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The agricultural land prices and land transactions development in
Slovakia and selected EU countries
I. TAKÁČ1,A. BANDLEROVÁ1
1Slovak University of Agriculture, Nitra, Slovak Republic
Abstract: The issue of agricultural land market is important for really well functioning
agricultural land market. The determination of land value depends on the purpose for which
the agricultural land is used. The article analyzes and compares the evolution of the
agricultural land market in Slovakia and surrounding countries (the Czech Republic, Poland
and Hungary). In the first part we follow the evolution of land transactions in Slovakia and
other selected member states of the European Union. In the second part of the article we
summarize the evolution of agricultural land prices in Slovakia and some new and old
member states of the European Union. In the third part we follow the evolution of agricultural
land rent transactions in Slovakia and neighboring countries in the Visegrad Four and some
selected member states of the European Union. In the fourth part of analyzing is compared the
evolution of market rental prices for agricultural land in Slovakia, and some member states of
the EU.
Key words: agricultural land market evolution, land transactions, land price, land rents,
Introduction:
The specific and unique significance of land as property is that represents natural value not
formed by human being. According to the agriculture, the land is the main production
facilities and belongs to the natural wealth of the country. The properly functioning
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agricultural land markets have vital importance for the maintenance and the development of
regions and the growth of agriculture within the EU Member States. In Slovakia is mainly in
the last period as a result of accession into the EU described as an emerging agricultural land
market, but due to the limited amount of data less transparent. The implementation of CAP
(direct payments) in the New Member States of the EU raises the question of whether affect
the land markets within the NMS is expected. Evidence of capitalisation of public support to
agriculture into land prices indicates that benefits are partly transferred toward landowners
rather than toward the targeted population (the producers). This issue is of particular
importance in countries where a large proportion of land is used by farmers who do not own
land, such as in the Slovakia where corporate farms and large individual farms rent more than
90% of agricultural land from private landowners. Based on the mentioned above the issues of
the agricultural land market development (market price and rent) in the NMS is extremely
important however can affect the competitiveness of the agricultural sector.
Goal:
The article described the evolution and compare the market for agricultural land in Slovakia
and selected EU countries in terms of:
� Sale of land market transactions,
� Market price of land
� Land rental market transactions,
� Market rental prices for agricultural land.
Data:
707
The data for the article were collected from the following resources:
� data obtained from the Research Department of Law, University of Agriculture in
Nitra FEŠRR, VEGA project No 1/0357/08,
� data obtained from LICOS Research Centre of Excellence Catholic University of
Leuven, Belgium.
� data from the Eurostat database, FAO, and the Slovak Statistical Office,
� literature to address the issue
� research reports and scientific institutes of the Ministry of Agriculture:
o Report on the agriculture and food industry in Slovakia in years 2003-2007;
o Research Report Research Institute of Agricultural and Food SR
o Management of agricultural research institutions in selected countries;
o Annual reports of the Slovak Land Fund
Methods:
Within the article we used the following methods:
Time comparison using statistical indices:
j
kx x
xI =
1
to indicate in which multiple base index value is compared. Index for assessing the size of the
relative changes of selected parameters. According to the chosen basis of two types of indices
1 (Pacáková et al., 2003)
708
� chain indices (indices with variable base), which compares the value of variables
during the period of its value in the previous period:
Ttx
xI
t
t
tt ,.....3,2,1;
11
==−−
� base indices (indices with a permanent base in the period), which compares the value
of variables in each period t in the base period value of z = 0:
Ttx
xI
z
t
zt ,.....,3,2,1==
Results:
I. Overview of sale of agricultural land market transactions
The volume of sales of agricultural land varied among the Visegrad countries over time. The
volume of sold agricultural land among the countries recorded an upward trend especially in
the last period.
In Slovakia was the lowest total volume of sold agricultural land. As can be seen (Table1), the
volume of agricultural land sold in the period 2001 to 2003 declined and than since 2004 have
been grown. In the year of Slovak accession to the EU the amount of sold agricultural land
twofold increase and in the case of arable land increased 70% .
Table 1 The volume of transfers of agricultural land in six selected regions of Slovakia.
Agricultural land in ha Arable land in ha
709
2001 2,110 822
2002 1,451 962
2003 912 874
2004 1,853 1,476
2005 2,754 1,899
Source: Research institute of economics agriculture and food processing, Slovakia
The evolution in the Czech Republic and Poland has been influenced by the ongoing
development process of privatization of state land. In the case of Poland (Figure 1) nearly half
of the total sold land in the period 1994 to 2005 was accounted for sales of public
land. Poland, which has the largest area of land resources within the Visegrad countries, there
were annually to approximately 100 thousand transactions with land during the period from
1995 to 2005. Within the same period was the sale of land between private parties 1.7 million
hectares, representing 10 percent of total agricultural land in the country.
