Land Market Opening and New Rules of the Game
In 2021, an event occurred in Ukraine that forever changed the relationship between farmers and land share owners — the agricultural land market opened. What had been built over 30 years on familiar agreements and trust required a complete rethinking.
Simultaneously with the market opening, a large platform “Dobrozem” started operating, which became a professional intermediary between farmers, shareholders, and investors.
Rethinking the Farmer’s Land Strategy
Four years of market experience (a significant part under wartime conditions) have shown: the market opening changes not only procedures but also the very model of land relations.
A new class of landowners emerges — investors who are not engaged in agriculture but seek stable rent payments and preservation of land value. Their approach differs from the old generation of shareholders, so farmers will have to build a completely different model of cooperation.
Should Farmers Buy Land Shares?
For production purposes — usually not. Buying land is expensive, ties up working capital, and is rarely economically justified.
As an investment — yes, but with nuances:
— psychologically, it’s more difficult to sell land you cultivate;
— land outside your main area is easier to view as an investment asset;
— if you have good relationships with shareholders, sometimes you can buy at a reasonable price.
Typical Situation: why Farmers Sell Land They Previously Purchased
After the market opened, many tenants actively bought land shares, fearing the emergence of competitors. But with the increase in offers and prices, maintaining working capital became more difficult. As a result, farmers turn to “Dobrozem” asking to find an investor to regain liquidity. Often, the purchased portion of the land bank is small, but the financial burden is significant.
What’s Happening with the Market Now
Over 4 years, only about 4% of agricultural lands have been sold — people sell only when they really need money. Most are waiting for a better price.
This means that as soon as the economic situation stabilizes, the market may sharply activate. And then the number of shareholders wanting to sell land will start to grow rapidly. Tenants need to be prepared for this now.
What should Farmers Do Next
How to preserve the land bank? Should they prepare a buyout strategy? How will rental relationships change?
In the following parts, there will be a more detailed analysis of real scenarios, models, risks, and opportunities for agricultural producers.
