oilseeds, which might significantly contribute to world food security. Yet, to effectuate this expansion without amplifying prevailing price volatility, Ukraine will have to enhance its management of irrigation, storage and plant protection, to limit its support to biofuels and to abstain from imposition of export bans in response to shortfalls. Nutrient management 12. Large exports amount to large outflow of plant nutrients, and turn recycling and imports of nutrients into a necessity in preventing soil fertility loss and land degradation. Expansion of livestock activities with proper manure management also helps to compensate for this loss. Statistics and governance 13. There is domestic and foreign demand for independent and reliable information on prevailing social and environmental conditions, and trade regimes in Ukraine. A data platform that makes use of the available surveys, and avails of some capacity to conduct new ones could help meeting this need.