Land Reform and Rural Development in the Former Soviet Union

Together with the International Policy Fellowship, CPS was involved with two projects examining the impact of land privatisation on rural development in Kazakhstan and Ukraine.  With the Open Society Forum in Mongolia, we have also been involved in a series of research projects examining the impact of land privatisation in both urban and rural Mongolia.

Compared with central and eastern Europe, there are of course massive differences in climate, landsize, and demography in Mongolia and the fSU.  Arguably, the farming structures were far more embedded than in CEE and the transition question of whether to restore land to previous owners was far less of an issue.  In most cases, this would have entailed recreating land patterns of over 70 years previous and, in any case, in many parts of the fSU there was by no means a clear tradition of widespread private property ownership.

As a result, the property reforms introduced in the 1990s appeared much more gradual and cautious than in CEE.  There was far less of a rush to privatise and although many of the state and collective farms were granted greater autonomy, there appeared more continuities than changes.  Gradually though, this has changed and governments and agricultural enterprises, for different reasons became increasingly interested in extending the scope of private land ownership in rural areas.  Initially, there were a great number of mass voucher schemes, whereby the majority of the rural population, whether or not they were actually engaged in agriculture, were given shares in the semi-privatised state and collective farms.  These vouchers entitled them to a payment usually made in the form of crops.

In the early 2000s, in Kazakhstan and Ukraine there were changes to this system and owners were encouraged to take greater interest in their ‘property’.  In practice, this often meant applying for formal title deeds that designated them as the sole owner of a particular amount of land.  It is hard to say what was driving this change.  While the government claimed that it was to encourage the development of family farming, it seemed to offer more immediate benefits to the state in the form of taxes and to the larger enterprises who may have been able to snap up ‘abandoned’ land and thus reduce the amount of ‘owners’ that they had to pay dividends to.  At the same time, the move seemed to offer little benefit to the non-farmers who were happy to receive crop payments for their voucher shares.  It also was an expensive process both in time and money and there ware significant questions as to whether those not working full-time in agriculture would take up the private option.

Nurlan Almaganbetov was an IPF fellow from 2004-05 and he carried out extensive fieldwork in different parts of Kazakhstan in order to assess some of the impacts of recent land reforms.  He produced a substantial study that analysed both the new legal regime for rural property and the uncertainties that the latest land reforms were creating for significant sections of the rural population.

In Ukraine, there was a different argument over property, namely whether the country is able to stand a fully open market in agricultural land.  With its vast resources, would have the opening up the market lead to huge farms concentrated in the hands of a few and even worse for some people, concentrated in the hands of foreigners? The preferred response had been to create the legal fiction of private ownership combined with the actual practice of a moratorium on land sales.

In the same IPF year, after reviewing the relevant legislation Alexander Kobzev produced a strongly argued policy paper arguing in favour of ending the moratorium.