News
15.03.2013
Economically justified regulatory monetary value of land not exceeds 15 thousand UAH/ha – UCAB
Association "Ukrainian Agribusiness Club" (UCAB) calculated economically justified monetary value of agricultural land. The calculations demonstrate that this figure cannot exceed 15 thousand UAH/ha. UCAB says that these relevant calculations were sent to the Ministry of Agrarian Policy and Food of Ukraine and the State Agency for Land Resources of Ukraine.
The President of UCAB Alex Lissitsa says that different methodologies allow to calculate price for arable land in Ukraine, which varies from 9 to 16-17 thousand UAH/ha in some areas (depending on local characteristics and fertility).
UCAB experts claim that the annual average income from production of grain and oil-bearing crops is about 400-500 UAH/ha in the steppe zones and 1,500 UAH/ha in some areas of Central and Northern Ukraine. Capitalization of income, even taking into account the key interest rate (although such loans at this very rate are unavailable for agricultural companies), does not allow to talk about economically reasonable regulatory monetary value of arable land, which exceeds average national 14-15,000 UAH/ha.
In turn, Director General of UCAB Volodymyr Lapa says that in case of correct calculation of the regulatory monetary value of land and rental rates at the level of 4-5 percent, land share owners can receive annual income of about 600-700 UAH/ha, and in areas with more favorable production conditions - significantly higher. "If the government wants to establish the regulatory monetary value of arable land at the level, exceeding 15 thousand UAH/ha, it should be ready to purchase the land under that very evaluation after the formation of the land market, or, in other case, the difference between the regulatory monetary evaluation and real prices for land will denigrate the land reform", - the expert says.
The calculation of rental income and the regulatory value of arable land in Ukraine was based on the foreign experience. According to Mr. Lapa, the relatively high price for land in the EU is connected with significant size of government support. Thus, EU farmers, according to the methodology of the OECD, due to government support, receive about 17-20% of their yearly income, while Ukrainian farmers - only 5-6%. Meanwhile, in Russia, where economic conditions are more similar to the situation in Ukraine, the market price for arable land ranges from 500 to 1500 USD/ha, depending on the region.
Information note: Draft Regulations of the Cabinet of Ministers of Ukraine "On approval of the methodology of regulatory valuation of land" was published on the website of the State Agency for Land Resources of Ukraine on December 29, 2012 and provides setting of the capitalized rental income at the level of 14.4 - 27.9 thousand UAH/ha, depending on the region.
Association "Ukrainian Agribusiness Club"
Velyka Zhytomyrska str., 20 А, office 53, Kyiv, 01001
Phone: +380 44 201-4950
Fax: +380 44 201-4951
099 272 59 30
Tetiana Kotyk
www.agribusiness.kiev.ua
The Association "Ukrainian Agribusiness Club" (UCAB) www.agribusiness.kiev.ua was founded in 2007 to protect the economic and professional interests of players of agribusiness in Ukraine. UCAB is a unique platform in Ukraine for establishing business contacts between the leaders of agribusiness, improvement their work and dialogue with the government. UCAB actively supports Ukrainian producers in establishing and maintaining international business relations. The Association consists of the largest producers and processors of agricultural products in Ukraine.
