Ukraine's sky-high land lease rates: Why they exceed Netherlands prices

A phenomenon this year is the unprecedented increase in sublease rates for plots of state land intended for agriculture.

In October and November, at competitions on the Prozorro platform, winners increased starting rent rates by an average of nine times. At the auction for the largest plot of land, 4,000 hectares, in Kirovohrad Oblast, the final rent cost exceeded the starting price by 11 times and amounted to 40,000 hryvnias ($960) per hectare.

For comparison, the highest agricultural land rental rate in the European Union is in the Netherlands, according to Eurostat. In 2022, the average rental rate for Dutch fields was 843 euros ($885) per hectare.

How will the lease be executed?

There have been jokes among Ukrainian farmers that due to the abnormal increase in state land rental rates, Ukraine is facing either a poppy or hemp boom next year. This is because most farmers who grow grain and other annual crops do not see the point in paying more than 20,000 hryvnias ($480) per hectare per year.

"Seriously, the work of a classic agricultural farm loses its economic meaning when fixed costs in the cost of production approach $700 per hectare. It is almost impossible to make a profit when costs are higher with conventional technologies," says Volodymyr Nahornyi, owner of the Volodar land agency.