The Agrarian Committee of the Verkhovna Rada approved the draft law on simplifying the change in the purpose of agricultural land
The Agrarian Committee of the Verkhovna Rada of Ukraine supported for consideration in the second reading the draft law No. 9627 on simplifying the procedures for changing the purpose of land from agricultural to industrial.
According to the authors, the simplification of procedures will allow to reduce the time for changing the purpose of land from the moment of submitting an application to its approval from 1-3 years to 1.5 months, which will become relevant in the period of post-war economic reconstruction, as investors need to be offered a quick and convenient procedure for allocating land . It will also make it possible to eliminate the corrupt permit market, where the state loses billions of funds.
From the opening of the land market on July 1, 2021 to January 1, 2024, 195,900 land purchase and sale agreements were concluded for a total area of 432,200 hectares, which is 1.05% of all agricultural land in Ukraine. According to KSE Agrocentr, in 2023 the volume of land sales increased by 58% to 172.9 thousand hectares, the price per hectare increased by 8.3%, the number of online auctions increased by 4 times, and the market capitalization increased by 89.9 billion UAH (by UAH 179 billion since the opening of the land market), but the market has not yet recovered to pre-war levels. In the second half of the year, an average of 529 hectares were sold daily, which is 37% less than before February 2022. In the 4th quarter, 23,800 deals with an area of 53,900 hectares were concluded. Due to the invasion of the Russian Federation, 120,000 contracts with an area of 355,500 hectares were not concluded, so market losses amounted to 12.4 billion UAH or $325 million.
The volume of sales of lease rights for communal agricultural land through Prozorro. Sales in 2023 increased by more than 4 times to 1,677 auctions for a total area of 14.5 thousand hectares. Since the start of electronic land auctions on Prozorro.Sales, 5,504 communal plots with an area of 48.7 thousand hectares have been leased, thanks to which communities receive 428.5 million hryvnias annually.
KSE Agrocentr experts believe that in the structure of incomes of local budgets, incomes from the circulation and use of agricultural land continue to grow and reach 10-12%. However, they can be much larger, since only in 2015-2021, 331 thousand hectares were leased under the old procedures, which is 7 times more than the volumes sold through Prozorro.Sales. It is expected that income from land lease under the new procedure may reach UAH 29 billion per year. Individual communities already receive 5-15% of their budget revenues from the lease of agricultural land through competitive online auctions.
Oleg Nivyevskyi, vice-president of the Kyiv School of Economics and head of the "Unbreakable Land" project, believes that the opening of the land market for legal entities from January 1, 2024 will increase the value of land by 40%, and the capitalization of the land market - up to $50 billion. Therefore, the potential volume of crediting can amount to $17.5 billion, which will allow to reduce the gap in financing the agricultural sector, which currently reaches $21 billion, and to meet the needs for short-term financing and investments in reconstruction, restoration and development.
