Valuating Agricultural Land. Quality really matters!

Working for over 21 years in Slovakia with land related projects I am often surprised by the wide variety of prices that are asked for and also paid for agricultural land. For sure, a lack of reliable information (transaction prices are not publicly available in Slovakia) is an important reason for this variety in prices. Another trend is that Slovak sellers try to base their asking price on prices paid in other countries without paying a close look at the quality of their own land. Sellers also often forget that foreigners (also EU residents) are mostly, by law, excluded from buying land in Slovakia making the market less transparent and less liquid. [Read more...]

Growing Fast Growing Trees in Slovakia not always growing into the sky

With its strong agricultural background and available agriculture lands, one might think that growing “fast growing trees” (FGT) for energy and industrial purpose is wide spread in Slovakia. It could benefit the environment (Co2 reduction) and create additional sources of income for the agricultural sector.

However, it is not so simple is it seems.  Let’s look at some of the key factors that determine the success:

  1. Land. Growing FGT is considered in Slovakia as an agricultural activity, but only allowed on lands with lower quality (in Slovakia this means land with a “bonita” of 5 to 9). The better quality lands are only meant for crop farming This makes sense, although some fertile lands are located in regions where crop farming is very difficult if not impossible (e/g flood areas of rivers).
  2. Efficiency. Slovak land ownership is characterized by lots of smaller parcels, mostly with more owners per parcel. To be efficient in growing FGT a minimum of ca 5 hectares is needed. When growing FGT on rented land, one needs to have approval from all landowners. This could turn out to be an impossible challenge (there is always someone apposing change). To focus on larger parcels with just a few owners, or to own the land oneself is necessary to be successful. Buying of agricultural land in Slovakia is certainly possible but not always an easy job to do. Buying forest land is easier. Also for using state land one needs approval from the owner (the Slovak state).
  3. Legislation. Growing FGT needs approval from the regional authorities. They will check the soil quality (“bonita”) and other restrictions (such as bird protection). Therefor one has to carefully consider where the activity is planned. Legislation can change frequently in Slovakia and is based on EU law. The pace in which new legislation is drafted and implemented is much faster than in many countries in Western-Europa.
  4. Finances. Growing FGT is in general financially interesting. Depending on the type of tree, subsidies are available from the state (the so called dotation per hectare which was ca € 204/ha for 2014).
  5. Location. Slovakia has an excellent infrastructure, enabling transportation by road, rail and water (Danube). Also its strategic position in the center of Europe makes it an ideal basis for agricultural activities. Export markets are easy to reach.
    Within Slovakia, the Middle and Northern part of the country offer good opportunities as land- and rental prices are attractive and more land is available with lower quality soil.
  6. Climate. With a continental climate and enough precipitation (especially in the Northern and Middle parts of the country) the climate condition are favorable for FGT. However, one has to pay attention to the status of underground water, which in some areas is less sufficient.

Growing of Fast Growing Trees offers good possibilities in Slovakia but one has to do its homework first. We would be happy to support you in Slovakia. This activity would also offer Slovakia a good opportunity to diversify and strengthen its agricultural sector. Until now, the country has not used this potential because of uncertainties in legislation and lack of experience and knowledge. Many farmers and land owners are not aware of the benefits it offers.

In case of questions or remarks pleased do not hesitate to contact us. We would be happy to support you in setting up or expanding your activities in Slovakia.


Pig production in Slovakia insufficient to cover local demand

Shortage of local pig production in Slovakia offers enormous potential for new investors

In this blog I will highlight the enormous potential that Slovakia offers for (new) pig producing companies. A potential now known by many in Europe.

For many agricultural products, Slovakia is not self-sufficient in its production to cover local demand. This applies especially to pig production. Local production only counts for less than 50% of local demand. The rest is imported (see also graph below). A large part of imports are piglets for fattening that are then also used for export. That is the reason why exports strongly increased since 2009. Slovakia’s location, close to export markets like Hungary, Austria and Germany and its excellent infrastructure makes the country well positioned for export. [Read more...]

New law on selling agricultural land in Slovakia. Not really a move forward

In the blog post of March attention was paid to the opportunity that Slovakia had to further develop its agricultural sector by opening up to capital and knowledge. The question then was stated if Slovakia would make the same proactive choice as its neighbouring country the Czech Republic and other EU member states, such as the Netherlands, had made before? These countries have clearly chosen to open up the agricultural sector, therewith increasing output, quality, employment and profitability of the sector. Within the EU, Slovakia is one of the least productive countries in agriculture and has the most fragmented land structure in the EU. Opening up the sector would stimulate the inflow of capital and knowledge and would certainly be beneficial for the sector and the country (see also the blog post of February). [Read more...]

Agricultural land lease in Slovakia. A low risk factor for farmers?

Slovakia has a very specific structure of ownership and lease of agricultural lands. 20% of the agricultural land is owned by so called “unknown owners”. The Slovak State is aware that these lands used to be owned by private people. However, contact with these owners or their heirs was mostly lost during WWII and the communist era. These 20% are managed by the Slovak State, that itself also owns 5% of the agriculture lands. The remaining 75% is owned by known private and corporate owners (including the Catholic Church).
[Read more...]

The Slovak agricultural sector after May 1st 2014, a move forward?

“Produced in Slovakia”

When Slovakia joined the EU in 2003, the country was granted a transitional period until 30 April 2011. During this period it was prohibited for natural and legal persons from other EU member states to directly acquire agricultural land. The main reasons for the transition period were:
[Read more...]

Slovakia, catching up but still behind production of crops in comparison with other EU member states

With the new agricultural policy from Brussels (CAP), being implemented as of 2014 (see also Blog of January), it is a good time to look at the level of production of some standard crops in Slovakia compared to other EU members. Since the revolution in 1991 the agricultural sector has seen drastic changes in ownership of agricultural companies and usage of technologies. Restructuring of the sector has resulted in an increase of production per ha. However, further restructuring and capitalisation is needed to bring the sector in line with other EU member states. The tables below clearly shows that with some crops Slovakia is catching up slowly (sugar beets, sunflower seeds, some cereals) but in other crops still lagging behind the other EU member states.
[Read more...]

Agricultural subsidies for 2014 and 2015 in Slovakia under the new Common Agricultural Policy (CAP)

Table: expected payments per ha or unit for 2014 and 2015 Source: Slovak Ministry of Agriculture

Table: expected payments per ha or unit for 2014 and 2015
Source: Slovak Ministry of Agriculture

[Read more...]

Quality of Slovak Agricultural lands, the BPEJ code and its usage in selecting agricultural land

The quality of agricultural soil in Slovakia is indicated by at the so called BPEJ number. BPEJ (simply also called “Bonita”) stands for a 5 digit numerical code. [Read more...]

Rental prices for Slovak arable lands catching up, but still among the lowest in the EU

Most farms in Slovakia own little own land. Around 90% of the lands are owned either by (many) small private people or the Slovak Land Fund (SPF) and the Catholic Church and rented out to farmers. This is the highest percentage in the EU. [Read more...]