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“Potential agricultural sector investors should also


to consider the alternative of investment in agricultural services, rather than the land itself





to increasing investment in agriculture. The Cabinet of Ministers of Ukraine and the World Bank signed a credit agreement to finance the issuance of state certificates for land ownership in rural areas and development of the cadastre system in Ukraine. Total project cost is US $ 359.453 million. To date, Ukraine has already issued more than half of the state certificates on land ownership in rural areas and there are more than six million owners of land shares.


FIGURES According to the State Committee for Land Resources, the value of all land in Ukraine is UAH 330 trillion. This figure is the cadastral valuation, which is based on market value. But the calculations were carried out in 2006, and were it not for the crisis, it is estimated that the ‘land assets’ of the country would be valued at around UAH 1,000 trillion. According to the Department of State Land Cadastre of the State Committee for Land Resources, as of January 1, 2010 Ukrainian agricultural land accounts for 71% of the total land area or 42.8 million hectares, including 33 million hectares of arable land (18%); forest areas, and 4% of land allocated for construction.


Since January 1, 2006, the area of


agricultural land has decreased by 128.9 thousand hectares (it decreased by 31.1 thousand hectares since 2009). Recent data from the State Committee for Land Resources shows that over the past 10 years, the owners of land shares are increasingly less likely to lease their land. In 2001 (according to official figures) there were 22 million hectares in lease, compared to the beginning of this year when the figure was down to 17.5 million hectares. That means that during this period 20% of land shares “fell out” of the moratorium. Lease payments for land plots from state and municipal property are assigned to the category of state taxes and fees. Over the last six years lease payments for 1 ha per year have doubled: from UAH 117.1 per year in 2004 to UAH 260 in 2010. However, nearly 80% of these payments are in kind, not cash. The average lease cost for land at the beginning of April 2010 reached UAH 278.3/ ha, which is double that of April 2007. State and communal property totals than 10 million hectares, including territories that are not in land shares. Before the crisis, the cost of agricultural land reached US $ 1,200 per hectare. Now, according to Baker Tilley calculations, the price is more likely to be set at US $100 - 450 / ha, dependent on location. It is forecast that over the next few


years, following lifting of the moratorium on the sale of agricultural land, its value will steadily grow – after an initial dip. The state plans to restrain large corporations from increasing the amount of land they own in order to avoid the creation of modern corporate farmers. There are ongoing debates about limits on the exact extent of land that can be owned by one company. Right now the realistic ceiling value under discussion is 10,000 hectares, though there are some suggestions that 50,000 or even 100,000 hectares would be acceptable.


According to the Institute of Agricultural Economics, agribusiness activities start being profitable at processing levels of 50-400 hectares. In January-March this year there were 1,114 land plots and lease rights sold in Ukraine. The total area of this land is 1,513 hectares, which was sold at UAH 238.4 million. According to the forecasts made by the State Agency of Land Resources, after the lifting of the moratorium on the sale of agricultural land, the average cost per hectare of agricultural land will be UAH10,000 to UAH 12,000. According to the agency, this level of prices is now being used in various business transactions. The level of lease price set for land in the country is based on this figure,


October/November 2010 UkraineBusiness insight 21


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