Agricultural corporations appropriate the fertile farmlands of Ukraine

km. Niema Movassat, a member of the German left parliamentary party addressed the public with an article about the access of international agricultural companies to the fertile farmland of the Ukraine ( of 18 February 2015), after his question had been answered by the Federal Government (“Deutscher Bundestag, Drucksache 18/3925”, 18th election period, 4.2.2015). He writes that in the wake of the war in the East of the country and largely unnoticed by the general public there is “a massive sellout of Ukrainian agricultural land to quoted national and international agricultural corporations”. Although a sales moratorium for land in the Ukraine applicable up to the year 2012 has been extended until January 2016, the construct of leasing Ukrainian land for periods up to 50 years is very attractive among investors.
The consequences for small farmers in the country are devastating: “They lose their land and are at best employed as cheap labourers by agricultural companies. Poverty and land concentration in the hands of a few are the result.”
Together with a number of group members, the MP had tried to get more detailed information about the land transfer. The Federal Government confirmed in its reply “the immense extent of land grabbing”. Half of the agricultural area in the Ukraine is already managed by large companies. The largest of these, the agricultural holding UkrLandFarming, owns about 670,000 hectares. In contrast, large-scale farming in Germany would manage a maximum of 12,000 hectares.
The ten largest Ukrainian agricultural companies control approximately 2.8 million hectares of land; some oligarchs have many hundred thousand hectares each. These areas are cultivated mainly for the export of agricultural products; they require a lot of technology and capital and are closely linked to equity as well as European pension funds.
Earlier, the Ukraine was considered the “granary” of the Soviet Union, because it has abundant black earth soils and the acreage of 32 million hectares is about twice as large as in Germany. The Ukraine today is world’s third-largest corn and fifth-largest wheat exporter and also produces large amounts of rapeseed which are exported to Western Europe for the production of gasoline.
The sellout of the agricultural area is accompanied by a massive privatization policy. The treaty of association with the EU foresees privatization and deregulation in the agricultural sector. In the future, genetically modified seeds can be grown in the Ukraine. The country, says the MP, counts among the most promising growth markets for the seed producers Monsanto and DuPont. The loans amounting to EUR 20.5 billion granted by the IMF and the World Bank in May 2014 did not only make “reforms” such as the raising of the retirement age and lowering the gas prices a condition. The MP believes that one of the conditions was the sale of farmland to listed companies.
The German Government and the EU support the sellout of the Ukrainian country with millions of funds. So, the loans of the European Bank for Reconstruction (EBRD) to Ukrainian and international agricultural corporations have grown vigorously. As in 2013, 45 million euros have been paid to Ukrainian companies, in 2014 with 131 million euros this amount has already tripled. With foreign companies, the total sum rose from 122 to 186 million euros in the same period.
In the Ukraine, German companies are also active. Among others the agro-dealer Toepfer International (today ADM Germany) who were granted a loan over $50 million from the EBRD in 2012 “for the purchase of grain and oilseed”. For 2015 approximately 1.2 million euros are scheduled for agricultural projects carried out by the German Ministry of Agriculture in the context of the Bilateral Cooperation Programme in the Ukraine. A Twinning Project of the EU with the Ukrainian Government financed land evaluation, soil management, surveying and the creation of a ground cadaster with 1.8 million euros. Since 2008, the German Agriculture Ministry has also financed the “German Agricultural Center in the Ukraine” (DAZ) which offers training courses for farmers. German agricultural companies, including also Toepfer/ADM and the seed manufacturer KWS are among others the founding members of the DAZ organization. So far 2.5 million euros have been spent. Bayer and BASF play a big role in these trainings as well.
Considering the overall development, it is only little credible that the Federal Government writes: “The responsibility for managing agricultural structures is within the sovereignty of Ukraine. […] The Federal Ministry of Food and Agriculture (BMEL) places special emphasis on the promotion of small and medium-sized enterprises in the bilateral cooperation. […]”    •