CIBR Blog

THE RISE IN THE PRICE OF FOOD
WILL TRIPLE THE PRICE OF THE LANDS
 
 
Source ZF - 6May 2008

The big prices practised to sell the agricultural products in the last months have lead to the farmers’ appetite of cultivating some more and more surfaces with cereals, which lead to the increase of the prices used for the transactions related to the agricultural lands.

Now, the average price for an hectare of agricultural land is of 1.500 Euro, but the players from the field say that it will be triple in the following three years.

"People begin to do investments. After they have entered in the European Union, the prices have begun to increase, the tendency being of alignment to the prices that are practised at the European level that reach even up to 10.000 Euro. The average price is in this moment of 1.500 de Euro/ha,  but till the end of the year it will also increase with at least 500 Euro, and in the following three years it will be triple ", as Viorel Matei, the president of the National Federation of the Agriculturists from Romania has declared for the Financial Newspaper .on the sites of agricultural ads, thousands of farmers show their interest in buying land, the greatest part choosing the compact surfaces.

"I am buying agricultural land in the same place (at least 5 hectares for a plot), for the agriculture (I am not interested by the astronomic prices, maximum 1.000 Euro/ha), in any county,  preferably in the plain areas, Teleorman, Calarasi, Ialomita, Ilfov, etc", as  Gheorghe F. from Ialomita county says on the site anunturi-agricole.ro. This is one of the farmers that, being encouraged by the more and more price of the cereals, tries to increase the cultivated surface.

The price for the wheat has reach to some maximal quotas in the last months, being subjected to some transactions at the local level even at the value of 250 Euro pet ton (900 lei/ton),  which means 0,24 Euro/kg (0,86 lei/kg), its value being in the month of April with 150% bigger compared to the same period of the last year. The same thing  happens with the sunflower and with the maize, where there have been registered a double even a triple value  of the prices

"I have decided to buy now when the price will not increase. In Neamt  county the hectare is sold with 1.000 Euro, but I have had a problem , because I had only found plots smaller than 10 ha. I want to buy at least 20  hectares", Mihai A. from Neamt county says.

The farmers that own over 10.000 hectares and that are trying to extend the surfaces in their exploitation also have encountered difficulties in finding some compact surfaces. And this especially because this year an increase of the production of cereals with over 70% is being estimated, compared to the last year, in the conditions of performance of a raised level of the prices because of the crisis of agricultural products that took place at the international level in the last year.

"In order to beneficiate of the investment that you are doing in agricultural lands you should have big plots of lands, because otherwise you cannot exploit them. There are a lot of investors, even foreign investors, that have bought land, but they are not using it because it is not in the same place. You cannot work on two-three hectares, to turn the tractor and to go 10 km till the following plot ", as Stefan Poenaru, the ones that administrates over 14.000 ha of land by means of the company Agrofam Fetesti says.

He sustains that he should regulate the law for the circulation of the land and that for the merging of the lands so as the agriculture begin to be profitable.

Considered for a long period as being a domain without profitableness, the agriculture has begun to be a part of the investment plans of the business men,  especially  in the last year, after the moment when the prices for the agricultural products have been tripled compared to the previous year based on the big request at the world’s level both for the consumption, and also for the production of  de bio-fuels.

Another factor for the increase of the price for the agricultural lands is constituted by the bigger and bigger interest of the foreign investors for the unexploited land from Romania, but which has a very big agricultural potential.

Even if the law does not allow the acquisition of the agricultural lands by the foreign persons till 2014, they can buy from the small farmers if they register a company in Romania. For example, the company with Danish capital FirstFarms, with activities in the agricultural domain has bought in the last year about 5.500 hectares of agricultural land in Romania, for which it has paid a little more than 10 mil. Euro. From all the dates of the company it results that the lands from Romania have had the smallest prices (6.830 lei/ha), while the average acquisition price for the lands from Slovakia has been in the same in the period of 8.970 lei/ha. In the same time, compared to Denmark, the surfaces from Romania are ten times smaller.

"In the following three years, Romania will become one of the most powerful countries from Europe as far as the production of cereals is concerned,  and this thing attracts the investors. It is true that almost four millions of  hectares are owned by the small farmers that own a hectare, but the surfaces begin to be merged ", as Viorel Matei, the president of the National Foundation of the Agriculturists from Romania explains. He considers that the success registered by the real estate investments will be immediately followed  by the agriculture.

Romania own about 9,7 millions of hectares of land,  surface that is situated on the second place at the European level, after France.