Law of Ukraine “On Private Plot Holding ”

Recent legislation and commentaries by the experts of the Institute for Rural Development.

The Law of Ukraine “On Private Plot Holding” (№742-IV dated 15 May) came into force on 11 June 2003. According to the law, the activity connected with farming on a private plot holding (PPH) is not considered entrepreneurial. This is the activity carried out by individuals (without forming a legal entity) in order to meet their own needs through the production, processing and consumption of agricultural produce, selling its surplus and provision of services using PPH property, including services in the sphere of “green tourism”. Also, PPH can be set up by individuals being in family relationship and living together. The law defines organizational, economic, social and legal principles of keeping PPH. These include, in particular:

• Possibility to join the land parcel allocated for PPH from the land of state or communal property (maximum 2 hectares) with the land lot transferred to PPH ownership as a result of land sharing. According to Tamara Ostashko, Institute for Rural Development expert, this will promote the development of a tendency to increase PPH land use, which in the long term may result in the establishment of a family farm system in Ukraine, hence the resolution of unemployment problem and formation of the middle class in rural areas.

• PPH members belong to the category of employed population if their work on PPH is their main job, and estimated monthly income per PPH member equals to or exceeds the set minimum salary (UAH165). The status of employed person provides for social security, i.e. in case of temporary incapacity for work (so called sick list), award of pension, in various insurance cases. The amounts of such payments depend on estimated monthly income per PPH member. The methodology for employment status definition was to be developed by the Government with the consideration of regional conditions and normative land assessment during three months following the law adoption.

• The legally set standard on services to be provided using the PPH property, including those in the sphere of green tourism, creates the possibility for rural residents to generate additional income and facilitates the resolution of the unemployment problem.

• PPHs are entitled to participate in agricultural producer competitions for Government support to be received under national and regional programmes.

• The law stipulates the provision of Government support to PPHs under national and regional programmes from both national and local budgets.

Note. According to the Ministry of Agrarian Policy, as of the beginning of 2003 the number of PPHs that added the appropriate land parcels to their farms and ran them without formation of legal entities exceeded 500 thousand, and the area of their land use was between 7 and 10 hectares of agricultural land.

Tamara Ostashko