The land moratorium, and the market that could not form

From the late 1990s until 2021, agricultural land in Ukraine could not be sold. It could be inherited and it could be leased, but not bought or sold. That prohibition shaped the entire sector.

Why it was imposed

Land was distributed to former collective farm members as individual shares in the 1990s. The fear — genuinely held and not unreasonable — was that impoverished rural households would sell those shares immediately for very little, and that within a decade the land would be concentrated in a small number of hands.

The moratorium was intended as temporary protection. It was extended repeatedly for twenty years.

What it actually produced

A lease economy. Since land could not be bought, it was leased in bulk, and large agricultural holdings assembled operations of tens of thousands of hectares out of thousands of individual lease contracts.

Millions of owners received rent — often modest and sometimes paid in grain rather than cash — for land they could not sell and mostly did not farm.

And investment suffered in a specific way: a farmer on a short lease does not invest in drainage, soil improvement or irrigation, because the benefit accrues over a horizon longer than the tenure.

The unintended outcome

Concentration happened anyway, through leases rather than through purchase. The moratorium prevented owners from realising value; it did not prevent large operators from assembling scale.

The lesson

Prohibiting a transaction does not remove the economic pressure behind it; it redirects it into a form that is harder to see and usually worse for the weaker party. That is the most transferable finding in Ukrainian economic policy and it took twenty years to demonstrate.

What the ban produced unintentionally was a sector built on tenancy: the person who works the land does not own it, and the owner does not work it. The consequence on the equipment side is plain — nobody makes a long-term investment in ground that is not theirs. Drainage, liming and irrigation, the work that pays back years later, went undone for exactly that reason.