This can be combined with data on all parcels owned by a subset of legal entities to test if concentration of land use at field or village level affects prices, as a potential indication of market power.<sup>12</sup>

# **2.3 Evolution of sales and lease market volume and prices**

Table 1 shows that, since January 2021, 1.97 million new leases and close to 390,000 sales of agricultural land were registered. While reporting of transaction prices was legally mandated, weak enforcement implies that there are 307,083 sale and 933,102 lease transactions for which prices are reported, with a median price of US$ 981 per hectare for sales and US$ 89 per hectare per year for leases as a basis for subsequent analysis (panel A). The data also suggest that the number of registered mortgages using agricultural or any other type of land as collateral remained minuscule.<sup>13</sup> Appendix table 1 illustrates the time profile of transactions. After opening of land markets for individuals in July 2021, monthly land sales quickly increased to 27,070 for 73,818 ha in December 2021 before, in February 2022, all land sales were stopped and leasing activity reduced significantly as a result of the war.<sup>14</sup> Median prices for sales and leases decreased by 14% from US$ 1,133 to US$ 989 and by 6% from US$ 90 to US$ 85, respectively, between 2021 and 2022 and remained close to this level thereafter.<sup>15</sup> Compared to individuals or FOPs who accounted for 5.7% and 8.4% of transactions and area,<sup>16</sup> legal entities dominated in the lease market, accounting for 94% of all transactions and 92% of the land transacted in the period (table 1 panel B). Of all the land parcels leased, 81.4% were categorized as land for commercial and 18.6% as land for personal use. By contrast, as legal entities were not allowed to purchase agricultural land before 2024, 95% of land sales transactions that account for 94% of the area transferred in land sales markets were by individuals or FOPs and 42% of sale transactions (accounting for 22% of area transacted) involved personal rather than commercial land. _Ceteris paribus_ , legal entities pay about a third more for leasing or buying land.

Monthly data provide a more granular picture: As figure 2a illustrates graphically, the number of monthly sales, which had reached almost 30,000 in December 2021, dropped to zero due to the war in early 2022 and then gradually recovered to about 10,000 in March 2023 and 15,000 by March/April 2024. Once legal

> 12 The date of parcel acquisition is used to determine whether the tenant’s or buyer’s farm was operational in the year before the transaction as well as the size of their operational holding.

> 13 The most immediate reason is that even if land can be used as collateral for loans, in the Ukrainian context, the transaction costs of doing so for individual farmers are prohibitive. The absence of a response to the opening of land sales markets to legal entities and the low number of mortgages even for non-agricultural land (with a total of 9,289 mortgages involving residential, recreational, or industrial land registered in the entire period since January 2021) points to more deep-rooted regulatory or institutional issues.

> 14 To fend off potential cyber-security threats, all land-related digital registries were taken offline immediately after the Russian invasion with only leases allowed to be registered locally on paper using simplified procedures.

> 15 26% of lease transactions affecting 18.6% of leased area with an average size of 1.6 ha per lease involved land for personal farming and 81% of leased area was land for use by commercial agriculture (below referred to as ‘commercial land’ for simplicity). Similarly, 78% of land transacted in the sales market was commercial, though with an average parcel size of 3.2 ha as compared to 1.2 ha for personal land, commercial and personal land account for 42% and 58% of transactions in the sale market, respectively.

> 16 The difference in area points to a shorter maturity of individuals as compared to legal entities’ lease portfolio (often referred to as ‘land bank’).

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