Ukrainian peasants are not only dealing with damages caused by war; they are also under pressure from corporations hungry to  control Ukraine’s productive land

Ukrainian farmers are bearing the brunt of the war: as one of the world’s top grain producers for export, the farming industry is facing damages to key infrastructure caused by the conflict. Meanwhile, peasants are resisting the Russian invasion while continuing to feed the population as bombs are being dropped. What’s more, the war has revealed structural failures in food systems and land distribution. Since 2008, Ukraine has been targeted by speculators. At present agroholdings control 29% of the country’s agricultural land and most foreign investors have their companies registered in tax havens. War and conflict can create opportunity for investors as land is abandoned, property certificates stolen, and the war-torn country finds itself in need of foreign capital to recover. Therefore, during reconstruction, regulating and controlling the land market to prevent further land concentration will be critical. The Tenure Guidelines can serve as a key tool in this regard, as they can also help lay the groundwork for a transition to just and equitable land distribution and food systems.

Across Ukraine, breadbasket of Europe and the world, farmers are bearing the brunt of the Russian invasion: suffering devastating consequences in their fields and some fighting on the frontlines. Wheat fields are being burned, farms occupied, equipment stolen or damaged, silos and refineries blown up, crops seized, property seized, roads and ports blocked, and farmers accused of being spies. Some farmers have lost their sons, family, and friends. Others have had no choice but to flee, leaving their land and farms behind to save their lives, like Yevguén and his family.

Peasants who have stayed behind in Ukraine face obstacles to collect this year’s harvest, and most of it has been severely compromised. Around 30% of arable land will be impossible to harvest this season because it is littered with rockets, munition, and artillery. Estimates suggest that it will take five to eight years to demine the affected areas, but the problem is if this land will be safe again for growing food in the next years or decades. Moreover, the war will have an enduring impact on the environment. As of beginning of November 2022, NGO Ecoaction has documented 685 acts of aggression that pose potential risks of negative environmental effects, such as damages to nuclear power plants and hazardous waste storage facilities that can cause chemical pollution, along with other potential problems.

How the conservation and recultivation will take place will be a key issue after the war. Farmers question whether the loss will be compensated by supporting farmer’s families and through a land redistribution reform. There is the risk to convert other regions of the country into arable land in a territory where the percentage of land for agriculture is already far from reasonable in terms of agro-ecological balance.

Around 30% of arable land will be impossible to harvest because it is full of ammunition, but the question is if this land will be safe again for growing food

Oleksandr Ratushniak / UNDP Ukraine

Farmers are also having problems buying fertilizers and gas for equipment and shipping their products to market, especially for export, while the price of grain on the local and national market is considerably lower than the one for export. Many farmers will lose their investments from this entire year. Peasants in occupied Ukraine are forced to collect and sell their crops to Russian troops at exceptionally low prices and some feel pressured to negotiate with the occupiers to survive. There have also been reported cases of stolen grain in occupied territories. Other farmers, however, tirelessly resist the Russian invasion and work in the shadows, amidst bombs, to continue feeding the Ukrainian population. Before the war small farmers grew as much as 98% of the country’s total potato harvest, 86% of vegetables, 85% of fruits, and 81% of milk. 

“[Small-scale farmers] are very influential on the ground and very patriotic”, says Mykhailo Amosov from the Center of Environmental Initiatives Ecoaction, an environmental organization that supports peasants. “Historically, local farmers have been part of this country’s resistance. They are responsible for food sovereignty and the liberation of their people.”  Amosov also claims that Russia is deliberately targeting Ukrainian fields and agricultural infrastructure to diminish Ukrainian’s enormous agricultural capacity. Large-scale industrial farming is bearing the brunt of the war: the main damages have affected big infrastructure necessary for food production. Meanwhile, “small farmers are harder to target because they are more widely dispersed,” explains Amosov. 

