Every 4 out of 5 hectares transferred by the State Land Bank are not leased, but the State Property Fund reports a victory

Almost a year ago, the State Property Fund created the first state land operator, State Land Bank LLC, whose purpose is to lease land and thus fill the state budget. The first pool of state lands with a total area of almost 91,000 hectares, which the State Property Fund took from various state enterprises and institutions, was transferred there. However, during this time, the State Land Bank managed to lease only a little more than 20,000 hectares. Officials present this as a victory, but UNN decided to find out whether this is really the case.

It was planned that the State Land Bank would lease 91,000 hectares of agricultural land to farmers, which would bring an additional billion hryvnias to the budget. However, since August last year, the operator has managed to announce auctions for only less than half of the land it received – 42.3 thousand hectares. Of these, even less were leased – only 20.5 thousand hectares. The state budget earned UAH 615.7 million from this instead of the promised billion.

“The success of the implementation of the first pool of agricultural land demonstrates the efficiency of the “Land Bank”… Further, the team is working at an accelerated pace to launch the second pool of land, all the necessary documents are being prepared for adoption by the Government”, – commented Deputy Head of the State Property Fund Igor Tymoshenko.

So it turns out that leasing 22% of the land that was transferred to the State Land Bank is a victory? And what about more than 70,000 hectares (almost 80% of the transferred area)? It turns out that this land, instead of working for the state’s economy, is a dead weight for the newly created state operator. In terms of figures, every 4 out of 5 hectares simply do not work.

It’s like a restaurant reporting on one dish sold for a high price, instead of explaining to the owner why 80% of the menu is not selling.

If we even calculate that the average cost of renting one hectare, as reported by the State Property Fund, is 30.1 thousand hryvnias, then the cost of inaction can be estimated at billions of hryvnias of lost income for the budget from land not leased.

Currently, a situation has developed where citizens, paying taxes, are actually financing the maintenance of land that does not work for the benefit of the state and which could bring profit.

Despite such disastrous results, the Deposit Guarantee Fund is actively working to get its hands on the second pool of state land for lease. This time we are talking about twice as much land. The Fund plans to collect more than 206 thousand hectares from state institutions and enterprises.

The scheme is the same, after the state lands fall into the State Property Fund, they will be transferred to the newly created state enterprise “Reserve”. After that, the state enterprise will be reorganized into State Land Bank – 2 LLC. It is likely that new lands will become a dead weight this time as well. 

Therefore, a completely logical question arises: why does the State Property Fund take away state lands after all? In this way, they want to demonstrate to us the highest level of ineffective management? Or is the goal different, to lose a couple of hundred hectares along the way between state-owned enterprises and LLCs?