IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Security of Property Rights and Land Use Transition in Ukraine

Listed author(s):
  • Nizalov, Denys
  • Thornsbury, Suzanne
  • Loveridge, Scott
  • Woods, Mollie
  • Zadorozhna, Olha

Risk and uncertainty over the results of agricultural production were always considered as impediments for the development of agricultural sector and rural areas. Besides traditional weather and market related sources of uncertainty, agriculture in transition economies is facing one more major factor of risk – changes in the institutional protection of property rights. This paper illustrates how such institutional uncertainty affects the land use and crop mix patterns in Ukraine. Ukraine is a country with some of the richest arable land in the world and is among the largest agricultural producers. Land reform started in Ukraine in 1990. It transfers land from state to private ownership. However, a market for land sales has not been established yet. Moreover, its establishment has been postponed several times since 2001. Thus, the design of this institution remains unknown, which brings uncertainty about the rights of owners, state, tenants and investors. To test if unsecured property rights for land lead to under-investments and impact the crop mix, this paper uses different sensitivity to institutional uncertainty of investments in annual vs. perennial crops. Data from Ukrainian State Statistic Committee for years 2004-2010 is used. This unique set contains panel data on a very large sample of farming entities. It shows that almost 95% of Ukrainian agricultural land is rented. Such structure creates incentives for investments in relatively more secure annual crops. The results of seemingly unrelated regression analysis show that a higher share of rented land is associated with a lower share of land used for perennial crops. At the same time, farms rent more land to increase share of annual crops. The difference in response to uncertainty is found significant between the two crop types. It implies that extension of moratorium on land sales in Ukraine leads to under-investments in Ukrainian agriculture in general and into more capital intensive crops in particular. The uncertain property right makes the tenant deviate from the “optimal” crop mix reducing the productivity of tenant farms. Thus, Ukraine faces significant losses in agricultural production and GDP in the short run. Moreover, the uncertainty leads to underinvestment into new technologies including adaptation to the climate change. Such underinvestment affects productivity and vulnerability of Ukrainian agriculture in the longer run

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Agricultural and Applied Economics Association in its series 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington with number 125828.

in new window

Date of creation: 2012
Handle: RePEc:ags:aaea12:125828
Contact details of provider: Postal:
555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202

Phone: (414) 918-3190
Fax: (414) 276-3349
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ags:aaea12:125828. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.