A pilot project on mass land assessment is being prepared for launch

The Ukrainian Government has approved a resolution on the implementation of a pilot project on mass land assessment. The document, which was developed by the Ministry of Agrarian Policy and Food, provides for the creation of a geo-information system of mass land assessment integrated with the software of the State Land Cadastre, the construction of a mathematical and statistical model of mass land assessment, the creation of an automated system for calculating and updating indicators, and the development of proposals for the use of assessment results .

Note that during the two years of the free land market, only 1% of all agricultural land was sold and donated. According to the Deputy Minister of Agrarian Policy and Food of Ukraine, Denys Bashlyk, the average price per hectare increased in three regions: Ivano-Frankivsk, Lviv, and Ternopil. It reached almost $2,000 per hectare in Frankiv Oblast, $1,450 in Lviv Oblast, and $1,400 in Ternopil Oblast. This is an indicator that, despite the restriction, there is a demand for land and the price does not stand still.

In total, almost half a million hectares of land have been alienated since the opening of the land market. Such data are contained in "Opendatabot" with reference to information on land relations monitoring. In total, over two years, as of mid-September 2023, the largest amount of land was bequeathed — 828,000 hectares. For comparison, during the same time, only 365,000 hectares were sold under sales contracts. In total, 448,000 hectares were alienated during the entire period of the open land market. In general, the average area of the purchase agreement is 2.2 hectares. At the same time, the average transaction price is UAH 39-45 thousand. Since the opening of the market, land in Kherson Oblast has become the cheapest at UAH 23,000 per hectare, while the most expensive land was in Lviv Oblast — UAH 132,000, Kyiv Oblast — UAH 119,700, and Ivano-Frankivsk Oblast — UAH 98,112,000.

It should be noted that the second stage of the land market, which will begin in January 2024, will allow farmers to consolidate on their lands and develop a long-term business, which they did not dare to implement on leased lands.

"The second stage of market opening is extremely important not only today, but also in the process of post-war reconstruction and transformation of the agricultural sector. We can already see that if there are problems with logistics in the agricultural sector, it is necessary to develop a deep bulkhead, and this cannot be done on leased land. Projects with long-term payback involve the use of own, not leased, land," Denys Bashlyk emphasized in this regard.

According to him, in order for the land market to work effectively and fully, Ukraine should move to mass valuation of land, as it happens in all civilized countries, where the land market has been operating for many years.

We would like to add that from 2024, a significant increase in lending secured by agricultural land is expected. Currently, about 6% of loans granted to enterprises in the agricultural sector are secured by collateral in the form of agricultural land. After the opening of the market for legal entities, as well as the full launch of the Fund for the partial guarantee of loans in agriculture, we should expect a significant increase in land-secured lending.

This is stated in the analytical review "Land Market in Ukraine", prepared by the Center for Food and Land Use Research at the Kyiv School of Economics.

According to the National Bank of Ukraine, the amount of loans granted to agricultural sector enterprises by Ukrainian banks as of the end of May 2023 reached UAH 110.91 billion. Of them, 49% (54.1 billion UAH) were loans with a term of up to 1 year to replenish working capital. 51% (56.7 billion UAH) are loans with a term of more than 1 year for financing capital investments. Of these, only UAH 3.7 billion were involved for more than 5 years.