Dying for Agribusiness

The report by Frédéric Mousseau and Eve Devillers for the Oakland Institute, under the title WAR AND THEFT THE TAKEOVER OF UKRAINE’S AGRICULTURAL LAND is listed under Ukraine in my most recent Critical Links post.

The report addresses the central question: who controls the agricultural land in the country known as the “breadbasket of Europe?” - the land, in other words, that some 100,000 to 200,000 Ukrainians have sacrificed their lives defending over the past year. As noted in my 2017 book, Western Mainstream Media and the Ukraine Crisis (Boyd-Barrett 2017), the creation of opportunities for western capital in the agricultural domain was central to the interests of western nations in their support of the illegal Maidan coup d’etat that took place in 2014.

Lifting the moratorium on the sale of agricultural land that had been imposed during the Soviet era, and the creation of a land market, had been key demands of Western financial institutions since 2014. The EBRD, the IMF, and the World Bank pushed for access to Ukraine’s farmland for agribusinesses and private investors. Their aid has been conditional on Ukraine’s ability to meet these objectives. For example the IMF’s 2015 approval of a four-year US$17.5 billion Extended Fund Facility followed by a US$3.9 billion loan program in 2018 included reforms tied to the creation of the agricultural land market.

Of particular subsequent relevance was the land reform that took place under the Zelenskiy regime in 2021 as part of the structural adjustment program initiated under the auspices of Western financial institutions.

Ukraine boasts 33 million hectares of some of the finest arable land in the world. The report estimates that the total amount of land controlled by “oligarchs, corrupt individuals, and large agribusinesses” is over nine million hectares or 28 percent of the country’s arable land. The rest is used by over eight million Ukrainian farmers. All but one of the ten largest landholding firms are registered overseas. Prominent investors include Vanguard Group, Kopernik Global Investors, BNP Asset Management Holding, Goldman Sachs-owned NN Investment Partners Holdings, and Norges Bank Investment Management, a number of large US pension funds, foundations, and university endowments. Most of these firms are substantially indebted to Western financial institutions. This gives creditors financial stakes in the operation of the agribusinesses, and confers a significant level of leverage over them.

By contrast, small Ukrainian farmers are at a significant disadvantage: they have limited amounts of land and financing, many are close to poverty: “The Partial Credit Guarantee Fund established by the World Bank to support small farmers is only US$5.4 million, a negligible amount compared to the billions channeled to large agribusinesses”.

Western aid has been conditional a structural adjustment program of austerity measures, cuts in social safety nets, and the privatization of key sectors of the economy.

Not surprisingly the creation of a land market, put into law in 2020, implemented from 2021, under President Zelenskyy, was opposed by a majority of Ukrainians. Large protests and rallies in 2019 and 2020 demonstrated popular suspicion that the land reform law would exacerbate corruption in the agricultural sphere, and reinforce its control by powerful interests. Many feared the potential for oligarchs and foreign interests to obtain ownership of land by exploiting “the country’s impotent judicial and regulatory systems.”

The World Bank clearly expected that the land reform law would “push poorer, smaller farmers out of agriculture and help grow larger land holdings”. And when funding is available to small farmers they must use their land and possessions as collateral, becoming even more vulnerable to the vagaries of market conditions, to the advantage of the banks that advance them the funds.

The 2021 law therefore will likely further increase the agricultural land in the hands of oligarchs and large agribusiness firms. They have started to increase their land holdings and to circumvent restrictions on the purchase of land.

The report notes that by “supporting large agribusinesses, international financial institutions are in effect subsidizing the concentration of land and an industrial model of agriculture based on the intensive use of synthetic inputs, fossil fuels, and large-scale monocropping – long shown to be environmentally and socially destructive…These concerns are exacerbated by Ukraine’s staggering and growing foreign debt, contracted at the expense of the population’s living conditions as a result of the measures required under the structural adjustment program. Ukraine is now the world’s third-largest debtor to the International Monetary Fund (IMF) and its crippling debt burden will likely result in additional pressure from its creditors, bondholders, and international financial institutions on how post-war reconstruction – estimated to cost US$750 billion – should happen. These powerful actors have already been explicit that they will use their leverage to further privatize the country’s public sector and liberalize its agriculture”

The current war has exacerbated concentration of ownership by Ukrainian, western and Russian agribusiness interests. One cited source claims that Ukraine’s rural population is now suffering from poverty, with 44 percent living below the poverty line and seven percent suffering from malnutrition.

The report notes that “Ukraine’s staggering and growing foreign debt makes it likely that reconstruction will be dictated by international financial institutions and foreign interests, which have already indicated that they will use their leverage to further privatize the country’s public sector and liberalize its agriculture. Ukraine’s external debt – estimated at US$132 billion in 2020 – has continued to swell because of the war.197 In 2022, the EBRD, the IMF, and the World Bank approved close to US$7 billion of additional loans to the country.”