Producers of grain and oil crops are most interested in purchasing Ukrainian agricultural land

Producers of agricultural goods, mainly involved in the production of grain and oil crops, make up more than 80% of legal entities - buyers of agricultural land resources. At the same time, among agricultural lands purchased by legal entities, only 38% of agreements were concluded by representatives of agrarian holdings.

According to the results of the first study of the portrait of legal entities-land buyers, which was carried out by KSE specialists with the support of the USAID Program for Agrarian and Rural Development, in total during the first six months after the opening of the land market for legal entities in Ukraine (from January 1 to June 30, 2024) 823 legal entities used the right to purchase agricultural land. During this time, they concluded 7.2 thousand agreements with a total area of ​​21.5 thousand hectares. The share of legal entities in the land market in terms of purchased areas for the first 6 months of 2024 was 18%. Most of the transactions were concluded by entities whose main activity is directly related to agriculture - 83.5% of the total number of transactions or 85.4% of the total area of ​​agricultural land. Of them, 93.2% of the agreements were concluded by firms whose main activity is the cultivation of grain, leguminous and oil crops. Among the lands purchased by legal entities, 38% of the agreements were concluded by representatives of agrarian holdings. However, the average size of plots purchased by them is smaller than that of legal entities that do not belong to holdings.

It should be noted that since July 2021, when the open land market started working in Ukraine, Ukrainians have purchased 500,000 hectares of agricultural land with an average cost of UAH 41,000. Land in the Poltava region became the most requested. In three years, 60.36 thousand hectares were sold there, and the average price per hectare of land in the region reached UAH 42.75 thousand. Currently, at the third stage, the Ukrainian land reform should open the land market to buyers from the European Union. This stage is the completion of the land reform with the harmonization of the land legislation of Ukraine with the relevant legal norms of the EU. At the same time, Ukraine aspires to become a member of the European Union. Therefore, it is worth remembering that the interaction of the member states in the EU is based on the observance of the four freedoms. It is about the free movement of goods, services, labor and capital, which includes land. Thus, the legislation of the European Union prohibits limiting the right of land market participants to the movement of capital. But the current Land Code of Ukraine prohibits the sale of agricultural land to foreigners. Therefore, in order for Ukraine to be able to get the opportunity to join the EU, the specified norm must be removed from the domestic legislation.

A little earlier, the Verkhovna Rada of Ukraine adopted in the second reading and in general the draft law "On amendments to some legislative acts of Ukraine regarding the protection of the interests of owners of land shares (shares), as well as the application of administrative procedures in the field of land relations." According to official reports, the adopted version of the document includes, in particular, the following provisions: extension (from 2025 to 2028) of the deadline for registration of unclaimed land plots, implementation of the distribution of land plots between owners of shares and their heirs of lands remaining in collective ownership after the distribution of land plots . Currently, it is envisaged to restore the mandatory training of certified land management engineers and to extend until 2026 the pilot project of entering information into the State Land Cadastre by certified land management engineers. In addition, a rule will be established according to which the term of validity of lease contracts for land plots formed from unclaimed (undistributed) land plots that have passed into communal ownership will be terminated 2 years from the date of state registration of communal property rights to them. In addition, the draft proposes to foresee the peculiarities of the administrative procedure in the field of land relations.

We would like to remind that from January 1, 2024, the second stage of land reform began in Ukraine. It provides, in particular, an increase in the maximum size of the plot for purchase from 100 hectares to 10,000 hectares. In addition, now not only individuals, but also legal entities will be able to buy land. At the same time, the requirement that only citizens of Ukraine can purchase land has been preserved. Let us add that the Agrarian Investment Fund expects a significant increase in agricultural land lease rates. The rate is planned to be adjusted to the risks and peculiarities of each region. In particular, the chairman of the Agrarian Investment Fund, Yaroslav Yaroslavskyi, expects that thanks to online auctions for the lease of state agricultural land, which are planned to be launched in the near future, rates will increase approximately threefold. The starting rate was determined at the level of 12% per annum of the normative monetary valuation of the plot. On average, it is from UAH 3,500 to UAH 4,000 per hectare per year. The winner will be the one who offers the highest bid.