Figure 1 The land sales transactions in Poland
Source: Institute for Agricultural Economics and Warsaw Agricultural Estate Agency in Warsaw, ANR and
IERiGŻ
710
The Czech Republic has been growth in sales of agricultural land since 2000 mainly due to
sale of state land to farmers. Especially since 2002 yearly have entranced around 70 thousand
hectares (about 1.7% of the total land fund) State-owned land on the market. (source:
agricultural land and Cartography Office). On the other side the private annual sales volume
in the period from 1993 to 2001 represented almost 0.3% of total agricultural land. In the
period from 2002 to 2004, the annual sales volume represented around 1.5 percent and in
2005 even more than 3% of the total area of agricultural land. Increase especially in recent
years was largely due to a reduced interest rate on a loan throught guarantee fund for the
purchase of land for agricultural use.
In Hungary (Table 1) at the time of accession into the EU changed the owner of more than
213.3 thousand hectares of farmland, representing nearly 3% of total country productive
agricultural land. Much of it was sold by the application of a pre-emptive rights (91.1
thousand hectares). Transfer of ownership of agricultural land was largely carried out by other
manner than by sale. Inheritance, donation, purchase and mutual exchange of soil were
carried out in a volume of 122.2 thousand hectares. In 2006, there was a transfer of
agricultural land in the amount of 210.7 thousand hectares. Almost half of the transfers of
103.8 thousand hectares agricultural land related to inheritance, purchase, donation or
substitution. Buying throught pre-emptive in 2006 was approximately 95.5 thousand hectares
of which more than half of sales were represented by the sale between part-owners or close
relatives (49.4 thousand hectares). According to official statistics, the sale of land to citizens
of the other Member States in 2006 was negligible (700 hectares).
Table 2 The volume of transfers of agricultural land in Hungary
Agricultural land in thousand
711
hectares
2004 2005 2006
Land acquired on the base of pre-emptive rights: 91.1 90.5 95.5
co-ownership, or close relatives 34.4 31.6 49.4
home tenant or farmer 37.5 33.7 36.9
farmers from the EU Member States x 0.4 0.3
public land (national land fund) 19.2 24.8 8.9
Land acquired without any pre-emptive: 122.2 109.8 115.3
inheritance, purchase, donation and Exchange 105.8 96.9 103.8
other transfers of land 16.4 12.9 11.5
Total transfers of agricultural land 213.3 200.2 210.7
source: Ministry of Agriculture and Regional Development, Hungary. Mardi - Institute of Geodesy and
Cartography and Remote Sensing. National Land Fund of Hungary.
II. The agricultural land sales prices development
The agricultural land market prices development in Slovakia and neighboring countries
experienced significant changes, particularly in the period after accession to the EU (see Chart
2). The significant increase in prices of agricultural land can be seen in the case of Slovakia,
the Czech Republic and Poland.
Figure 2 Development of the average current sales prices of agricultural land in selected
countries (V4)
712
Source: Licos market research, Agricultural research institute for the Czech Republic, GUS, and ANR Zagorsky
for Poland; RIEAFI for Slovakia, the FADN for Hungary; Notes: Czech Republic - only the price of agricultural
land, private owners, Poland - The price of arable land is private and public owners, Slovakia , Hungary, the
price of agricultural land, both private and public owners
In terms of comparison between countries a constant market price index of agricultural land
provides better view of its development between countries. As shown in Figure 3 after the
countries accession into the EU, the development of real market prices of land (adjusted for
inflation) reached significantly increasing trend. Index of land price growth achieved in 2007
compared with 2001 in the case of Slovakia, 237% and 216% for Poland.
Development of market prices in the Czech Republic has been significantly affected by the
sale of state land to farmers, which began in 2000 when the agricultural land was sold at fixed
administrative prices and not at market prices. Market price index in the Czech Republic fell
in 2004 to 81% and then in subsequent years after accession into the EU grew and in 2007
reached 116%. As expected, the trend in prices has been exceptionally strong during the
countries' accession to the EU.
713
When comparing prices before (2003) and the year after the EU accession (2005), the market
price of sold land increased by almost 21% in Slovakia and around 35% in Poland.
Figure 3 Indices of average fixed price of sold agricultural land per hectare (base year 2001
= 100%)
Source: own calculation, Licos land market survey
Since enlargement of the EU in 2004 have the differences in market prices between the old
and new EU Member States been gradually decreased. As shown in Table 6, the gap in the
price of land between the countries is shrinking. For example, the average market price of
land in the Czech Republic and Slovakia has been closer to the prices in Germany and
France. Figure 4 shows that the evolution of agricultural land prices in the new Member
States after accession into the EU have had significantly increasing trend in comparison with
the old Member States wrehe the development ofagricultural prices have been stable.
