Stalin's Legacy Is Choking The Ukrainian Economy

The government has resisted pressure to lift a ban on land sales, despite pressure from the IMF and investors

- James M. Gomez and Kateryna Choursina

It could be a picture of rural prosperity: Workers steer grumbling trucks and red harvesters as high as houses, churning 1,400 acres of snowy farmland into thick, black mud. The early winter scene, about 250 miles west of Kiev, instead illustrates Ukraine’s failure to drag its most historically significant industry into the 21st century.

Mriya Agro Holding Plc, the company hauling away the last of the sugar beet crop on the land, owns none of the wide-open field, a patchwork of 270 individual plots that it leases for three years to five years each. The landowners, who were bequeathed the property after the fall of communism, aren’t allowed to sell, so Mriya has little incentive to spend any money to increase the harvest. “If the company is the owner, it would be possible to invest more,” says Viktor Tarchynskyi, a foreman for Mriya. “Germans put in complex fertilizers every five years. We can’t afford to do that.”

Few things define Ukraine more than farming. Its people have lived, toiled, and starved on the land for centuries, and their economic and political struggles are dug deep into the soil. It’s here that Joseph Stalin’s forced collectivization drive exacted its heaviest toll. From 6 million to 7 million Ukrainians perished in the 1932-33 famine. One enduring legacy of that painful chapter is that land reform has been too sensitive for successive governments to tackle.

Ukraine tallied $13 billion in agricultural exports from January to September, equal to about 40 percent of total exports. The country is among the world’s top producers of sunflower oil, barley, wheat, and corn. Still, there’s huge untapped potential: Although Ukraine boasts one of the world’s richest concentrations of fertile black soil, its crop yields are among the lowest in Europe.