In January-March 2024, the capitalization of the agricultural land market in Ukraine increased by UAH 202.5 billion, due to a 7% increase in the number of agricultural land sales transactions and an 11.2% increase in land prices, said Vice President of Kyiv School of Economics (KSE) for Economic Education, Professor Oleg Nivievsky at the seminar “Land Market: New Players, New Challenges, New Prospects” organized by KSE and the USAID AGRO program.
According to his information, in the first quarter of 2024, 25.7 thousand transactions of purchase and sale of agricultural land plots with a total volume of 58.8 thousand hectares were concluded in Ukraine, which is 7% higher than in the fourth quarter of 2023, which recorded a record number of transactions of purchase and sale of agricultural land for the entire time after the start of the full-scale invasion.
In the first three months of this year, the weighted average price of a hectare of agricultural land increased by 11.2%. While in the fourth quarter of last year it amounted to UAH 37.7 thousand, in January-March 2024 it increased to UAH 42.0 thousand per hectare. Thus, the capitalization of the agricultural land market has increased by UAH 202.5 billion since the beginning of this year, stated Nivievsky, and attributed these phenomena, in particular, to the opening of access to the land market for legal entities from January 1, 2024.
“Despite the full-scale war and a rather limited model, the agricultural land market in Ukraine is developing successfully. A clear indication of this is the recent decision of the National Bank to increase the liquidity ratio of agricultural land from 0.35 to 0.5. This has already opened up the possibility for the agricultural sector and landowners to attract additional funding worth $25 billion, which is comparable to the annual financial needs of farmers and landowners,” said the KSE Vice President.
Roman Neter, KSE Agrocenter expert, said that in January-March 2024, 436 legal entities purchased 2957 agricultural plots with a total area of 8.5 thousand hectares. At the same time, a little less than half of the transactions took place in March 2024, when 276 legal entities exercised their right to purchase agricultural land, acquiring 1253 land plots with a total area of 3.5 thou hectares.
He recalled that at the end of 2023, before the launch of the second stage of the land market, a number of experts expressed concerns about the possibility of large players accumulating large areas of farmland. But in the first quarter of 2024, these fears were not confirmed.
“The share of legal entities in the land market in the first quarter was only 14.5%, while the rest of the transactions are still made between individuals. At the same time, the opening of access to the land market for legal entities is already having a positive impact not only on liquidity but also on market transparency,” Nater emphasized.
Ksenia Sydorkina, USAID AGRO Program Director, said that the development of the agricultural land market is increasingly affecting the public finance system of communities after the personal income tax paid by military personnel was redirected to the state budget. Since January 2024, the increase in revenues related to agricultural land has offset the decline in other community tax revenues by a quarter. For example, in February of this year alone, taxes related to agricultural land accounted for 13% of all community tax revenues, compared to 10% in February 2023, and reached UAH 3 billion, which is 20% higher than the same period last year.
“The agricultural land market is an additional resource for the restoration of territories, the potential of which has yet to be realized by joint efforts of the government, lawmakers and communities,” said USAID AGRO Chief of Party and expressed confidence in the need to implement the reform of spatial development of territories and a number of other projects on land consolidation, irrigation development, affordable lending for small and medium-sized agricultural producers, including with the support of the Partial Guarantee Fund for Agricultural Loans, as well as with the support of the Fund.
Sydorkina said that international law experts from the Civitta, Aequo, and EasyBusiness consortium, with the support of the USAID AGRO program, have developed a concept for harmonizing Ukraine’s land legislation with EU law. The concept envisages the development and adoption of 14 legislative acts that will facilitate the approximation of Ukrainian legislation to European law, the development of land relations and the agricultural sector as a whole.