714
Figure 4 the average fixed price indices of sold agricultural land in selected EU
countries in local currency per hectare (base year 2001 = 100%)
Source: own calculation, Licos land market survey
III. Overview of rents of agricultural land market transactions
Renting of agricultural land in many countries is the most widespread form of land
transactions. Table 1 presents aggregate data of selected countries on share of leased
agricultural land. Among individual countries, there are considerable differences in the
amount of leased land. For example, in Italy, where the agricultural policy to encourage
cultivation of land ownership, the proportion of leased land is only 26% in Belgium, where
the strong protect tenants renting land legislation, about 68% of the occupied land is leased
land. Land rents which is represented by a wide range of differences between countries
represent the main role in the land transactions within the new EU Member States,.
In Slovakia and Czech Republic, where the proportion of leased agricultural land is the largest
across the EU, the farmers leased more than 90% of the used agricultural land. Explanation of
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such a high proportion related with period of socialism. During the comunist period in those
countries the large agricultural cooperatives and state-owned companies where established.
Those companies did not own almost any agricultural land but they used agricultural land
owened by individuals in free of charge. This situation then continued during the period of
transition. Nowadays the land in the Slovakia and the Czech Republic mostly used by private
companies and cooperatives whitch do not own agricultural land but rented it.
The Hungary where the share of total rented land by the farmers is almost 60% is situated in
the midlle of the list of EU countries. The lowest share of total rented land by the farmers
within the EU and new Member States has Poland approximately 22%. This indicatior is the
lowest in Poland mainly because of the historical reasons. Since both before and during the
communist regime in the country dominated the mainly small family farms that carry out
agricultural activities on its own soil. This situation has been subsequently maintained during
the transition period till the present.
716
Table 3 Share of leased agricultural land in the total used land. (%)
2003 2005 2003 2005
Slovakia 95 91 Finland 33 34
Czech republic 89 86 Great Britain 35 31
France 71 73 Spain 31 31
Belgium 68 68 Portugal 29 30
Germany 65 64 Slovenia 24 30
Hungary 56 59 Austria 26 29
Latvia 54 53 Italy 29 26
Sweden 45 40 Lituania 26 24
Holand 39 39 Poland x 22
Greece 34 36
Source: EUROSTAT
717
Table 4 Share of individual farmers in agricultural land use (%)
2003 2005
Irland 100 100
Greece 100 100
Slovenia 94 95
Belgium 92 92
Holand 92 92
Finland 93 92
Lituania 89 90
Poland 88 90
Latvia 88 88
Great Britain 89 85
Austria 83 83
Italy 88 82
Sweden 81 82
Portugal 77 75
Germany 69 69
Spain 69 69
Hungary 54 50
Maďarsko 50 49
Czech republic 27 29
Slovakia 13 16
Source: EUROSTAT and country statistical offices
As shown in Chart 1 in the Visegrad countries at country level, there is a positive correlation
between the total share of leased agricultural land in countries and the share of agricultural
land used by agricultural companies, and conversely a negative correlation between the total
amount of leased agricultural land within the country and the share of agricultural land used
718
by individual farmers. In the case of individual farmers the share of leased land on the total
used land is low, however they mainly cultivate their own land. Agricultural companies and
cooperatives in most cases do not own any or only a negligible amount of agricultural land
therefore they leased in extensive amount of agricultural land. This is the case of Slovakia and
the Czech Republic where companies and cooperatives have dominant position and cultivate
the large proportion of the leased agriculture land. Conversely in the Poland, where is a high
percentage of individual farmers is the low proportion of the total leased agricultural land. In
Hungary, where companies are cultivating almost the half of the total acreage, the proportion
of the total leased land within the country is almost 60%.
Figure 5 The relationship between the total share of agricultural land used by individual
farmers and the share of the total leased agricultural land (%)
Source: own calculation
IV. The evolution of agricultural land rents
Looking at the current available data about rents for agricultural land the average rents for
agricultural land in Slovakia and neighboring countries varies considerably. After accession
719
Visegrad countries into the EU showed the land rents development similar direction (Figure
2).
The most significantly land rents increased in Poland and Hungary. The huge increase in rents
in Poland was due to the high price of wheat grain in particular, because the land rents are set
on the price of wheat, or distributed in the form of a kind. In terms of euro has been the
highest long-term rentals in Hungary, followed by Poland and the Czech Republic. In
Slovakia, there remains the lowest long-term rents from the former countries of the Visegrad
Four. In 2007, the average rent in Slovakia was € 24 per hectare, while in Hungary was rent
87 € per hectare, and the Czech Republic € 47 per hectare.
