Ukraine's soaring land lease prices surpass Dutch rates
Land lease prices in Ukraine are skyrocketing, surpassing rates in the Netherlands. At a Land Bank auction, the record valuation reached $960 per hectare (approximately 390 acres), 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 be raised as much as nine times at state auctions organized by the local Land Bank. Surprisingly, the ongoing and brutal conflict with Russia in the east does not complicate the situation.
A valuation was quoted for the Kirovohrad region's four thousand hectares (approximately 15,500 acres). The price per hectare reached 40,000 hryvnias (approximately $960).
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, converting to approximately $885 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 $700 per hectare.
Nagorny mentioned that the costs are influenced by constantly rising expenses, like the fuel excise tax, which accounts for about 15 percent 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.
