The average price of arable land in Latvia is the lowest in the Baltics
Approximately one-third of Latvia’s territory is covered by agricultural land (LAZ). On average, a hectare of arable land in Latvia currently costs 4,600 EUR/ha, while in Estonia the price is 4% more expensive. According to the latest data of the Central Statistics Office, 69,000 economically active farms were registered in 2020, managing a total of less than two million hectares of agricultural land (AAR) – or ~ 31% of the entire territory of Latvia. Between 2001 and 2010, the number of rural farms changed significantly, decreasing by almost 41% and increasing the area of managed agricultural land by 8%. On the other hand, during the last four years, the area of LIZ increased by only 38,000 hectares or 2%, while the total number of farms decreased by 950 or 1.4%. The latest “Rural Property Market Index” data (April):
Agricultural land (LIZ):
• 43% – the average increase in the sale price of 1 ha of agricultural land in relation to 2020 (in March 2023 – 43%; in February – 43%, in January – 41%); • 183 EUR/ha – adequate average annual rent for agricultural land in Latvia (in March 2023 – 183 EUR/ha; in February – 183 EUR/ha; in January – 178 EUR/ha); • 330 EUR/ha – the highest annual rent for agricultural land in Latvia (330 EUR/ha in March 2023; 330 EUR/ha in February; 330 EUR/ha in January).
Forest properties:
• 65% – the average amount paid by the buyers to the owner from the real market value, keeping the rest for themselves (64% in March 2023; 62% in February; 60% in January); • 50% – the sellers sold the property below the market price (March 2023 – 50%; February – 50%, January – 50%); • 5 days – on average, this is how long it takes from the moment the advertisement is published until the first buyer’s offer for the property at the market price (March 2023 – 1 hour; February – 30 minutes; January – 30 minutes; December 2022 – 15 minutes). The price of agricultural land in Latvia has increased rapidly in recent years. The average price of arable land in Latvia last year was approximately EUR 4,600/ha. The total range of average prices currently varies from 2,400 EUR per hectare in Latgale to 5,200 EUR per hectare in Zemgale. Although only in two counties – Zemgale and Kurzeme – the average price per hectare of arable land exceeds the limit of 5000 EUR, in some cases also elsewhere, for example in Vidzeme, Vidusdaugava and Selia, land prices can be higher than 5000 EUR/ha. It should also be taken into account that only average price indicators are considered in the context of the index. Analyzing the highest prices, it is also possible to observe distinct individual cases, for example, the price of arable land of certain properties in Jelgava and Bauska counties even reaches 15,000 EUR/ha. If in 2021 the average LIZ price in Latvia and Estonia was almost equivalent, last year the average LIZ price in Estonia was already 4% higher. However, among all the Baltic countries, the highest land prices are in Lithuania. There are almost twice as many farms in the neighbors as in Latvia – about 132,000. In Lithuania, a hectare of arable land costs on average 8% more than here, namely from 4700-5000 EUR/ha. The average land price has increased four times since 2011 and currently ranges from 1,800 to 6,500 EUR per hectare. The biggest price increase since 2021 can be seen in the Vilnius region, where the price for a hectare of LIZ has increased by half. The most fertile and thus the most valuable lands are located in the middle of the country – the average price of land in the Kedaini district of the Kaunas region is 5,600 EUR/ha, while the price in the Šaki district of the Marijampole region exceeds 6,300 EUR/ha. However, the highest price in Lithuania is observed in the north, where the neighboring country borders Latvia – the average price in Pasvale is approximately 6400 EUR/ha, and in Joniški district – 6500 EUR/ha. Here, too, the specificity of average indicators should be taken into account, allowing for exceptions. On the other hand, in Estonia, the average price of arable land was 4800 EUR/ha last year. The highest price of arable land is observed in regions with the best soil quality – in Estonia, this is mostly in the middle of the country. In Rapla county, the average land price reaches almost 5,500 EUR/ha, the price has increased by 75% in the last four years, but in the south of the country – in Polva and Valga counties – the price of agricultural land fluctuates around 5,400 EUR/ha. Within the European Union, price differences are significant. For example, in the Netherlands, the average price of arable land is slightly more than 77 thousand. EUR/ha, however, it should be taken into account that in the country LIZ makes up almost 54% of the total area. On the other hand, in Poland, the average price of arable land reaches almost 11,000 EUR per hectare.
Such significant price differences are mainly related to the intensity of production – in regions where there is intensive production of vegetables, fruits (for example, the Netherlands, northern Italy) or intensive animal husbandry (Denmark), prices are higher than in grain and extensive animal husbandry regions. However, this is not the only factor that makes such a drastic difference. Property prices are also affected by factors such as climatic conditions, soil fertility, state support policy for farmers and the overall level of development of the industry sector, population density and distance from markets, as well as the trade restriction policy of LIZ and other aspects. In Latvia, the price of agricultural land is most significantly influenced by the agronomic properties of the soil. Similar to the neighboring countries, the assessment is carried out according to the quality assessment maps, which were developed even before the regaining of independence and reflect the location of the most fertile and least fertile agricultural lands. The State Land Service (VZD) uses soil mapping and land assessment cartographic materials to determine the qualitative assessment of land. Field works of soil mapping and land evaluation in Latvia were completed in 1994. According to VZD data, the average weighted assessment of land quality in Latvia is 38 points (maximum score – 100 points). For LIZ, this indicator is considered the minimum level of fertility to be able to ensure commercially viable agriculture. Of the total LIZ area in Latvia, the soil fertility level of 41% of territories is lower than 35 points and only 5% of the LIZ assessment is higher than 55 points. The quality assessment of the land is influenced by several factors, such as the degree of cultivation of the land, the content of organic substances, acidity, moisture conditions, land reclamation, erosion risks, etc. Although there is a lack of the latest data, there is concern among experts that the mentioned assessment could have decreased over the years due to changes in land treatment types and affecting both the content of organic substances and the proportion of chemical elements in the soil.
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