Since Russia’s invasion of Ukraine, the country’s external debt has soared as it relied on financial support from the West. Western aid – particularly through International Financial Institutions (IFIs) – has been conditioned on drastic structural adjustment programmes, which include austerity measures, cuts in social safety nets, and the privatisation of key sectors of the economy, according to a new report from the Oakland Institute – a US based civil society organisation.
One of the key structural adjustments initiated by IFIs in Ukraine was the creation of a land market and deregulation of the agricultural sector to improve the sector’s productivity and access to finance. The report found that as a consequence, 28 per cent of the country’s arable land was acquired by oligarchs and large agribusinesses, with the largest landholders controlled by foreign actors. This continues the trend of high concentration of the grain trade, with four companies exercising an oligopoly over the market by controlling about 70-90 per cent of the global grain trade (see Observer Summer 2022). Moreover, in Ukraine, most of these landholding firms are substantially indebted to the World Bank and the European Bank for Reconstruction and Development, which have invested $1.7 billion in the sector in recent years, giving them financial stakes in agribusinesses. This raises legal questions considering Ukraine’s ban on foreign ownership of land.
Furthermore, the IFIs are effectively subsidising an industrial model of agriculture based on use of synthetic inputs, fossil fuels and large-scale monocropping – long shown to be environmentally destructive. Instead, international support should be geared towards supporting small and medium scale farmers who have demonstrated resilience and a great potential for leading the expansion of a different production model based on agroecology and the production of healthy food.