The lower limit In the prices for fertile agricultural land exceeds 1000 BGN

12 years ago a company with special investment purpose “Advance Terrafund”, started the first private project for consolidation of farmland on the territory of Katunets village, Lovech, area, in cooperation with the Dutch Government Office of Land and Water Management (DLG) and the Bulgarian Ministry of Agriculture. Today the company, which is also a member of the Bulgarian Association of Owners of Agricultural Land, reports five completed land consolidation projects.

Another 11 projects, however, are frozen, as the process of consolidation in Bulgaria proved too undesirable for inclusion in the administrative procedures performed by the institutions.

Since it has been five years within which no comments or references to land consolidation have been made in Bulgaria, Synod. BG turned for comments to the executive director of “Advance Terrafund”, Mr Radoslav Manolov, to seek his expert opinion on land consolidation, which have already twice failed within proposed legislation in the field of agricultural land relations in the country and also on the prospects ahead the land market.

-Mr. Manolov, can you please indicate the advantages of the already completed five  consolidation projects and their effect for the farmers?

No one disputes the need for land consolidation because only consolidated land is easier to process, because with an infrastructure available you can not only invest in irrigation, but also apply important environmental practices. And as for the long-term use of consolidated parcels, they can participate in different investment projects, which will be given priority in the future Common Agricultural Policy.

Ten years ago, with the pilot projects, we planned to attract the state as an administrator, because without its help, people could hardly get all the documents needed to carry out their respective land consolidation. Moreover, the negotiation of parcels for exchange requires time and a lengthy persuasion of the local inhabitants, which is also a priority of the state.

Perhaps what is little known by the Bulgarian public is that land consolidation works mainly for the benefit of small owners and regulates precisely their problems. The principle of  consolidation is the following – small farmers receive the nearest land properties in order to make it easier for them to work the land. In the redistribution of land plots, the large owners receive the aggregated terrains on the periphery of the agricultural land borders, where they will both not disturb the rest with noise from the machines and with the various treatments of crops, and also facilitate consolidation as it will happen between less people.

Despite the great results that we achieved with the 5 completed consolidation projects, there  was inexplicable reluctance on the part of the state to follow the experience of the Dutch. The native administration seemed to prefer things to happen on the way with the least possible resistance, with the explanation that “farmers make enough money, let them deal with the problems themselves”. Thus no policies whatsoever in the area of land consolidation have been introduced for the past five years.

-As there is a lack of interest, how much does a land consolidation project cost to a single farmer?

In order for a consolidation project to be successful, at least 20 percent should be achieved in the improvement of the land structure, at least 20% of consolidated land should be within the agricultural plot boundaries. To all participants and to us as a fund, our expenses came out at about 30BGN per acre, which was nothing at that time when one annuity cost roughly as much.

The organization of the process itself took a lot of time and effort, so it is important for the state to build legal frameworks to ease the administration of the processes. According to the procedure, we had to conduct an information campaign among the residents of the land, so if they are willing, they can join this project. I will remind once again that land consolidation is a voluntary process.

In practice, there is a dislocation and relocation of ownership in different areas, which during the negotiation process between the different people becomes quite difficult to manage. It takes most of the time and the chance people will leave without shaking hands and with no agreement is huge. Therefore, with the first projects, to serve as a benchmark for such type of negotiations, we as a big company, met with the large owners with the idea and the conviction to achieve such an agreement. All this was related to a lot of effort because the geodesists and the surveyors had to redraw the land plot a numerous times to see exactly what the interests of the specific areas were.

So we finally made it. These five approved projects have literally happened and these are very nice territories, and in each of them the interests of the people who actually cultivate the land were given priority.

-What was the role of the Dutch in this process?

Only one of these five projects was consulted by the Dutch experts, and Holland paid the consultants for their expert opinion the amount of about 110 000 EUR. On behalf of the Bulgarian Ministry of Agriculture, the support was on a know-how basis and also with specialists who participated in the projects. We ourselves financed the services of the project company and for the subsequent inspection of the land after the negotiation, which is extremely important. Because after so many redrawing and reshaping of the land, inaccuracies could occur easily.

Interestingly, after witnessing our experience in these pilot projects, especially during negotiation processes, the Dutch themselves introduced changes and in their land consolidation methodology. In previous years, a land consolidation project in Holland would take between 8 and 10 years to be completed, so in order to facilitate this process, the Dutch developed a software in the form of an application to smartphones. As a result, now in Holland, consolidation happens in just 8 months instead of eight years as in the past.

With this software, every owner can be playing with various options for their land repositioning and thus find where the best places are for a priority transfer of their lands. In the Netherlands the land is divided into three types – one is, “I don’t want to touch it, I’ll leave the land where it is”, the other, “I can probably relocate them” and the third one, “I must definitely relocate them”.

