Ukrainian Agriculture Land Opportunity

Ukraine is an Agrarian Country

Ukraine has a significant land potential of 60.3 million hectares. This is 5.7% of Europe's territory. Currently, Ukraine has more than 41 million hectares of agricultural land. Of these, 32.5 million hectares are arable land. That is why Ukraine has historically been called the breadbasket of Europe. It is home to about 25% of the world's black earth soils, which are known for their high level of fertility.

Facts about

Agriculture in Ukraine

Due to the high quality of its agricultural land, Ukraine is the world’s largest exporter of sunflower oil and one of the largest exporters of grain.

In 2021, Ukraine exported $27.9 billion worth of agri-food, which is almost 25% more than the record figure of 2020 ($22.4 billion).

The main agricultural crops that make Ukraine one of the world’s leaders are grains and fodder crops, including wheat, corn, barley, sunflower, sugar beet, tobacco, pulses, fruits, and vegetables.

Opportunities

For the development of the agricultural sector in Ukraine

In order to develop Ukraine’s agricultural sector, increase the value of agricultural land, and attract investment in Ukrainian agriculture, in 2021 the Verkhovna Rada of Ukraine lifted the ban on alienation and change of purpose of agricultural land plots established in 2001.

Thus, in 2021, a market for agricultural land, including commercial agricultural land, began to form in Ukraine.

As a result, almost 31 million hectares of agricultural land, or 74% of the total area of such land in Ukraine, including more than 27 million hectares of arable land, or 83.5% of the total arable land in Ukraine, were put into free circulation.

Land prices in Ukraine's neighbors after the liberalization of the domestic agricultural market

00

Introduction of the land market

After the introduction of the land market in Ukraine and until January 1, 2030, the sale price of agricultural land plots allocated in kind (on the ground) to owners of land shares (units) cannot be less than their regulatory monetary value.

01

Results of the first land trandings

The first land auctions have already established the market value of agricultural land, which ranges from $1,000 to $1,500 per hectare.
According to land market participants, this price level will be maintained until 2024.
In the process of economic circulation and growth of land capitalization, the market value of agricultural land will objectively increase.

02

Trading of legal entities

In addition, with the start of full functioning and admission to trading of legal entities, the price of 1 hectare of land for commercial agricultural production will reach at least the level of its value in Eastern European countries bordering Ukraine (see the tables below for details).

03

Fertility of Ukrainian soils

Given the fertility of Ukrainian soils and the steady increase in agricultural production in recent years, a 20% annual growth rate is the most pessimistic minimum that experts expect. Especially after January 1, 2024, when legal entities owned by Ukrainian citizens will be entitled to purchase agricultural land.

04

Investing

In such circumstances, investing in land guarantees the ability to sell it at any time. In this case, the probability of losing value is minimal.

Years of agricultural opening by country: Poland - 2004, Bulgaria - 2005, Romania - 2004, Czech Republic - 2006, Lithuania - 2004

*Years prior to the lifting of the moratorium on land sales to legal entities
Eurostat 2011-2020, Eurostat 2000-2009

More

Interesting information

01/06/2023

Ukraine’s comfortable climate for yields

Comfortable weather conditions contribute to the increase in yields in Ukraine. Creating a positive effect for agricultural production

01/06/2023

Advanced network of reclamation systems in Ukraine

Ukraine has an advanced network of land reclamation and irrigation systems, which includes almost 6 million hectares of reclaimed land

Thousands of hectares

Target regions. Agricultural lands

6 million hectares
Regions with the highest soil quality
Best precipitation and climate
Private individual owners
Territories that have never been occupied / close to the front line
Export routes not affected by the war with Russia

Time / Value Scenario per 100k hectares ($123mm) – Conservative. Using Poland land appreciation curve

	2 years	6 years	11 years	16 years
Rental yield*	7%	7%	7%	7%
IRR	15%	27%	23%	21%
CRM	1.2x	3.3x	5.5x	10.0x
Annualized Appreciation**	6.8%	18.7%	13.4%	12.6%
Investment ($)***	(123.1)	(123.1)	(123.1)	(123.1)
OPEX ($)	(1.6)	(2.6)	(4.4)	(6.2)
Rental ($ mm)	4.9	61.7	189.0	415.6
Land Sale ($ mm)	140.4	343.8	492.7	817.6
Total Revenue ($ mm)	145.3	405.5	681.7	1,233.2
Profit ($ mm)	20.7	279.9	554.3	1,104.0

* Rental yield assumes lease contracts with farmers that reset annually and adjusted based on the prevailing land value
** Using Poland land appreciation curve as the baseline. Source:
*** Investment can be scaled up and down between $50M - $600M

Time / Value Scenario per 100k hectares ($123mm) – Optimistic. Assuming 10y convergence in land prices with neighbors

	2 years	6 years	11 years
Rental yield*	7%	7%	7%
IRR	22%	43%	33%
CRM	1.3x	6.2x	10.1
Annualized Appreciation**	12.1%	32.6%	20.1%
Investment ($)***	(123.1)	(123.1)	(123.1)
OPEX ($)	(1.6)	(2.6)	(4.4)
Rental ($ mm)	4.9	92.9	322.6
Land Sale ($ mm)	154.7	668.0	926.5
Total Revenue ($ mm)	159.6	760.9	1,249.1
Profit ($ mm)	34.9	635.3	1,121.6

* Rental yield assumes lease contracts with farmers that resets annually and adjust yield based on the prevailing land value
** Assumes Ukraine’s and its neighbors' prices at year 17 to converge in 10 years, given macro demand forces and current 10x price differential
*** Investment can be scaled up and down between $50M - $600M

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