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Ukraine: Collective Farm System Proves Entrenched

For nearly 10 years, the directors of collective farms and their allies in many former Soviet republics have blocked reforms to agriculture -- particularly laws aimed at breaking up the old collectives by allowing land to be bought and sold. One of the worst situations is in Ukraine, where superficial reforms have done little more than create new rural oligarchies. RFE/RL correspondent Ron Synovitz reports.

Prague, 5 April 2000 (RFE/RL) -- The main argument against private land ownership in former Soviet republics is much the same whether it comes from the manager of a collective farm in Russia or a Communist parliamentarian in Kyiv. Those opposed to private land rights say they want to protect their countries from criminals and foreign plunderers.

But reformers note that the main opponents of land reform are those with a vested interest in maintaining the status quo -- even if that means keeping workers trapped, virtually as serfs, on semi-privatized farms. The reformers say the right to buy and sell land is the first real step toward creating a productive, market-based agriculture sector. They argue that the use of land as collateral for short-term loans is the foundation of Western farm credit systems.

Without full property rights -- including the right to use land as loan collateral -- Russia and Ukraine are not able to take even the first step toward creating a credit system for private farmers. So farmers in both countries are still struggling simply to buy seed, fertilizers and fuel. The current system forces them into unfavorable barter trading, where they often pledge half of their future harvest just to get supplies for spring planting.

Ukraine's Agriculture Ministry says that -- with most collective farms transformed into joint-stock companies and cooperatives -- the Soviet-era system of collective farms has ceased to exist. But the Organization for Economic Cooperation and Development, or OECD, says the transition has been in name only, and that Ukraine's land privatization exists only on paper.

The OECD notes that inefficient and corrupt collective managers held over from the Soviet era still control most of Ukraine's large, quasi-privatized farms. Many of these managers have lucrative ties with regional business bosses who control food production and grain storage facilities.

The agrarian power base of Ukraine's leftist politicians -- who control the parliament -- also depends on keeping the old Soviet networks intact. Communist and Socialist parliamentarians continue to defend the interests of the new rural oligarchies by blocking land laws. As a result, Ukraine's reforms actually discourage workers from leaving old state farms to start their own operations.

Managers of the renamed -- but essentially unchanged -- collectives still control social services in rural communities. These services include housing, health, education and even supplies of electricity and water. That means cooperative mangers have the ability to deny essential services to those who try to break away from the large farms.

Ukrainian farm workers have been issued certificates that, in theory, give them the right to a share of land from their former collectives. But few have land titles or can identify a plot of land as their own. The region around Odesa is a typical example. In that area, of more than 341,000 rural residents with certificates for the right to obtain land, only about 6,000 have actually received titles.

Some farmers on collectives have sought to exchange their certificates for land titles, even though the legal and economic conditions for small family farmers are quite unfavorable. But those who try are often given the most undesirable plots of land from the old collectives. Reformers say it is not surprising that most workers -- many of whom are owed months of back wages -- still choose to stay with the renamed collectives.

President Leonid Kuchma issued a decree in December aimed at completing the privatization of Ukrainian agricultural land by this month. But the lack of supporting legislation from parliament has left inconsistencies, and the target date for completing the titling process has now been pushed back to 2002.

It remains unclear whether Ukraine's parliament will pass laws allowing land to be bought and sold. Western agriculture specialists in Ukraine say it appears the government finally is committed to real land reform. But years of dithering have chased away most foreign investors. Even U.S. government aid programs for Ukrainian farms have been cut back dramatically, due to corruption and the lack of reform progress.

All of these conditions have contributed to the steady decline of Ukrainian agriculture since 1992. Last year's grain harvest was the worst since World War II -- so poor that it forced the former "bread basket of the Soviet Union" to import grain from Kazakhstan to meet domestic needs. Forecasts predict the grain harvest this year to be even lower than last year. Several Ukrainian regions already are experiencing bread shortages, and more are expected.

The shining stars in Ukrainian agriculture are the small garden plots at people's private dachas. The OECD says more than 85 percent of Ukraine's food supply is now produced on dachas, which comprise less than 14 percent of the country's agricultural land. The OECD says this statistic alone should be enough to convince Ukrainians that private land rights are the salvation for their ravaged agriculture sector.