Agriculture in Bulgaria relies on big farmers
Interview taken by Alma Davidova
Radoslav Manolov, Deputy Director Chairman of the Bulgarian Association of Owners of Agricultural land (BAALO) and Executive Director of Advance Terrafund: “If large farms in Bulgaria cease their activities, there will be no one else to work in agriculture.”
–Last year you stated that the agricultural land market belongs to the buyers and your company attempts to mostly buy land. Did you see these plans coming through and what are the reasons to make such an assessment of the market?
-Last year, we actually only made purchases and no sales. Now we are continuing to buy while limiting the sales. The reasons are that we expect the trends to be for an increased demand for farmland because of its limited nature. The other incentive is still the low threshold at which agricultural business can be started, especially when it comes to young farmers. We have had very good profits and they are related to trading land. Last year we deliberately abstained from any sales, though the price of the land was rising, we had lower results. This fact is known by our shareholders.
-Why is there such a low price threshold set to start agricultural business in Bulgaria?
-Because, for example, if you want to start such a business in a country in western Europe, there you have to wait for years to get on a healthy soil. Or you have to buy the rights of some other farmer. In some countries, there are even early retirement programmes for farmers so that others can take up their business. But we don’t have that kind of government policy here. The only price you have to pay is either a higher annuity, or to buy land.
How do subsidies affect the agricultural land market?
-There is a very large free financial resource on the market. And farmers are safe payer because they get subsidies. Banks continue to attract farmers and a possible purchase of land or direct renting of agricultural land is, in fact, the only price they have to pay to start an agricultural business.
-What is the situation when renting agricultural land?
-The problem with hiring is that it is based on a competitive, competition principle and the one offering the highest price usually wins. This is the reason for the gradual raise of the rents of agricultural land and it is a prerequisite for the price rise per acre.
– What is your vision on the cost of agricultural land?
-On average, according to BAALO data, the appreciation of farmland is between 5% and 7%.
These are only our observations as still there is no statistics to refer to. However, even if there was statistical data, the official statistics is not accurate because it also includes transactions on tax base and some others at real prices. Besides, there may also be some individual deals concluded at very high prices.
-What are your predictions?
-Our views are that land prices will continue rising in the next 10 years, regardless of the development of CAP. And it will be due to the financing, the easy agricultural start and the long-term use of land.
–What is your opinion on Europe’s policy towards large agricultural land plots?
-In Europe, where there are a lot of small and medium-sized agricultural land plots, the concentration and ownership of huge agricultural establishments by a single ownership, is not tolerated. However, co-operation between the farmers themselves exist.
In Bulgaria, where the population has withdrawn from agricultural areas, the only ones who do business and maintain successful farming at this stage are the large, the big agricultural and owners. Here the situation is not comparable to that in Europe. That is the current stage of affairs for now. When saturation of big landowners becomes existent and when there are enough small and medium-sized entrepreneurs who want to start a business in agriculture, only then we can talk about small and medium owners. In Bulgaria, if large agricultural owners cease their activity, there will be no one left to work.
-Are the areas changing once you start a farming business there?
-We have cultivated land which hasn’t been tilled by a tractor for 20-30 years. People really appreciated that. When we start an agricultural business in some area, this leads to income for the owners, such as agricultural annuities. However, it does not lead to influx of people into these areas.
This issue must become part of the government policy. We can be somewhat influential economically, but this is only a part of what is necessary.