Agriculture, EU – Baltic States, Lithuania, Markets and Companies

It is predicted that the price of agricultural land will likely become close to the land prices of neighboring countries. An increase in the price for land in the market is expected to be on average not slower than over the past five years, Finasta informed.

According to analysts of AB Bank Finasta, due to the land consolidation processes and increasing financial support of the European Union, it is realistic to expect about a 30% further annual increase in price for agricultural land in the coming years in Lithuania.

The analysts forecast the average price of parcels of Lithuanian agricultural land to reach approximately 11000-12000 litas per ha in 2012. It should be noted that in Lithuania the average price for one hectare of fertile and consolidated parcels will increase.

"In Lithuania, the fertility of agricultural production is higher than in other Baltic countries; however, it’s almost two times lower than in Western European countries.

Thus, with increased investment into agricultural activities, there will be potential for larger harvests, as well as for higher profitability. Historically high prices for agricultural production allow receiving higher income from agricultural activity, so farmers and economic operators will be ready to pay higher prices for land," – say the AB Bank Finasta analysts.

In Lithuania, productivity of land is higher than in other Baltic countries; however, prices for agricultural land in the country are lower than in some neighboring countries. The average price of agricultural land in Lithuania is not as high as in Latvia and Poland, despite the fact that last year Lithuania saw the highest price increase (42.4%) of land.

According to AB Bank Finasta analysts, in the coming years, the demand for land in Lithuania can raise more interest of institutional investors regarding agricultural land. Forecasters say that interest of investors from other countries will also increase as restrictions regarding the acquisition of agricultural land for foreigners will decrease.