Dynamics of Agricultural Production and Land Use in Post-Soviet Ukraine

Multiple economic and institutional factors drive change in the mix of agricultural commodities produced over time in any country. We examine grain, fruit and vegetable markets in Ukraine since 2004, with a focus on the evolution of property rights and their impact on planting decisions. Institutional uncertainty about property rights impacts both the use of land in agriculture and crop mix, and leads to underinvestment in crops with a longer investment cycle and higher value added. As an alternative to land sales, a well-developed rental market has emerged. The rental market requires minimal upfront investment in land acquisition but limits incentives for long-term investments. Farm-level data from the State Statistics Committee of Ukraine on 21,000 farms between 2004 and 2012 (State Statistics of Ukraine, 2013) show that despite higher revenue per hectare, the share of fruit crops has remained virtually unchanged since 2004. In contrast, the share of oilseeds produced has doubled over the same period.