Ukrainian Union of Lessors (UUL) which is grant recipient of the USAID Financial Sector Transformation Project, is launching a study of international land leasing experience in Europe and the United States in order to adopt best practices in leasing instruments in this field.
Such an analysis became urgent in connection with the adoption by the Verkhovna Rada of Ukraine on March 31, 2020 of the Law on agricultural land use, according to which, from the second half of 2021, the moratorium on the sale of agricultural land was abolished.
Landowners will have the right to dispose of their land, which most of them will certainly use. And then for today’s tenants-agro-producers the question of sources of financing for the acquisition of leased land will be urgently raised. Unfortunately, bank lending in most cases will not solve this problem.
At the same time, leasing is a much more effective financial instrument in this field, as evidenced by the global experience of advanced economies. Its approaches to the borrower are much more flexible in principle, and in relation to such a subject as land, may be generally unique in the domestic financial market. And Ukrainian industry operators are preparing for this.
There are currently a few countries in the world that have a moratorium on agricultural land sales. Among them, besides Ukraine, Congo, Tajikistan, North Korea, Cuba, Venezuela. Most countries have long owned land markets and leasing is one way of financing it.
That is why the Ukrainian Union of Lessors, with the support of the USAID Financial Sector Transformation Project, has attracted leading Ukrainian and foreign experts specializing in the study and consulting of the agricultural sector in Ukraine and in the world.
The experts should analyze the foreign experience and, taking into account Ukrainian realities and peculiarities, make specific proposals and recommendations for leasing agricultural land in Ukraine.
The best international experience will be of benefit to the Government, the Regulators, the leasing market for the creation of a domestic mechanism for financing the land market. It will also be of use directly to farmers, small and medium-sized agricultural businesses.
Reference:
Association “Ukrainian Union of Lessors” – established in 2005 as a voluntary association of professional participants in the leasing market. From the same year, the Association is part of the LEASEUROPE Confederation with its headquarters in Brussels, bringing together the associations of 31 European countries. The Ukrainian Union of Lessors includes participants who generate more than 70% of the Ukrainian leasing portfolio. In 2019, the Association became a recipient of the USAID / FST Project.