Ukraine's farm lease rates soar past Netherlands levels
Land lease prices in Ukraine are skyrocketing, surpassing rates in the Netherlands. At a Land Bank auction, the record valuation reached approximately £790 per hectare, according to the local service Liga.net. Ukrainian farmers fear that these costs exceed the profitability threshold.
In recent months, Ukraine has seen a dynamic increase in land lease prices. As reported by the portal Liga.net/ua, rates can increase by as much as nine times at state auctions organised by the local Land Bank. Surprisingly, the bloody and brutal war with Russia in the east does not complicate the situation.
A valuation was quoted for four thousand hectares in the Kirovohrad region. The price per hectare reached 40,000 hryvnias (approximately £790).
Leasing in Ukraine more expensive than in the Netherlands
The service Farmer.pl compared this data with Eurostat's, which indicates that the highest rates for agricultural land leases in the European Union are in the Netherlands. The average field price in 2022 was 843 euros per hectare, which converts to approximately £730 per hectare. This is less than the record auction in Ukraine.
The costs of leasing agricultural land in Ukraine have already started to reach this average, especially in Ukraine's most fertile and front-line-distant regions. Volodymyr Nagorny, head of the Ukrainian real estate agency Volodar, stated that given the current agricultural production costs, the hard profitability threshold for leasing in Ukraine is a rate of approximately £580 per hectare.
Nagorny mentioned that the costs are influenced by constantly rising expenses, like the fuel excise tax, which accounts for about 15 per cent of production costs. National regulations are gradually being adjusted to meet EU requirements, affecting land price increases. Ukrainian farmers are concerned that the colossal lease costs may be unprofitable.
