Incomes of Rural Households from Land Ownership: Problems and Ways of Formation

Abstract

At early 90s, a large part of agricultural lands in Ukraine passed into the ownership of rural households as a result of land sharing. However, farmers could not fully implement their right for private property of lands. The objective of the study is to analyze problems related with formation of an effective land owner in rural areas of Ukraine and outline ways for income growth in rural households from land ownership.

The price of 1hectare of arable agricultural land, according to the regulatory monetary valuation, is nearly 1,000 USD, whereas in countries with market economy land prices vary from 5,000 to 70,000 USD per hectare. As sale of land has been impossible in Ukraine due to the introduced moratorium, the prevailing form for implementing rights of shared lands’ owners has been lease assignment. The present-day lease relations feature low effectiveness, as rent accounts for only 5% in the total household’s income. The following measures are proposed to deal with the existing problems: to make inventory of the leased lands; to creating the land exchange; to enforce the Law of Ukraine “Turnover of Agricultural Lands”; to create favorable conditions for development of family farms.

Results for the study allow for the conclusion that once the market of agricultural lands is formed in Ukraine, farmlands will be redistributed in favor of more effective owners, with the subsequently growing incomes of rural households and the increasing level of rural employment.