"Land Transactions Allowed After 20 Years" Ukraine, Can It Control Global Grain Prices?

Reform Allowing Land Transactions from the 1st of Next Month
Expectations for a Sharp Increase in Grain Production

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] Ukraine is emerging as a dark horse to solve the soaring global grain price problem.

With reforms allowing land transactions in Ukraine set to be implemented soon, there are expectations that grain production in Ukraine, known as one of the most fertile territories in the world, could surge.

On the 21st (local time), Bloomberg News focused on Ukraine's land reform, which will take effect from the 1st of next month. According to the reform plan, the Ukrainian government will allow free land sales within the country for the first time in 20 years.

Although Ukraine has optimal environmental conditions for agriculture, its share of global grain production has been minimal.

For example, the production volume of corn, one of Ukraine's representative exports, is about 33% less than that of the United States, and wheat production is about one-quarter lower than that of the European Union (EU).

This was mainly due to the prohibition on land sales, a legacy of communism from the Soviet era.

Ukraine halted land sales in 2001 out of concern over land monopolization by foreigners and the upper class.

Farmers had to cultivate land by leasing government-owned land, which resulted in constraints on productivity growth.

Volodymyr Zelensky, President of Ukraine
[Photo by Yonhap News]

In response to these criticisms, Ukraine discussed introducing a reform plan allowing land sales, and as a result, from next month, individuals will be able to purchase up to 100 hectares (1 hectare is about 3,000 pyeong) of land.

Due to the COVID-19 pandemic, global food prices have risen to the highest level in a decade according to UN data, and the global food supply chain has been hit. Attention is focused on whether this land reform plan will ease the global food supply.

A professor at Kyiv School of Economics emphasized, "This measure is not just a policy for Ukraine," adding, "It means more export revenue for Ukrainians and more food for the world."