For two months, people are let to play with the different options themselves. All these combinations are saved on their computer and determine which the most successful options are, based on the changes submitted by all people in a particular agricultural land area. Finally, when after the second month people go to the Land Registry Office, they submit their most desirable options. An ingenious way to solve a similar case in just two months without wasting unnecessary time.

So based on our experience, the Dutch Ministry is changing its system of land consolidation, and what is our Ministry planning?

Yes, the Dutch saw our experience in the negotiation process and they were very pragmatic. But this is typical for them because they quickly adapt new techniques, especially when it comes to improvements in agriculture. You know, they are leaders in the production of agricultural products in Europe. Since land consolidation performs a beneficial role in many respects – to improve infrastructure, to arrange the lands, to build and repair the irrigation systems, it must be a process that starts when certain conditions arise. For example, we have a number of owners with an interest in consolidation of their properties, they must be provided with a transparent procedure administered by the State.

About our experience in the field of land consolidation, there is nothing to talk about since for the last five years there has been no mention of it. Even with new land law projects proposed, we are still at the very start.

This time not only our association of owners of agricultural land, but also other branch organizations in agriculture expressed strong disapproval. Because the draft law does not comply not only with the Constitution, but also with the Public offering of Securities Act, the Obligations and Contracts Act, and other similar regulatory acts.

When we received the bill for public debate, fellow lawyers were amazed because it turned out that there was no sentence, no idea that was not rebuttable. A combination of all that has ever been offered gathered in a single document. We were surprised by the desire to readjust the law, which is even now working successfully.

All the participants in the process were quite astonished by the situation in this important for agriculture issue. The future law must create stability, balance, protect the interests of both large and small owners. If there is no balance, no alignment and harmony with the rest of the legislation in the country, this law is doomed.

-What is your position regarding land consolidation in a future legislation and who should administer it – the Land Registry Office (Cadastre) or the Ministry?

In my opinion, people are not interested in whether land consolidation will pass through the Land Registry or through the Ministry of Agriculture. But against the backdrop of the Dutch experience, I believe that land consolidation should indeed be organised by the cadastre agency because there are professionals with experience in land repositioning. The Netherlands has 7 cadastral districts and 7 companies that are responsible for these areas and as large structures they are involved in the implementation of similar projects. Interestingly, they are also working on international projects for land consolidation around the world-China, Germany and many other places. The Land Registry of the Netherlands participates in international projects and consults many countries around the world.

Bulgaria also has the know-how in this regard. Why not offer similar services? Currently, there are Bulgarian specialists who have worked with us, who attract similar cadastral companies for similar projects.

-How would you comment on the state of the land market?

Currently, only because of the increase in market of agricultural land purchases, conditions for land consolidation are created. Since last year, agricultural land prices have gradually begun to rise again. Interestingly, the lower limit of this growth is already a minimum of 5 percent within just one year, which is not at all low. The prices in the productive regions have already gone up to a 1000BGN per acre and this is the starting price at which they are negotiated. This regards properties in regions of interest and earnings from agriculture are high. Where there is investor interest and even less acres can easily support people.

There has always been a difference in prices but gradually there was a convergence in the other places. Usually the cut in prices was quite high but now the lower limit is catching up. If previously it was 500-600BGN, it is now 900 – 1000BGN. And there are places where we as a fund, already buy the land at 1 200-1 300 BGN per acre.

Usually this price leveling starts from the Northeastern Bulgaria moving towards the Northwestern part until it gradually catches up.

After the prices in Dobrich have already reached 2 500 – 2 800 BGN per acre, some agricultural land owners appeared who are determined to sell and with the sum received from the transaction, to buy more acres in other regions of the country.

-And in the years to come, how will sales proceed?

In my view, this increase in prices has slowed down due to the uncertainty about the future Common Agricultural Policy (CAP). But as of October 2019, the new European Parliament will be aware of the new requirements and all this will push the market up again. Because the land remains a valuable asset, especially in an intensive agriculture, what we are already observing in the country.

As regards the payment ceilings, I believe that Western countries are not interested in tolerating Eastern Europe because they have no advantage of creating competition for their farmers – a historical fact. That is why these ceilings are aimed at limiting the large farmers in Eastern Europe – not only in Bulgaria and Romania. Have you heard of any large farmers in Western Europe? There, family farming is an important unit and that is why they continue to favour small and medium-sized business, and through the ceilings there is a barrier to access for the penetration of larger businesses.

In my opinion, every country should and must monitor its interest in the EU. As much as we do not want this, at present in Bulgaria there is a shortage of small and medium-sized farmers. If the big producers are not there, some areas will be deserted. Our colleagues have been developing thousands of acres in northwestern Bulgaria, where they have not seen a tractor for years. In these regions, large farmers are an important economic and social factor for those living there. They provide income in the form of annuity, property security and food supply in stores.

That is why, if we do not insist on better conditions including the preservation of the ceilings, we will have missed the chance to defend our interests.

Interview taken by Ekaterina Stoilova