Банкеръ Weekly

Briefs

AGRICULTURAL LAND IN BULGARIA HAS NO REAL MARKET PRICE YET

Agricultural land in Bulgaria totals 62 million decares, which is 55% of the country's territory. Forty two million decares of the farm land is cultivated. If the tilted land is calculated at the currently effective prices of BGL100-150/dca (BGL50-90/dca in Northwestern Bulgaria, and BGL280-340/dca in the Plovdiv region), its value will amount to BGL6.3BN. Having in mind that just 0.5% of the farm land has been traded so far, the inevitable conclusion will be that this is not the real market price, i.e. agricultural land near population centres, roads, or other sites of infrastructural importance is mainly traded.
The average market price of farm land in the European Union (EU) member countries is some DEM2,000-3,000/dca. In view of Bulgaria's future full-fledged membership in the EU, the price of agricultural land should be at least half of the lowest rates in the EU (in Portugal and Greece it is about DEM1,000-1,500), or at least three-fold higher than presently.
The paradox here is that this basic resource for the country is out of whatsoever economic utilization. The farm land has practically no market value. It cannot be mortgaged or pledged at financial institutions. Moreover, there is no land market in Bulgaria, although 99% of the ownership on land has been restored theoretically.
The great problem to the economic utilization of farm land over the next dozens of years will be the disintegrated land ownership, and of land utilization consequently. There were 3.5 million owners of agricultural land in Bulgaria at the start of land reform in this country. High ranking political and government circles are promising quick land consolidation. This is one more incompetently spread public delusion, for which all of us will be paying off afterwards.
A widely launched thesis over the last few years is that farm land is not economically utilized due to the lack of a land re-allocation law. It should be born in mind that the process of land consolidation is long and complicated. Re-allotment of land has been going on in Western Europe since the beginning of the 19th century. What does re-allotment of land now mean?
First of all, considerably larger money resources will be needed than for the land reform, which is lagging for 10 years now, and which is in fact only restoration of land ownership. Secondly, re-allocation of land is a compulsory undertaking, as historical experience has shown. For example, when land was consolidated in Bulgaria in the 1930s, land-surveyors were always guarded by police. Local courts are presently literally overheaped with claims regarding the land reform. Most of them are for restoration of property rights on agricultural real estates at their initial sites. Thirdly, real economic interests are hiding behind appeals for re-allotment of farm land. They are mainly connected with the army of officials at the Ministry of Agriculture and Forestry and the land commissions, and with the multiple private companies, which were drafting the land-division plans. Proceeds from fees charged by private notaries and lawyers for registration of real estates and endless court disputes, are not trifling as well.
When land consolidation begins, everything will start anew. Will society succumb to these manipulations and will it pay again their high price?

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