Farmland in the Ukraine

By: "Farm Tender" News
Cropping & Grain News
Jul 15, 2017
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Today, the owners of agricultural land are people of Ukrainians who were involved in agricultural enterprises of the former USSR.

Since during the disintegration of the USSR, agricultural lands were divided between the workers of agricultural collectives in parts (land plot "share") (2.5-3.5 Ha)

What is a land share?

So, the land share is a conditional plot of land allocated as a result of the distribution of land to collective agricultural enterprises among its members. The land share has its own size, defined in hectares and even monetary value.

While there is a moratorium on the sale of agricultural land (share).

Ukraine from the end 2017 wants to start trading state-owned agricultural land, and from 2018 to allow citizens to trade land for agricultural purposes, which is privately owned.

-But the tenant has the primary right to purchase land.!!! Rent. Sale.Purchase. Agricultural land can only be carried out by citizens of Ukraine.

This is to attract investment in Ukrainian companies through citizens of Ukraine. While many arable land plots worldwide get deteriorated by intensive conventional farming practices, Ukraine’s black soils, Chernozem, have managed to stay much less harmed by humanity’s most dangerous and delusive “inventions”. Ukraine’s diverse farming climatic zones provide an exceptional opportunity for fully-diversified, complete-cycle farming ventures with their own livestock, seed production and premium field crops and row crops production of export-scale harvest volumes.

Format of Investment in Agricultural Land in Ukraine Investment in agriculture land in Ukraine is conducted under farmland lease agreements.

Ukraine’s agricultural land cannot be purchased, but lease agreements for agricultural land enable as much freedom for performing farming operations as ownership while also providing a primary right of purchase in case of the agricultural land sale moratorium lift and given that pai holders would be willing to sell off their property.

Cost of Investment in Agricultural Land in Ukraine Cost of investment in Ukraine’s farmlands is the lowest in Europe while it provides the highest return potential given the high soil fertility and unrealized agri-ecological potential of Ukraine’s soils. The cost of investment is composed of the lease rights acquisition cost, annual lease fees and annual cultivation (actual farming operation) costs.

Agricultural land lease agreements carry a legal obligation of land cultivation which inevitably requires a lessee to perform actual farming activities. Since agricultural equipment lease is not very common in Ukraine, most farms invest in tractors, tillage equipment, seeding equipment, harvesters, etc. Capital investment into agricultural equipment in Ukraine may vary from USD 350 (locally produced equipment or mixed) to USD 800 (high-end Western equipment) per hectare.

Calculated per annum with fuel, spare parts, seeds, fertilizers, crop protection, labor costs, etc. included, annual cultivation cost from USD 200 per hectare using organic farming methods up to USD 500 per hectare with conventional/chemical farming. Organic farming, as opposed to intensive conventional farming, provides a better investment opportunity in Ukraine due to high natural fertility level in the soils. In most of the cases, there are no yield losses when growing organically in Ukraine compared to what most of the Western European farms experience during the transition period.

Optimal investment cost in Ukraine’s agricultural land is one of the lowest at USD 600-800 per hectare compared to Americas’ (USA and Argentina) USD 4,000+, and Western European level of USD 12,000+. At the same time, the current harvest yields in Ukraine suggest that the agro-ecological potential of 6.2 metric tons per hectare can be easily obtained under proper farm management and with the use of optimal organic technologies.

Agricultural Land Valuation in Ukraine Ukraine’s soil quality is subject to bonitet valuation system. Most of Ukraine’s soils boast a bonitet above 40. Chernozem (black soil types) have a bonitet of 70-80 and more. Soil fertility is a complex quality of soils and not limited by bonitet. Land valuation in Ukraine has no standardized system and in most of the cases is based on the yeilds history for particular farms or individual fields.

Agricultural Land Management in Ukraine Soil quality tests are easy to obtain in Ukraine and cost USD 200-450 per measured field (50-200 hectares). Such tests often include detailed recommendations for further soil treatment making it very easy to draw cultivation and fertilization plans per each individual field.

Farm management, on the other hand, is a more complex issue. Many Ukrainian farms lack new equipment or sufficient knowledge of modern farming technologies and sustainable farming methods.

An optimal size of an individual farm in Ukraine is 5,000 to maximum 10,000 hectares. The farm volume is considered optimal when any commercial crop can be harvested and sold at the minimum export volume of 3,000-5,000 metric tons.

Harvest storage is a critical consideration for operational independence and financial stability of a farm not only in UKraine. A capital investment of USD 120-150 per metric ton of storage should be considered to secure long-term performance of a farm.

How to Invest in Agricultural Land and create a Farm in Ukraine? Agricultural investment made easy: AgroBuyer Ltd. agriculture experts can provide you with further information and details on how to practically realize agriculture investment opportunities in Ukraine.