The so-called breadbasket of Europe, endowed with fertile lands that annually produce some 60 million tons of cereals, has always been an attractive claim for the large merchants of agricultural commodities such as Cargill, Bunge or ADM, as well as investment mega-funds such as Black Rock, or Vanguard. Ukraine has a third of Europe's agricultural land, is the world's second largest grain exporter and produces a third of sunflower oil. In times of growing food security fears and skyrocketing prices for staple foods, it could be a new gold mine for global capital.
However, the obstacles to the entry of investors have frustrated the expectations of the giants of Chicago or Wall Street. Specifically, the moratorium on the purchase and sale of agricultural land legislated in 2001 in order to stop the concentration of land ownership in the hands of the great oligarchs.
With a total ban on the purchase of land by foreigners, the moratorium has complicated the progress of large commodity brokers and other investors, who had to enter through the back door in the capital of Ukrainian companies or rent land through contracts of lease.
But much of the 32 million hectares devoted to grain production remained beyond the reach of global capital. They were divided between corrupt Ukrainian oligarchs and seven million small and medium farmers in a country where 40% of the inhabitants live off the land.
Without multinational investment, the productivity of the sector has been very low, less than a fifth of that of France, for example. But most Ukrainians have opposed corporate entry despite pressure from the US State Department, the International Monetary Fund (IMF), global investors and agrarian lobbies in Brussels.
Only after the regime change – with the so-called Maidan revolution, which overthrew the government of Viktor Yanukovych in 2014 – did the path begin to clear for Western traders and investment funds. Likewise, this year's Russian invasion has turned out to be the perfect shock doctrine. With the support of the Government of Volodímir Zelenski, the Parliament in Kyiv approved in 2020 the partial lifting of the moratorium. The new law allows the purchase by individuals or companies of up to 10,000 hectares from January 2024.
This so-called liberalization had been a condition of the $5 billion bailout agreed with the IMF in 2020 and the generous offer, announced this month, to freeze service payments on Ukraine's massive debt. The International Monetary Fund calculates that it will increase the potential growth of GDP by more than one point.
But there is a democratic problem. The full implementation of the reform depends on the outcome of a referendum to be held in 2024 to decide whether to give the green light to foreign companies. It is quite likely that the majority of Ukrainians will vote against it. "There is no support for small farmers as is the case in Spain or France and the measure only accelerates concentration in the hands of oligarchs and large national and foreign foreign companies," says Frédéric Mousseau, director of the Oakland Institute of California. I don't see any reason why public opinion has changed much with the war."
The irony, then, is that the big lobbies of the agrarian business, despite being the defenders of the war for democracy against Russia, do not want a plebiscite on land deregulation. “Calling a referendum would be a disaster. Public opinion is clear, there would be an overwhelming majority against it,” says Bate Toms, president of the Ukraine-UK Chamber of Commerce in an article sponsored by the powerful Washington Atlantic Council think tank.
