The price of agricultural land in Ukraine can reach up to 45,000 per hectare

The weighted average price of land in Ukraine for 2023 reached an indicator of 38.6 thousand per hectare and it may rise by another 10-15% in 2024. As Andriy Martyn, senior project manager for land reform of the Cabinet of Ministers Reform Office, said in an exclusive interview with AgroPolit.com, in 2024, we can expect a further gradual increase in prices for agricultural land - by a maximum of 10-15%. This is due to the fact that the sea trade in agricultural products has resumed and the marginality of agribusiness is gradually recovering. Odesa's ports reach pre-war indicators. Most EU countries have legislation on land consolidation, but at the level of national legislation.

The expert is also sure that the need for land consolidation will gradually grow in Ukraine, since tenant farmers are buying up plots of land in different places, and therefore they are interested in forming unified land massifs. He said that the possibility of creating national legislation on land consolidation was discussed with the European Union during the development of the EU Plan for Ukraine, but it was not included in the list of mandatory measures.

According to him, when Ukraine joins the European Union, the right to free privatization will have to be extended to all citizens of EU countries. The expert noted that in the near future the Verkhovna Rada should adopt the so-called "European integration" draft laws. These specified documents bring the national legislation of Ukraine into compliance with the requirements of the legal system of the European Union.

He added that the adoption of the law on the State Agrarian Register is also part of Ukraine's obligations to international partners. The speaker called the topic of free land privatization the most politically difficult. Most military personnel and their family members do not need land at all - they mostly want to sell it immediately. Therefore, it is better for the state to help defenders not with land, but with money - it will be more fair, justified and effective. In addition, if Ukraine joins the EU, the right to free privatization will have to be extended to all citizens of EU countries, because discrimination is prohibited in the EU. It is obvious that this alone will require a review of the corruption-inducing rules of free distribution of land.

However, despite the increase in the land ownership limit to 10,000 in Ukraine, business will not be able to buy all the land for two main reasons. The first reason is that plots in Ukraine have an average area of up to 10 hectares, so it will take some time to acquire large areas of land, and due to the inclusion of natural persons in the process, this process becomes even longer and risky. Experts consider money to be the second and most important reason for the impossibility of buying Ukrainian land by businessmen. Due to the war, major players in the land market suffered significant losses and lost part of the land bank. According to experts, the acquisition of 10,000 hectares of land will cost the agricultural holding UAH 360 million. According to them, there are almost no companies in Ukraine that have such funds and can invest them in the purchase of land. Analysts add that not all agricultural holdings will legally be able to purchase land. At the same time, the Land Code prohibits the acquisition of land by companies whose beneficiaries are foreigners. This cuts off some of the leading players in the agricultural market who have foreign investors. Also, the market is unlikely to see public Ukrainian companies that have foreign investors among their shareholders.

Currently, in order to navigate land prices in Ukraine, the State Geocadastre publishes a certificate of average prices, but official statistics often show lower prices than the actual ones. As the founder of the Feodal service, Andrii Demyanovych, said, the price of Ukrainian agricultural land can vary both depending on the region and based on the selected plot. According to analysts, thanks to the data of the State Geocadastre, it is possible to gain an understanding of price dynamics. Experts emphasize that if you resort to the capitalization of land lease prices at auctions, comparing them with official information on sales, it will turn out that the real prices should be two to three times higher. Andriy Demyanovych added that self-regulation of the land market will take place in about ten years. The minimum price of a hectare of agricultural land is equal to its normative monetary value (NGO). Often, in sales agreements, the parties specify a minimum price, and the difference is paid in cash. Official statistics take into account only official sales data, and there the prices are lower than the real state of affairs. This mainly applies to small farmers, larger farmers are trying to document the higher value of the land," Andrii Demyanovych said.

We would like to remind you that the second stage of the land reform began in Ukraine on January 1 of this year. According to the norms of the current legislation, 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. We will also remind you that at the end of 2023, a petition was registered by the All-Ukrainian Agrarian Council to postpone until the end of the war the increase in the maximum area of agricultural land "in the same hands" from 100 hectares to 10,000 hectares. The specified petition gathered the necessary 25,000 signatures for its consideration by the President of Ukraine, who instructed the head of government to consider this issue. But until now, no decisions of the CMU in this regard have been reported. It should be noted that the land reform will also have a third stage, which involves the opening of the market for foreign individuals and legal entities. But the decision on this must be approved at the all-Ukrainian referendum, which cannot be held under martial law. It is worth noting that since the opening of the land market in Ukraine (from July 1, 2021) only 1% of land was sold, of which 99.5% remained in agricultural production. It is also noted that since the beginning of 2023, the weighted average price for land in Ukraine has increased by 10.4%, up to UAH 38.5 thousand per hectare.