elements of EU policy, the government established the digital SAR registry platform, using it to implement the EU-supported producer support grant targeted to small farmers (< 120 ha) among many others.

# **2.1 Ukraine’s agricultural sector**

With more than 40 million ha of some of the most fertile agricultural land globally, Ukraine has traditionally been a key global supplier of agricultural commodities, especially sunflower oil, maize, and wheat. Before the war, agriculture contributed about 10% to GDP and 42% of the country’s exports. The sector’s structure was shaped by de-collectivization in the early 2000s when some 7 million landowners were provided with land shares of about 4 ha each. Some 20 million ha of Ukraine’s agricultural land is farmed by formalized large farms, often firms with links to foreign capital markets (Deininger _et al._ 2018) that lease land from owners. About 12 million ha is estimated to be cultivated by small and household farms many of which lack the resources to register formally and may also not be covered by the country’s agricultural statistics. In 2002, about 9.2 million ha was state or communal land and an unknown share of this land was ‘privatized’, often in non-transparent ways that imposed significant losses to the public (Nivievskyi 2020). The country has one annual growing season with winter crops (wheat, rye, barley, rapeseed) sown in fall, summer crops (barley, maize, sunflower, soybean) in the spring and harvest from July to November.

In 2019 and 2020, Ukraine enacted far-reaching land governance reforms including allowing sales of agricultural land through the stepwise lifting of a moratorium on such transactions that had been in place since 2001. This was expected to allow use of land as collateral for credit to deepen domestic capital markets and, in the agricultural sector, support diversification, , especially by smallholder producers, away from land- and capital-intensive bulk commodities with little value or employment added. Complementary institutional reforms included measures to (i) improve transparency and data access as well as quality via digital interoperability; (ii) improve public land management by transferring ownership to local governments and requiring all lease rights to public land to be done through electronic auction; and (iii) establish a partial credit guarantee facility to ease access to financial markets by small producers.

While some of these measures had shown positive effects,<sup>7</sup> the war started by Russia’s invasion in February 2022 profoundly affected economic and social outcomes in three ways. First, the blocking of low-cost avenues for grain exports via Ukraine’s Black Sea ports and the need to shift to more expensive alternatives negatively affected Ukraine’s comparative advantage in exporting bulk agricultural commodities with possibly far-reaching effects on long-term prospects and profitability of Ukraine’s agriculture (Wilson _et al._ 2024) For example, for wheat, Ukrainian producers are estimated to have lost $1.4 billion in producer surplus (Devadoss and Ridley 2024), while Russia sustained at most modest losses or may even have gained

> 7 The mandatory shift from centralized in-person to fully electronic auctions run by local authorities for any transfer of use rights to public land instantaneously increased lease prices by 175% (Deininger _et al._ 2023b).

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