the post-war market price (of $1,369) for agricultural land (Deininger & Ali 2023), pointing towards broad awareness of market conditions after the 2021 opening of sales markets for agricultural land.

Compared to the near-universal desire to buy more land, only 3% are willing to sell land, a share highest in the <50 ha farm size group (6%) and zero for farms in the > 500 ha category. The mean proposed sales price, $3,142 (ranging from $4,787 in the > 50 ha group to $1,206 in the 120-500 ha group), is mostly above what potential buyers are willing to pay, consistent with a strong endowment effect (Zhu _et al._ 2021) and highlighting that, with strong fundamentals, agricultural land continues to be a promising investment.

As a proxy for farms’ capital stock, information was obtained about ownership and current value of tractors and mechanical equipment. With 84% (82%, 88%, and 72% in the < 50 ha; 50-500 ha, and > 500 ha groups, respectively) of sampled farms owning tractors, a significant share of large and small farmers rely on machine rental services. The per ha value of equipment ranges between US$610 and US$680 for all size groups, except the < 50 ha one ($1,213), possibly due to indivisibilities and frictions in markets for rental services.

Data on credit market participation suggests that access to credit is limited and biased in favor of larger farms: 55% of farmers overall—34% in the < 50 ha group vs. 84% in the above 500 ha group ever accessed credit. While 2.3 years passed since the average credit recipient obtained her last loan, the average farm in the > 500 ha class received its last loan 9 months ago (0.78*12), i.e., in the 2022 production season after the invasion. This compares to a gap of 4.8 and 2.9 years for farms in the below 50 and the 50-120 ha class. With an average loan size of US$200,000 at a nominal interest rate of 5.4% that is likely to reflect interest rate subsidies provided by the government’s 5-7-9 program,<sup>20</sup> loan terms were more favorable for larger farms than for smaller ones. The latter, if they cold access credit at all, received amounts of US$7,028, US$17,597, and US$53,418 at rates of 11.5%, 8.3%, and 7% for the <50, 50-120, and 120-500 ha group, respectively. Such size bias is inherent to the way in which the interest rate subsidy program is currently administered.<sup>21</sup> The data also show that, except for loan recipients in the smallest farm size group, 21% of which borrowed for purposes other than working capital—most likely to smooth consumption in an emergency—virtually all the credit received went to short-term working capital loans. If the ability to use agricultural land as collateral for investment, backed by longer-term credit, to diversify into higher value-added agriculture is

> 20 For a description of the program, see <u>https://www.kmu.gov.ua/en/news/uriad-rozshyryv-prohramu-5-7-9-na-pidpryiemstva-zruinovani-pid-chasviiny; for the design https://www.kmu.gov.ua/en/news/oleksij-goncharuk-uryad-zapustiv-programu-dostupnih-kreditiv-5-7-9-pid-rekordno-nizkijvidsotok#:~:text=The%20State%20Program%20%22Affordable%20Loans%205%2D7%2D9%25,Ukrainian%20micro%20and%20small%20ent erprises; https://ukraineinvest.gov.ua/news/22-11-22/</u> and <u>https://www.kyivpost.com/post/8003</u> for figures for November 2022 and possible impacts.

> 21 As the current program structure requires producers to obtain a loan first and then provides a portfolio-based interest rate subsidy, it will do little to increase credit access beyond those who have been able to secure loans in the past.

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