2016-2017 saw Ukrainian farmers sink beneath the pressure and strength of property raiders. Law-enforcement officials have been unable to protect businesses and sometimes even help the criminals. How can farmers protect themselves?
“Are you having a peaceful Saturday evening? How nice! But the police in Poltava oblast are all working hard, distinguishing themselves through their efforts. Just now they detained more than 40 raiders who demanded to control farms and agribusinesses,” this announcement came from Arsen Avakov, the Minister of Internal Affairs, and was posted to his Facebook page on 4 November at around midnight.
“I had already given warnings, but they wouldn’t understand. We live in a state with laws, and the rule of law, and all misunderstandings, including those related to farming, will be resolved in court,” went the Minister’s announcement.
Not long after that, influential politicians, members of parliament and officials spread this same message. The Minister of Internal Affairs was so convincing that even Prime Minister Volodymyr Hroysman re-posted the message about the detention of raiders on his own Facebook page.
This was one successful law-enforcement operation, which was supposed to signal to businesses and investors that everything was alright with private property rights in Ukraine, that they were being guaranteed. But the truth this is that this was just one single occurrence, and it doesn’t even come near to showing how catastrophic the situation is with raiders gobbling up small and medium-sized farming businesses, especially between 2016 and 2017.
According to data from the Association of Farmers and Private Landowners, 7,150 attacks on farmers’ property occurred in 2016 alone. The Association includes in among these numbers both “classic” raiding (in which the acquisition of property occurs by juridical means, though the acquisition is truly based on legal loopholes or fabricated documentation) and simple banditry (from illegal methods of collecting on debts, to theft of harvests amounting in value to hundreds of thousands of hryvnia of stolen property). In the last two years, these attacks have risen to truly epidemic proportions in the Kherson, Odesa, and Kirovohrad Oblasts.
Blank Spots in the Registry
According to lawyers, one of the chief causes for the recent flowering of property raiding is bureaucratic entanglement. Thus, the majority of property leasing agreements drafted before 2004 are missing from state databases.
The management of agricultural lands and administration of property divisions in populated areas falls to the Ukrainian State Service in Matters of Geodesy, Cartography, and Cadastres (USSMGCC, “DerzhHeoKadastr”). Prior to 2014, local administrations had managed the ordering of land. After the change in management, in the absence of an electronic registry, information about and texts of landholding agreements were supposed to be delivered to the USSMGCC. However, the majority were never given to the keeping of the State Service.
An analogous situation developed with agreements drafted in rural, village, and town councils. Data from the majorities of these agreements were never transferred to the electronic registry maintained by the Ministry of Justice. Compounded with this, the majority of farmers, especially those who own small farms, do not have their fingers on the pulse of change. Thus they become easy targets for raiders.
In the words of Oleksiy Khartynov, partner at the ILF Law Firm, who specializes in questions of realty law, the agro-raiders have three methods of attack: the first method is a simple falsification of documents pertaining to land ownership. The second method is to attack through agro-firms. The raiders buy up a portion of a firm from shareholders, find themselves insiders among the executives of the firm and then strike. This scheme is similar to that used by raiders in other branches of the economy.
Finally, the third and most widespread method is that of “interception” of land. For this, the raiders either wait for a moment when the terms of lease expire or they simply take advantage of gaps in the property registry.
“The USSMGCC does not have in its database lease agreements drafted, for example, in the year 1999. The raiders send a query to the USSMGCC – does such-and-such agreement exist? They get an answer: ‘We don’t have a registry of that agreement, so we’re sending you information about the previous holder of that land,’” Khartynov explains in this scenario of a raider-attack. “Rarely do they provide different, more appropriate responses, so now the raiders formally possess the permit to apply for official documentation related to land use, then they quickly send in the documentation and receive confirmation of possession. And then the land is registered to a new landholder.”
Usually, the lawyer says, the true landholder at this time does not even guess what has happened, that his or her land has already been taken away. Then one day the “new legal lessee” arrives with documentation from the USSMGCC and demands that the (former) landholder vacate his or her plot of land.
“So, you have a lease agreement dating from 1995 which refers to some ‘Field No. 24 with an area of 10 hectares.’ But the raider has his number in the cadastre, which refers to concrete coordinates on a public map. And that’s all that matters. There’s only one thing to do now – run to the courts as quick as you can and demand that they overturn the decision of the USSMGCC. The court must immediately seize and reclaim for you your land and your harvest,” Khartynov explains.
The lawyer says further, that the landholder cannot wait for the raiders, but must request official documentation for their land and a number in the cadastre beforehand.
“But for this, you need to get on your feet, find the land-administrator, and pay him his service fee. Farmers say that they don’t have time for this, that they have to work the land. But the raiders do all of this: they don’t have to work the land, they have time for it,” Khartynov says.
The raiders take no less consideration of the terms of the lease of plots of land. According to the law, the current lessee has the right to extend the lease on existing terms or on any terms which are offered to another potential lessee. If the current landholder does not extend the lease within a specific timeframe, the land with all that is grown on it ends up going to another party.
Lawyers advise that during the six months prior to the expiry of the duration of the lease the lessee should begin to gather documents pertaining to the lease. No later than three months prior to expiry, the lessee should begin working with the landlord to extend the lease. If the lessee misses this window, then the only chance to maintain possession of the land would be through the decision of a court.
Raiders Attack Medium-Sized Business
Raiding is an expensive business. Attacking small farms is not profitable, and in most regions raiders do not even try to overpower small farmers using juridical means described above. They simply gather a group of unknown armed men and, threatening the farmer with their weapons, harvest his or her crops.
On the other hand, large agro-holdings are well defended by an army of lawyers and security guards.