Figure 6 Development of rental prices of agricultural land in selected countries in € per
hectare
Source: Licos market research, Agricultural research institute for the Czech Republic, GUS, and ANR Zagorsky
for Poland; RIEAFI for Slovakia, the FADN for Hungary; Notes: Czech Republic - only the price of agricultural
land, private owners, Poland - The price of arable land is private and public owners, Slovakia , Hungary, the
price of agricultural land, both private and public owners
720
Index of agricultural land rent in a real prices adjusted for inflation and exchange rate
(change in the euro against the domestic currency) thus provides a more accurate picture to
compare the development of rents between countries.
721
Figure 7 Rental price indices of agricultural land at current prices in domestic currency per
hectare (base year 2001 = 100%)
Source: own calculation
As shown in Figure 3, before the accession of the countries into the EU (in 2003) came into
land rent for significantly increasing trend. The average land rent in 2007 compared to 2003
in Slovakia increased by 127% and Poland with more than 300% (the effect of wheat
prices). The Czech Republic has increased the rent for the same period by 61%. Since the year
2004 in Slovakia and neighboring countries have begun to apply the same measures
supporting the common agricultural policy of direct payments linked to land area, we assume
that some of these supports may be capitalized in land rents.
722
Figure 8 Rental price indices of agricultural land in constant prices (in domestic currency per
hectare)
Source: own calculation
Figure 9 The difference of rental price indices of agricultural land (%)
Source: own calculation
723
When comparing the land rents evolution within the EU the country could be divided into two
main groups.The first one representative of the old Member States, where agricultural land
rents development were more or less stable. The second group consists of the new Member
States, where the land rents shown an average annual rate of change between the ranges from
10 to 30 percent. Increasing land rents index may be explained to the some extent by
increasing support (direct payments) per average land area. However the higher rental growth
in the new Member States gradually converge the gap in the amount of land rents between the
EU Member States. Figure 6 shows that the evolution has been significantly increased rents in
the new Member States after accession to the EU and the old Member States has been stable.
724
Figure 10 Rental price indices of agricultural land in selected EU countries (local currency
per hectare)
Source: own calculation,, Licos land survey
Conclusion:
The aim of our article was to analyze the agricultural land market development in Slovakia
and selected EU countries (particularly in the Czech Republic, Hungary and Poland) during
the period before and after accession in terms of land market sale transactions and prices and
land market rental transaction and rents . The volume of sold agricultural land. between the
Visegrad countries (V4) varies over time, but since accession into the EU, showed a rising
trend. In case of Slovakia was the total volume of sold land the smallest within the V4
countries. In the year when Slovakia entered the EU experienced a twofold increase in the
amount of land sold. Development of land market prices in Slovakia and neighboring
countries experienced significant changes, particularly in the aftermath of EU accession. A
significant increase in the lan prices were observed in the case of Slovakia, the Czech
725
Republic and Poland. When comparing rates the year before and the year after EU accession,
increased market price of sold land by almost 21% in Slovakia and almost 35% in Poland.
Land lease in many countries is the most widespread form of land transaction. Among
individual countries, there are considerable differences in the number of leased land. In
relation to the aim we mapped the evolution and compared the market rents of agricultural
land in Slovakia and selected EU countries in terms of land rental market transactions and
market rental prices. In Slovakia and Czech Republic, where the proportion of leased
agricultural land is the largest across the EU, the farmers leased more than 90% of the used
agricultural land. The lowest share of total rented land by the farmers within the EU and new
Member States has Poland approximately 22%. At country level, there is a positive
correlation between the total share of leased agricultural land in countries and the share of
agricultural land used by agricultural companies, and conversely a negative correlation
between the total amount of leased agricultural land within the country and the share of
agricultural land used by individual farmers. In the case of individual farmers the share of
leased land on the total used land is low, however they mainly cultivate their own land. In
Slovakia and the Czech Republic where companies and cooperatives have dominant position
and cultivate the large proportion of the leased agriculture land. Conversely in the Poland,
where is a high percentage of individual farmers, is the lowest proportion of the total leased
agricultural land.
Looking at the current available data in related to the land lease the average rent for
agricultural land in Slovakia and neighboring countries varies considerably. In terms of euro
has been the highest long-term rentals in Hungary, followed by Poland and the Czech
Republic. In Slovakia, there remains the lowest long-term rents from the former countries of
the Visegrad Four. before the accession of the V4 countries into the EU (in 2003) came into
726
land rent for significantly increasing trend. Comparing the land lease development between
the EU countries we figure out that evolution has been significantly increased rents in the new
Member States after accession and the old Member States has been stable.
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Contact Address:
Ivan TAKÁČ
Faculty of european studies and regional development
Marianska 10, 94976 Nitra
Slovakia
phone / fax number(s): +421 (37) 641 5607
e-mail address(es): ivan.takac@uniag.sk
Anna BANDLEROVÁ.
Faculty of european studies and regional development
Marianska 10, 94976 Nitra
Slovakia
phone / fax number(s): +421 (37) 641 5607
e-mail address(es): anna.bandlerova@uniag.sk;
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