A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Lerman, Zvi; Sedik, David; Pugachov, Nikolai; Goncharuk, Aleksandr Research Report Rethinking agricultural reform in Ukraine Studies on the Agricultural and Food Sector in Central and Eastern Europe, No. 38 Provided in Cooperation with: Leibniz Institute of Agricultural Development in Transition Economies (IAMO), Halle (Saale) Suggested Citation: Lerman, Zvi; Sedik, David; Pugachov, Nikolai; Goncharuk, Aleksandr (2007) : Rethinking agricultural reform in Ukraine, Studies on the Agricultural and Food Sector in Central and Eastern Europe, No. 38, ISBN 3-938584-18-1, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO), Halle (Saale), http://nbn-resolving.de/urn:nbn:de:gbv:3:2-2454 This Version is available at: http://hdl.handle.net/10419/45946 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. 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Bibliographic information published by Die Deutsche Bibliothek Die Deutsche Bibliothek lists the publication in the Deutsche Nationalbibliografie; detailed bibliographic data are available in the internet at: http://dnb.ddb.de. The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations concerning the legal status of any country, territory, city or area or of its authorities or concerning the delimitation of its frontiers or boundaries. The designations 'developed' and 'developing' economies are intended for statistical convenience and do not necessarily express judgement about the stage reached by a particular country, territory or area in the development process. The views expressed herein are those of the authors and do not necessarily represent those of the Food and Agriculture Organization of the United Nations. Diese Veröffentlichung kann kostenfrei im Internet unter <www.iamo.de/dok/sr_vol38.pdf> heruntergeladen werden. This publication can be downloaded free from the website <www.iamo.de/dok/sr_vol38.pdf>. © 2007 Leibniz-Institut für Agrarentwicklung in Mittel- und Osteuropa (IAMO) Theodor-Lieser-Straße 2 06120 Halle (Saale) Tel.: 49 (345) 2928-0 Fax: 49 (345) 2928-199 e-mail: [email protected] http://www.iamo.de ISSN 1436-221X ISBN 3-938584-18-1 In der Schriftenreihe Studies on the Agricultural and Food Sector in Central and Eastern Europe werden durch das IAMO Monographien und Tagungsberichte herausgegeben, die sich mit agrarökonomischen Fragestellungen zu Mittel- und Osteuropa beschäftigen. Wissenschaftlern, die in diesem Bereich forschen, steht die Schriftenreihe als Diskussionsforum offen. In its series Studies on the Agricultural and Food Sector in Central and Eastern Europe IAMO publishes monographs and proceedings focusing on agricultural economic issues specific to Central and Eastern Europe. This series offers a forum to researchers studying this area. ISSN 1436-221X ISBN 3-938584-18-1 PREFACE Land reform and farm restructuring have always been a major component of the transition from plan to market in all formerly socialist countries, and especially in the 12 former Soviet republics forming the Commonwealth of Independent States (CIS). Ukraine, the second most populous country in CIS (after Russia) and the third largest by area (after Russia and Kazakhstan), began the process of agrarian reform in March 1991, six months before the declaration of independence from the Soviet Union. However, all through the 1990s international organizations berated Ukraine for its slow and insufficient reforms. Derogatory phrases like "one step forward, two steps back", "changing the sign on the door", "disappointing performance", "lack of vigorous progress" were universally (and justifiably) used to describe the Ukrainian reforms during the presidency of Leonid Kravchuk (1991-1994) and then (perhaps with less justification) under Leonid Kuchma (1994-2004). Evaluating the outcomes of nine years of reforms through 1999, World Bank experts summarized the conclusions of their continuous monitoring efforts in the following uncomplimentary language (CSAKI, LERMAN, 2001): In Ukraine, land reform has been mostly limited to transforming state ownership into collective ownership… The weak reforms have failed to radically change the traditional collective organization of Ukrainian farms… Break-up and internal restructuring of large farms has been very limited. Hence it should not be a surprise that the transition process is not delivering in terms of increased profitability and efficiency. The "big bang" came in December 1999 in the form of Presidential Decree No. 1529/99 "On immediate measures to accelerate the reforms in the agricultural sector". By this decree Ukraine made the momentous decision to complete land privatization through conversion of the "land shares" – paper certificates of landownership previously distributed to the rural population – into demarcated and titled physical plots. This decision, long advocated by international donors, set Ukrainian land policies sharply apart from the policies of other large CIS countries (Russia, Kazakhstan, Belarus), and put Ukraine roughly on the same land reform path as the two smallest CIS members, Moldova and Azerbaijan. January 2005 marked the five-year anniversary of this landmark decree. FAO accordingly launched a monitoring study to assess the outcomes of reform since 2000 and to formulate a set of policy recommendations based on the post-2000 ii Rethinking agricultural reform in Ukraine reality in the rural sector.1 The overall purpose of the study was to determine to what extent and in what ways there had been fundamental changes in land and farm policy after 2000. The methodology included a structured questionnaire- based survey of three constituencies representing the Ukrainian farm structure: The managers of large corporate farms, individual peasant farmers, and operators of rural household plots (this survey is referred to as the 2005 FAO farm survey). Interviews were also conducted with regional agricultural officials to get a view of farm-level changes "from the outside". Official national statistics were used to construct a picture of sectoral changes. The survey was designed to conduct a comparative analysis of land rights, management structure, and economic performance in the two main sectors of Ukrainian agriculture – corporate farms and individual farms. We were also planning to collect information that would enable us to detect significant differences between the "new wave" corporate farms created on the basis of the new legislation in the post-2000 period and the "old wave" descendants of the traditional collective and state farms. The study is a collaborative effort of three institutions: The Policy Assistance Branch of FAO’s Regional Office for Europe and Central Asia (REUP) in Rome, the UNDP-sponsored Agricultural Policy for Human Development (APHD) project in Kiev, and the Institute of Sociology, also in Kiev. David Sedik as the Head of REUP was responsible for the overall design, management, and coordination of the study. Vladimir Artyushin and Nikolai Pugachev from the APHD project were in charge of the local implementation of the study in Ukraine, including collection and analysis of sectoral data. Yurii Privalov, Aleksandr Goncharuk, and Maria Olenina from the Institute of Sociology were responsible for the survey field work and over- saw the construction of the computer database with the survey data. Zvi Lerman from the Hebrew University of Jerusalem provided overall scientific guidance for the