Wheat production is expected to be at least 35% lower in 2022, according to Kayrros data analysis. The US Department of Agriculture forecasts that wheat exports will drop by nearly half and sunflower production will also decrease sharply, bringing Ukraine down from its position as the world’s top sunflower producer since 2008/2009. The Kyiv School of Economics calculates that the cost of the war for the Ukrainian farm industry is around 4.3 billion USD, and the FAO  estimates 6.4 billion USD.

But how did Ukraine become such a massive industrial food producer?

AgroPortal

Industrial agriculture and land-grabbing in the world’s breadbasket

Ukraine has the highest ratio of arable land in Europe. 55% of the territory has optimal conditions for growing crops, this constitutes 33 million hectares of land, about the size of Malaysia or Norway. Before the war, Ukraine was the world’s no. 1 sunflower seed producer and the sunflower oil exporter, the 2^nd largest exporter of rapeseed, the 4^th largest exporter of corn, the 5^th of wheat and 7^th of soybeans. Industrial agriculture accounts for 11% of the gross domestic product and 41% of all Ukrainian exports. Agroindustrial activities, however, are generating harmful impacts on the environment, including water and soil contamination as well as loss of biodiversity. 40% of all agricultural land may have its fertility diminished, according to a study by Ecoaction.

After the spike in agricultural commodity prices in the late 2000s, Ukraine became the second most attractive country in the world to transnational investors, according to a report on the global land rush by Land Matrix . Over the last 15 years, 250 agriculture land agreements have been settled in Ukraine, covering 3.3 million hectares, 10% of the arable land of the country. This land rush has also brought about extreme land concentration. In 2018, 180 agribusiness —0.4% of the total number of farmers— owned 20% of the productive land. Meanwhile, peasants with farms ranging from 1 to a 100 hectares own 12% of Ukrainian farmland, but contribute up to 52.7% to the gross domestic agricultural output.

Furthermore, according to Land Matrix, foreign investors control 7.6% of all agricultural land but the Eastern Europe Regional Focal Point estimates this figure to be as much as 15%. Investors are mainly based in tax havens or offshore countries such as Cyprus and Luxembourg —top investor countries— as well as the Netherlands, Singapore, and Belize. The United States is the third largest investor country and, although it is not a tax haven, US companies tend to use their subsidiaries in tax havens when trading grains and other agricultural raw materials abroad. The State Fiscal Service of Ukraine estimates that about two-thirds of export operations in Ukraine are processed through offshore entities. This represents 40% of the grain market and a loss in tax revenues of about 100 to 150 billion UAH (between 2.72 and 4 billion USD, conversion date 04/10/2022)

The most disturbing fact, however, is that this takeover has occurred despite the approval of a land moratorium on the sale of agricultural land in 2001, which was intended to prevent land concentration. 

Ukraine has the highest ratio of arable land in Europe. After the spike in agricultural commodity prices, it became the second most attractive country in the world to transnational investors

Ukrainian agricultural land broken down by region and concentrated in the hands of businesses holdings, acreage exceeds 10,000 hectares 

Ecoaction

The land moratorium: A failure in market regulation

During the 1990s, following Ukraine’s independence and the collapse of the Soviet Union, a series of neoliberal reforms were enacted to transition the land system from state property to private property. Formerly state-owned farms were privatized, and land was redistributed among farmers and transferred to collective agricultural enterprises (CAEs). By the end of 1999, six million farmers had received certificates for their private land shares.

In October 2001, Ukrainian’s Land Code (LCU) was updated with the goal of consolidating land privatization. However, it also included a total moratorium on agricultural land, which forbid the sale of agricultural land, modifications of such land’s intended use, and the transfer of land as a business option or a pledge. The only possible way to transfer land was through lease agreements and some forms of gifts and inheritance. This loophole has allowed agribusiness to accumulate land through long-term lease agreements of up to 49 years. In 2017, renting one hectare of agricultural land in Ukraine cost €40, compared to €160 in Hungary, €240 in Bulgaria, and €847 in the Netherlands. Thus, Ukrainian land became very appealing to investors.

