It is more profitable for agricultural producers to rent land than to buy it - an opinion

13/05/2024 09:51


In SFG "ASTRA." from Poltava Region are focused on acquiring land that is already under cultivation. The director and co-owner of the agricultural enterprise, Roman Horobets, told about it.

"Mostly people come to us with an offer to sell their plots of land for a very urgent need. Although I always recommend them not to sell the share, but to try to find alternative options for solving financial problems. After all, land is a non-renewable, rather attractive asset that does not require maintenance and generates constant passive income," explained the farmer.

At the same time, he assures that it is more profitable for agricultural producers to rent land than to buy it.

 

"Here you need to look from the investor's point of view and calculate the yield. If, roughly speaking, an investor receives an income of UAH 8,000 per hectare, and a hectare costs UAH 80,000, this is a 10% return. Under such conditions, it is possible and impractical for an agricultural producer to buy an asset. But curiosity grows when the rent is nominally UAH 10,000, and the price is UAH 50,000. In this case, the yield is 20% and it is much more interesting. At a minimum, this level of profitability will allow us to attract financing at the market interest rate," the agrarian explained.

In SFG "ASTRA." from Poltava Region are focused on acquiring land that is already under cultivation. The director and co-owner of the agricultural enterprise, Roman Horobets, told about it.
"Mostly people come to us with an offer to sell their plots of land for a very urgent need. Although I always recommend them not to sell the share, but to try to find alternative options for solving financial problems. After all, land is a non-renewable, rather attractive asset that does not require maintenance and generates constant passive income," explained the farmer.
At the same time, he assures that it is more profitable for agricultural producers to rent land than to buy it.
"Here you need to look from the investor's point of view and calculate the yield. If, roughly speaking, an investor receives an income of UAH 8,000 per hectare, and a hectare costs UAH 80,000, this is a 10% return. Under such conditions, it is possible and impractical for an agricultural producer to buy an asset. But curiosity grows when the rent is nominally UAH 10,000, and the price is UAH 50,000. In this case, the yield is 20% and it is much more interesting. At a minimum, this level of profitability will allow us to attract financing at the market interest rate," the agrarian explained.
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