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. Last Updated: 07/27/2016

Land Reform Quietly Remaking Ukraine's Farms

SUKHYI YAR, Ukraine -- A quiet revolution is sweeping through Ukraine's villages, turning huge, money-losing state farms into private ventures and raising hopes the rich fields can once again flourish.

In December, President Leonid Kuchma abolished the country's more than 10,000 Soviet-era collective farms and decreed that the land should be divided among farm workers.

The move, a slap to the Communist opposition that insists land should remain in the state's hands, is an attempt to reverse the rapid fall in farm production.

"We cannot live according to the old standards anymore,'' said Viktor Tsybulsky, chief administrator of Sukhyi Yar, a village about 130 kilometers south of Kiev.

"We have a lot of land and smart people," Tsybulsky said. "We have to gradually reach the level of European states, at least those that are not so prosperous.''

By April, some 6.3 million Ukrainians had received plots averaging between 2.4 and 3 hectares. They have the right to rent out the land, but not to sell it.

The reform hasn't yet brought new wealth to villages like Sukhyi Yar, where blackouts are frequent and broken-down farm equipment dots the fields.

Nor has it resulted in a revival of the small farms that fed Ukraine and neighboring nations for centuries.

Instead, the great majority of farm workers have rented out their land to large companies that have rushed to put together big parcels of cheap land.

Sixty-seven percent of the former collective farm property has been incorporated into huge businesses and 25 percent has been turned into farming cooperatives, said Deputy Agriculture Minister Roman Shmidt.

Only some 6 percent to 8 percent has been divided into small farms, he said.

It's the second revolution in Ukrainian agriculture this century. In the early 1930s, Soviet dictator Josef Stalin ordered the confiscation of private farms and their reorganization into large collectives.

About 4 million people died during the brutal collectivization campaign, many starving as their crops were sent to feed people in the cities. Hundreds of thousands of others were imprisoned or exiled to Siberia and other harsh regions.

Ukrainian collective farms fed the Soviet Union for decades. But the agricultural sector languished after Ukraine gained independence in 1991 as the country's economy stagnated and investments dried up.

The collectives continued to rely on state subsidies, but production fell by more than 60 percent between 1990 and 1997.

Economists say the abolition of collective farms is the key to Ukraine's market reforms.

The government has also reduced its close regulation of the agricultural market, which discouraged investment.

But much remains to be done to attract investors, including the creation of a functioning agricultural market and abolishing export obstacles such as high taxes.

Many farmers say the reform has made little difference in their lives, and it certainly hasn't brought them money to invest in their plots.

The companies renting parcels are paying farmers in kind: 450 kilograms of wheat, up to 50 kilograms of sugar and about 25 kilograms of oats, rice and other cereals a year. Those amounts aren't even enough to sustain a village family.

"We ordinary peasants will suffer from poverty as always,'' said Leonid, a tractor driver who worked for 22 years on the Stryzhavka state farm near Sukhyi Yar.

Many of the new holdings are based on the former collectives and are often headed by the same directors, who sometimes block efforts to organize individual farms. Most villagers cannot afford to start a private business since they have no money to pay land taxes, and banks charge high interest on loans.

But proponents of land division are convinced the newly organized farms will work.

"Within months, the Ukrainian village will see real money for the first time,'' Prime Minister Viktor Yushchenko said recently.