Local farmers who could not make their farms financially viable or were unable to cultivate their plots found an easy source of capital in such leases. While small-scale farmers had trouble accessing loans, big agribusiness enjoyed access to stock markets and international institutions such as the World Bank’s International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD).

Although the land moratorium was renewed ten times, in 2007 an amendment pushed by the agribusiness lobby —which by this time had established very close ties with the political elite— was introduced to facilitate a wider range of opportunities for land exploitation through lease agreements, beyond agriculture. This amendment opened the floodgates to biogas production and animal husbandry, and other initiatives as well. 

In 2021, the moratorium was lifted, and physical persons (not enterprises) were able to buy and sell land, with a limit of 100 hectares per person. However, Mykhailo Amosov says agricultural companies are organizing their employees to buy land so the company can then rent it from them. By 2024, legal entities will be able to buy land, which may unleash another wave of land-grabbing and further exacerbate land concentration. Now, farmers propose to suspend the agricultural land market for the duration of the war as the mechanisms supposed to help them before opening the market to legal entities have not been put in place.

While large-scale industrial farms have been the most visibly impacted by the war so far, they may also be the quickest to recover as they have better access to financial markets and government support. Amosov suggests that small-scale farmers will need between $20,000 and $50,000 USD to keep their farms running, according to a survey conducted by Ecoaction. Amosov’s organization has already documented abandoned land and land ownership certificates destroyed by Russian soldiers.

Although the land moratorium of 2001 was intended to prevent land concentration, agribusiness have found loopholes to get hold of Ukrainian productive land

Oleksandr K

How can the Tenure Guidelines help in the reconstruction process?

War and conflict can create opportunities for investors and speculators as land is abandoned, official tenure records lost, and the war-torn country finds itself in need of foreign capital to recover. At present, the digital land registry and digital land market in Ukraine are out of service due to martial law, which greatly hinders the control and monitoring of land transactions. 

Protecting legitimate tenure rights and transforming the land management system and the industrial agricultural model will be key areas of engagement for peasant organizations and civil society in the reconstruction of Ukraine. The European Union has already promised an additional macro-financial package of €9 billion in form of loans; but the challenges of preventing further corporate land concentration and untenably high national debt remain.

The Tenure Guidelines provide a holistic human rights framework to lay the groundwork for reconstruction in terms of land management. Articles 25.4 and 25.5 outline the main points to consider when conflict arises, such as protection of tenure rights of refugees and displaced people, non-recognition of violent land-grabbing, and protection of official land records. The Tenure Guidelines also promote durable and gender-equitable solutions to tenure issues and non-discriminatory processes of restitution, rehabilitation, and reparation. 

Moreover, regarding the land market, Articles 11 and 12 offer ways to protect smallholders from unregulated markets and uncompetitive practices and urge states to guarantee market transparency and access to information. Government support should go to small-farmers rather than big agribusiness; and agro-holdings should be forced pay the appropriate taxes to the Ukrainian government. 

Reconstruction could also be used as a vehicle for an effective transition to agroecology and decentralized food systems. Mykhailo Amosov, however, foresees a difficult struggle as the post-war national reconstruction council has not included this in its agenda. One solution may be to adopt EU environmental standards and good farming practices to achieve the targets established in the European Green Deal and the Farm to Fork strategy. Nevertheless, the globalized capitalist food production system, based on long and intricate supply chains controlled by transnational corporations, agroholdings and financial powers, will surely apply pressure to maintain Ukraine’s grain cheap and industrially produced.

Protecting legitimate tenure rights and transforming the land management system and the industrial agricultural model will be key areas for the reconstruction period

Oleksandr Ratushniak / UNDP Ukraine

This article has been possible thanks to the information and support provided by Ecoaction.