Thus raiders focus their interests on medium-sized businesses with land ranging from 2,000 to 5,000 hectares, but who lack legal defense and physical security.
“Occasionally raiders organize attacks abruptly, out of the clear blue. But the majority of attacks evince certain signals of the threat beforehand. For example, if you are unable to extend 15% or more of your lease agreements; if controlling interests begin asking more questions – these mean that raiders have taken an interest in you,” warns Olena Petrova, another lawyer from the ILF law firm.
Petrova advises farmers to divide their activities and assets among several companies – if the raiders have to prepare to attack two firms, then it is twice as difficult and twice as expensive for them. It is also worthwhile to impose non-disclosure agreements on employees, to organize partners and allies and to hire security guards. Farmers should keep a constant watch on changes in the registry that pertain to one’s own assets, and if something fishy happens they should expect some “guests.”
Law Enforcement in the Raiders’ Service
The majority of registered agreements for so-called independently-farmed plots, according to lawyers, are falsified. A plain statistic makes this clear: out of 1396 agreements for independent farming registered in 2016, only 20 were rendered over to a court.
Lawyer Borys Zamikula states that in the majority of these cases nobody plans to render the agreements to legal authorities anyway. This occurs for two reasons. First, bribery the court receives from farmers.
“If a harvest is seized by a court, the farmer for several months has nothing to sell, and therefore, no money with which to pay his workers’ salaries or to put off to the side. Sooner or later most of those farmers give out and pay off a district-attorney instead of challenging the seizure in a court of law. Unfortunately, this usually means that the next year this happens all over again. Bribes beget more bribes,” Zamikula explains.
The second reason for falsification of agreements is psychological pressure on the farmer with the goal of forcing him or her to renounce his or her plot of land.
“If the land leased to one farmer falls under the eye of an even wealthier farmer, the wealthier farmer pays off a court to set up a new lease, to seize the land or the harvest. The first farmer’s business is now no longer profitable, so he or she gives in and gives up the plot of land,” the lawyer says.
The law allows any legal case to be entered into the Unified Registry of Pre-Trial Investigations, whether or not the case is frivolous. The cases are registered, a plaintiff petitions the court to seize the harvest, and the court approves his or her petition. Based on this ruling, the police arrive at the farm and physically confiscate the harvest. Then, under the watch of law-enforcement agents, common thieves arrive with a fictitious judgment which in truth was never anywhere recorded. In situations like this, one must scrutinize the raiders’ requisition order.
“Which case, which number, has it been notarized? Does it specify which harvest from which field is to be seized? Does it specify the field’s number in the cadastre? If there is no cadastre number, but the order only says ‘Field No. 6 from such-and-such town council’, you can refuse to accept the order’s execution. Lawyers must do this via legal means,” Zamikula states.
In this stage the farmer must gather together whatever official documentation he or she can, the lawyer advises. The farmer needs to watch what happens to the seized crops – do they go to the nearest grain elevator, as the law requires, or does someone try to carry them off to an unknown destination?
Everybody Knows but Nobody Talks
In all situations concerning property-raiders, the landholder must attract media support. Raiders hate the attention of the mass media because they must act under the cover of shadows. After farm-raiding gets media attention everything becomes more complicated for the raiders.
“Local newspapers are afraid to write about raiders because they know who is behind the raiding and they don’t want to take any risks. The national media will not pay attention to crops stolen from a few farms unless the problem has already become systemic. However, there are other media which do report on this theme,” announced Ivanna Skyba-Yakubova, the leading partner of the Bagels & Letters public-relations firm.
“The reporters do not always arrive in time to witness the raiders striking, because the farms are often located pretty far from the oblast capitals. But the majority of the media will gladly accept videos which farmers record on their smartphones. Lawyers often rely on and use these videos in court. Your smartphone, that’s your weapon, along with your lawyer.”
In Skyba-Yakubova’s words, there are at least three reasons for making raiding cases publicly known. First, the media often take up investigations which are overlooked by law enforcement bodies. Second, the legal system works slowly, and therefore these cases require public pressure to speed them up.
Third, exposing these problems helps protect against them in the future, and it breaks the cycle in which everybody knows what happens, but nobody talks about it. “If farmers united their strength into a joint campaign, their ability to protect themselves would dramatically increase,” Skyba-Yakubova believes.
Yuriy Mykhailov, the head of Agro Food Cluster Kharkiv, says that small and medium-sized agribusinesses must borrow methods of fighting against raiders which are used by the large agro-holdings.
“Individual farmers do not have the resources or ability, but together, for example, in a cluster – that is another matter. They must unite,” Mykhailov argues. “We can legally influence the work of law-enforcement agencies, the state administration, and attract the mass media to counteract raiders. I am convinced, that the best defense, is to unite.”
- Current farmland registry system is vulnerable to fraud that leads to conflicts over ownership and makes possible raider attacks.
- In Ukraine, 27 million hectares of farmlands are private while 10 million belongs to the state.
- Both private and state land cannot be sold due to a moratorium imposed by the state
- Land can be distributed through the rental market.
- 16 million hectares are rented to agricultural producers.
- Farmers cannot use land as collateral for borrowing from banks.
- The moratorium on sale of agricultural land prevents potential investment of billions of dollars in Ukrainian agriculture, according to economist Denys Nizalov.
- Ukraine is going to use the blockchain technology to manage its registry of farmland, according to First Deputy Minister of Agriculture Maksym Martyniuk. Blockchain, the technology that underpins virtual currencies, allows users to make simultaneous changes to databases across a distributed network, which could allow land-registry entries made in one location to be immediately visible across the system, adding to transparency.
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