Analysis
The truth about corporations taking over Ukrainian agricultural lands
Despite the moratorium on land sales to foreigners, by 2016, ten multinationals controlled 2.8 million hectares of Ukrainian land. Today, some estimates speak of 3.4 million hectares.
A text has recently spread on social media (including on the Facebook page of Il Giardiniere) alleging that “three large U.S. multinationals bought 17 million hectares of prime land from Zelensky.” Previously, rumors of such an alleged sale of “half of Ukraine to Monsanto, Cargill and Dupont” had been amplified across a small galaxy of various pro-conspiracy sites that in some versions also pinned the responsibility on the usual suspects, George Soros and global financial elites (including Warren Buffett, Bill Gates and the Blackstone, BlackRock and Vanguard investment funds).
Behind the simplistic explanations with little supporting evidence, spun to support various agendas and drawing a long tail of outraged comments in their wake, there is actually an element of truth behind the rumors, connected to economic interests converging on Ukraine since well before the Russian invasion. For several years now, a series of reports by the Oakland Institute economic observatory have documented the macroeconomic interests that have made the former Soviet republic an object of intense contention since the fall of the USSR.
Post-Soviet Ukraine, with its 32 million arable hectares of rich and fertile black soil (known as “cernozëm”), has the equivalent of one-third of all existing agricultural land in the European Union. With the end of socialist collectivization, an unprecedented amount of “virgin” hectares have “come into play” to be put on the market, a potentially tasty morsel for banks and agribusiness multinationals.
It is, after all, the much-touted “breadbasket of Europe,” with an annual production of 64 million tons of grain and seeds, among the world’s largest producers of barley, wheat and sunflower oil (for the latter, Ukraine produces about 30 percent of the world total). Since the 1990s, the race has been on for businesses to get their hands on what Jeff Rowe, DuPont’s director for Europe, describes as “one of the fastest-growing agricultural markets in the world.”
“Ukraine had been hardest hit by … the “shock therapy” of capitalist restoration in Eastern Europe and Russia itself,” writes British economist Michael Roberts about this stage in the country’s history. Indeed, its economy has suffered: during the 30 years after independence, incomes and quality of life have remained below 1990 levels and poverty is rampant. Not for everyone, of course – the “conversion” to capitalism has followed the usual pattern: a class of oligarchs and a narrow elite have enriched themselves disproportionately by despoiling the public sector with the complicity of the political class.
This new nomenklatura is being courted by both Russia and the West with competing “assistance” packages with strings attached, aimed at keeping Ukraine in their respective spheres of influence. The tension between the opposing sides exerting economic influence has been the dynamic underlying the politics of independent Ukraine from the beginning, encapsulated in the clash/opposition between Yanukovich and Yushenko. According to Frédéric Mousseau, director of the Oakland Institute, the “geoeconomic” dispute over Ukraine represents the biggest clash between the two rival blocs since the Cold War.
With the events of Maidan in 2014, the Western camp prevailed, while Putin retaliated by taking Crimea and waging war in the Donbass. The developments marked the beginning of Ukraine’s “annexation” into the Euro-Atlantic economic sphere, described by Mousseau and Elisabeth Fraser in a 2014 report entitled The Corporate Takeover of Ukrainian Agriculture, which gives an account of the redoubled push by Western financial institutions to “throw open the nation’s vast agricultural sector to foreign corporations.”
From the West came arms and money in the form of assistance packages from the World Bank, the International Monetary Fund and the European Bank for Reconstruction and Development. As usual, the cash was strongly tied to reforms that Ukraine was required to implement, all under the banner of fiscal restraint and austerity. Also according to Mousseau, the drive in Ukraine to privatize the land market is unprecedented in recent history. To limit unrestrained privatization, a moratorium on the sale of land to foreigners had been imposed in 2001. Since then, the repeal of this rule has been a main goal of Western institutions. As early as 2013, for instance, the World Bank provided an $89 million loan for the development of a deed and land title program needed for the commercialization of state-owned and cooperative land.
Furthermore, Western banks are imposing the optimization and consolidation of agribusinesses into large entities at the expense of small producers, who still constitute the majority in the country, with the goal of increasing “added value,” and, in the words of a 2019 World Bank paper, “accelerating private investment in agriculture.” The same report states that “a 30-percent productivity increase in agriculture could result in an additional 4.4 percent Ukrainian GDP growth in five years, and 12.5 percent growth over ten years.” It is safe to assume that the growth rates of private agricultural producers were expected to see far greater increases.
Despite the moratorium on land sales to foreigners, by 2016, ten multinational agricultural corporations had already come to control 2.8 million hectares of land. Today, some estimates speak of 3.4 million hectares in the hands of foreign companies and Ukrainian companies with foreign funds as shareholders. Other estimates are as high as 6 million hectares. The moratorium on sales, which the US State Department, IMF and World Bank had repeatedly called to be removed, was finally repealed by the Zelensky government in 2020, ahead of a final referendum on the issue scheduled for 2024. Furthermore, in January, a report by Usaid, the U.S. Agency for Assistance and Cooperation, lamented the absence of a reliable land market in the country that was limiting economic growth.
This despite the fact that an analysis by Open Democracy published in October revealed that ten private companies controlled 71 percent of the Ukrainian agricultural market, including, “in addition to the Ukrainian oligarchy, multinational corporations such as Archer Daniels Midland (ADM), Bunge, Cargill, Louis Dreyfus, and the Chinese state-owned company COFCO.” According to the Oakland Institute’s latest report on the subject, the list now also includes multinational corporations such as Luxembourg-based Kernel, the US holding company NCH Capital, the Saudi-based Continental Farmers and the French AgroGenerations.
Among this long list, European companies particularly stand out, and the role of the EU is increasing, especially after the signing of the economic association agreement between Ukraine and the European Union that came into force in 2017. That agreement, denounced at the time by Russia as a backdoor to facilitating the entry of Western multinationals, includes the promotion of “modern agricultural production … including the use of biotechnologies,” an apparent opening towards GMO crops on Ukrainian (non-EU) fields. Furthermore, agribusiness development in Ukraine and Eastern Europe is part of the European Commission’s strategic plan to boost “protein crops” and reconvert production in those regions to mainly soybean, for which meeting current EU needs is still largely dependent on imports from Argentina and Brazil.
The war now seems likely to disrupt the current grand neoliberal project in the short term, mainly because of disruptions in the export supply chain. Another unknown concerns how Ukraine’s limitations in its current condition might affect Chinese distribution routes to Europe under China’s Belt & Road plan, to which the country had signed on. Nonetheless, in the context of a global geo-economic realignment for which the war promises to be a crucial turning point, Ukraine can be predicted to remain a major point of focus, albeit in the midst of severe global instability.
Originally published at https://ilmanifesto.it/corporation-allarrembaggio-delle-terre-agricole-ucraine on 2022-06-01