How transparent are agricultural land deals in Ukraine? A VGGT assessment

In today’s world, food security has become a key challenge; consequently, the responsible governance and use of land play a vital role in ensuring public well-being and community development. Transparency and accountability in land governance are crucial factors in establishing equitable access to resources. The Land Matrix (LM) initiative addresses this by monitoring large-scale land deals (200 hectares or larger) and compiling data on these transactions in an open-access online database.

What are the VGGT principles, and why was this assessment conducted?

To identify and assess violations related to transparency in land deals, the Land Matrix uses the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security (VGGT). These principles provide recommendations to states on measures to protect the rights of users of land and other natural resources, while fostering social stability, sustainable economic development in rural areas, and environmental protection. Read more about the purpose of the VGGT principles and their implementation in our article.

While researching land concentration at the community level, we discovered that some agricultural holdings control more than 35% of a community’s land. This indicates a risk of significant land concentration in the hands of individual entities. Given such a scale of land use, an agricultural holding becomes a key player in a community’s socio-economic development; its operations can significantly affect the well-being of the population, the state of the environment, and other users’ access to land resources. This prompted us to analyse land deals for compliance with the VGGT principles.

The VGGT assessment comprises various indicators. However, those relevant to the land deals in the Land Matrix database are as follows:

1. recognition of land tenure status, i.e. whether the state identifies the territory as legally or institutionally secured for a specific indigenous population or community (V1);
2. displacement of the local population (V2);
3. existence of consultations with local communities and the conditions under which they occur (V3);
4. presence of land-related conflicts (V4);
5. realised benefits for local communities (V5);
6. documented negative environmental impact (V6);
7. provision (or lack thereof) of compensation for negative impacts (V7);
8. inclusive and gender-sensitive consultations (V8);
9. transparency of land purchase or lease prices (V9);
10. provision of legal assistance in dispute resolution (V10).
    

What were the results?

Using these criteria, we analysed deals involving the agricultural holdings Myronivsky Hliboproduct (MHP) and Ukrprominvest-Agro (Roshen). MHP is an agro-industrial holding company primarily engaged in poultry farming, meat processing, and livestock production, managing a land bank of over 350,000 hectares. UKRPROMINVEST-AGRO is a Ukrainian agro-industrial company with a land bank of 100,500 hectares; it is part of the Ukrprominvest corporate group, which is affiliated with the Roshen corporation.

The LM database contains 12 land deals linked to the MHP agro-holding and 3 deals linked to Ukrprominvest-Agro (Roshen).

Among the land deals associated with MHP, there is no information regarding the recognition of land tenure status (V1), population displacement (V2), or inclusive and gender-sensitive consultations (V8). Regarding criterion V3, five deals involved violations concerning community consultations—specifically, that such consultations were not conducted—while four deals involved consultations that followed all procedures, and three contained no information on the matter. Land conflicts (V4) were recorded in two deals. The first, #6854, concerns a court ruling to terminate sublease agreements with the operating company without cited reasons or violations. The second, deal #7184, involves a land dispute in which the operating company was suspected of forging a lease agreement; the court subsequently declared the agreement invalid in favour of the landowner. Based on the V5 assessment indicator, certain tangible benefits for local communities were recorded. Specifically, through its charitable foundation MHP-Hromadi and its subsidiaries, MHP provides benefits in the form of so-called “social funds” (financing road repairs in communities, renovating schools and other infrastructure, establishing mobile clinics or pharmacy outlets, gifts for children, “social stores,” etc.).

Despite these social benefits, they do not offset the negative impacts of the company’s operations on the local environment, public health, and community infrastructure. This is indicated by the assessment results for indicator V6. Negative environmental impacts—particularly those stemming from poultry farms—were identified in eight of the agreements. At the same time, there is no information regarding compensation for such impacts (V7).

Consequently, due to the lack of adequate communication between the company and the community, local residents from several villages in the Vinnytsia region have filed complaints with international financial institutions—specifically the IFC and the EBRD—with the support of civil society organisations (V10). Investigations into compliance with these institutions’ social and environmental standards in connection with their investment in the company’s development are currently ongoing.

Across all 12 deals, information regarding land purchase or lease prices is either partially or entirely missing, indicating restricted access to and a lack of transparency regarding information on land deals in public sources. While new land contracts between the agricultural holding and landowners do specify lease rates, this information remains accessible only to the contracting parties.

The deals assessed for the agricultural company Ukrprominvest-Agro (Roshen) also lack data regarding the recognition of land tenure status (V1), population displacement (V2), and inclusive or gender-sensitive consultations (V8). The deals make no mention of consultations with local communities (V3), suggesting a lack of communication between the operating company and local communities. Regarding indicator V4, land-related disputes were recorded in connection with deals #11723 and #11730. The first case involves a dispute between the operating company and a neighbouring agricultural firm over a specific land plot; it turned out that both companies held lease agreements for the same tract of land. The dispute associated with the second deal mirrors the aforementioned case involving the MHP company but on a larger scale: 60 land-share owners sought to terminate their lease agreements with the company, believing the contracts to be invalid.

Under indicator V6, a negative environmental impact was recorded (one of the companies appears in the Registry of Facilities Causing Harmful Impact). There is a lack of transparency regarding purchase prices and lease payments. On the positive side, the investor attempts to mitigate the consequences of its operations by providing benefits and advantages to local communities. The holding’s operating companies are implementing and continuously improving social benefit packages for employees, long-serving workers, and landowners, while also carrying out social programmes for rural development (such as supplying food to schools and kindergartens, repairing facilities, providing street lighting, assisting with village gasification, opening a medical centre, etc.).

Conclusions on compliance with VGGT principles

The Voluntary Guidelines serve as a useful tool for independently assessing the interactions between landowners—and the community at large—and the investor company acting as the land user. The Land Matrix assessment of deals based on VGGT principles employs a comprehensive, objective approach to determining the local-level impact of corporate activities.

An analysis of land deals involving the agricultural holdings Myronivsky Hliboproduct (MHP) and Ukrprominvest-Agro (Roshen) revealed instances of land conflicts, negative environmental impacts, and a lack of publicly available information regarding land acquisition or lease prices—key indicators of sustainability and socio-environmental responsibility. While community consultations may take place, they often occur only when mandated by procedures for planned activities or involve solely community officials rather than local residents. Both agricultural holdings provide some support to local communities through “social funds” used to finance infrastructure, educational, and other social projects. However, such practices do not obviate the need for transparency in land relations, proper communication with communities, and consideration of the environmental consequences of operations. The findings underscore the importance of further improving information accessibility regarding large-scale land use and strengthening accountability mechanisms for agricultural companies, particularly vis-à-vis the communities where they operate.