The black market has the backing of local state officials. Corrupt bureaucrats abuse their power to stuff their pockets with cash while they are stripping the nation of important natural resource and robbing poverty-stricken rural population of their private property. The black market causes environmental degradation and undermines sustainable economic development in Ukraine, one of the world’s top grain exporters.
The moratorium has never stopped the black market in Ukraine. According to Ukraine’s State Committee on Land Resources (SCLR), almost 20 percent of farmland changed ownership in the last decade.
And it seems that the black market is booming now more than ever. Kharkiv-based environmental NGO Green Front reports that the number of sales advertisements featuring farmland has increased in local newspapers recently.
The popular local newspaper Premier went from 58 to 300 weekly sales ads in less than a month. The black market has also made it onto the Internet. Now you can find hundreds of listings of farmland sellers online. For example, popular online store AllBiz has almost 200 listings of farmland sellers. Many sellers’ websites even guarantee a one-day delivery of farmland.
The black market in farmland is going strong with no questions asked. The buyers are farms, greenhouses, flower shops, landscapers, and house owners who can afford landscapers. The sellers are either firms subcontracted by the local government or local state officials. Sales of land is measured by the number of Russia-made Kamaz trucks it fills. A single Kamaz truck carries, on average, 10 tons of soil.
The black market price is seasonal with its low in spring and summer ($80-100 per ton) and its high in fall and winter ($150-180 per ton). According to the Green Front, the projected annual sales are almost $900 million in Ukraine.
This is how the black market works. An excavator digs out fertile soil, on average, up to four feet deep. Then an excavator loads the soil into a truck that delivers it to a buyer. To double their profits, infamous entrepreneurs bring garbage from urban areas and dump it in the excavated areas.
Thus, the damaged farmlands are converted into illegal landfills. This black market activity causes irreversible soil depletion and environment pollution. The SCLR reports that almost 32 percent of farmland is degraded and 20 percent of arable farmland is low-yield due to soil erosion. It is obvious that the black market could not reach the current volume of sales without backing of state and law enforcement officials.
State officials abuse the law even when it comes to private ownership of their constituency. The black soil is extracted from two main sources: abandoned land and retiree-owned land. So-called abandoned land is a land parcel whose heirless owner is deceased. Abuse of abandoned land is just another proof of the government embezzlement because ownership of the abandoned land is transferred to the local authorities automatically in Ukraine.
The magnitude of the power abuse is mind-boggling. When the NGO Alternative interviewed Party of Regions deputies of the Pesochyn village council in Kharkiv region, the second-largest region in Ukraine, they said blatantly that the farmland sale is only legal in their region while it is illegal elsewhere.
Retirees who own farmland also suffer a great deal from the government abuse. The SCLR reports that 53 percent of land owners are retirees and 30 percent of them have no heirs. The Green Front reports several cases when the soil was extracted from the land parcels owned by pensioners in Kharkiv province.
Several local residents tried to stop the illegal extraction of their land. However, the local government silenced the whistleblowers. The Green Front also submitted evidence of illegal extraction of land to the Kharkiv department of law enforcement. The law enforcement officials considered available evidence insufficient to open a case.
Right now it is too early to predict the impact of the black market in agricultural land on Ukraine’s economy. It is clear that the current black market activity causes irreversible damage to the environment and retards economic progress.
And the government embezzlement not only undermines a fundamental institution of capitalism and democracy – secure private property rights – but also erodes trust and accountability in political order.
Leo Krasnozhon is a professor of political science at the University of North Texas and Oleg Peregon is vice president of the nongovernmental organization Green Front in Ukraine.
