Банкеръ Weekly

Briefs

THE STATE SPENDS BGN100MN FOR PURCHASE OF LAND

By the end of 2003 the National Land Company will be set up by a special law. It is projected that as of 2004 the new institution will be actively participating in the local market of agricultural land. This is one of the priorities of the Ministry of Agriculture and Forests by the end of the incumbent Government's mandate, the Agriculture Minister Mehmed Dikme has announced recently. The National Land Company will have at its disposal a budget of BGN100MN. In addition to money, the State will participate in it by a contribution in kind - premises for the company's offices in Sofia and in the 26 regional centres. Meanwhile, both the declaration of farm land and the ways for its utilization should be completed in Bulgaria, Byurhan Abazov, Director of the Land Relations department at the Ministry od Agriculture specified. The setting up of a land register is in compliance with the practice in the European Union. A map of the land plots according to the ways for their utilization will be worked out by the year-end as well. The Agricultural Land Tenure Act, passed in 1991, has been amended more than 30 timed throughout the years, and the results of its application are disastrous, experts point out. Currently, there are more than 2,500,000 owners and over 20,000,000 plots of land in Bulgaria, they say. Most of the land owners are neither engaged in agriculture, nor do they intend to. Therefore, the restituted land plots are either deserted or leased at ridiculously low rents. The fragmentation of land and non-compliance with the requirements for its efficient utilization have resulted in serious distrurbance in agricultural production and several-fold reduction of the voulume of farm output. After ownership has been absolutized and setting great store in appeals of semi-literate polititions to restore the land in real boundaries because private initiative would work wonders, nowadays we have more than 21% of uncultivated land, that used to be tilled previously.According to experts, plots of at least 15 dca are currently in demand on the local land market, while most of the owners have 2-5 dca. It is not possible to apply modern technologies on such small plots and get good results.Yet, statistics since 1998 have showed a steady upward tendency in the purchase of agricultural land. Some 1,650 deals for the sale of about 48,000 dca were registered in 1998, while in 2002 more than 32,000 deals were closed and the traded land exceeds 500,000 dca. The average price in that period was BGN120-145/dca. In some regions prices are very low - some BGN60-80/dca, while in others they reach BGN400-600/dca. But these high price levels should not deceive us - these plots are suitable for construction of petrol stations, motels, and catering establishments near the roads. As a rule they are excluded from the land fund. Supply still exceeds demand 2.3-fold. Buyers of agricultural plots have several main requirements: the land should be near roads, pupulation centres and industrial zones, it should be grouped in plots of at least 15 dca each (the upper limit is about 800 dca), there should be irrigation facilities available or possibility for irrigation from a natural water resource. Most of the buyers admit they do not intend to engage in agricultural production and are buying the land for other purposes. At the same time, the farmers do not have sufficiant money to purchase more land and expand their own plots.After the arable land in this country had been fragmented for more than a decade, experts finally came up with the idea for the establishment of the National Land Company. The new structure will be responsible for the sale and purchase of agricultural land, leasing or renting plots, as well as amassing them in order to meet market demand. The aim is to create in that way a steady market tendency, stabilize prices, and set up a stock of economically effective plots of land, for which there will be sufficient demand by both local and foreign buyers. The new company will also be responible for managing the plots from the State land fund, which includes about 32% of all lands in Bulgaria. The National Land Company will be purchasing agricultural land at higher prices than the market levels (about BGN200/dca) and when possible will add it to plots from the State land fund in order to form larger plots. The authors of that idea believe that in that way the Natinal Land Company will become a partner of investors in agriculture who want to acquire plots of land for efficient production without wasting time and money. Of course, the State will be selling the land at higher prices than it has purchased the plots. Thus, it will be making profits from both the stir-up of the market and from the deals in land. The idea for amassing the land is quite logical. It's another question how far the idea will be realized as planned. Bulgarians do not easily sell real estates, especially when small plots are a source of some profits to the owners.

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