Polish land offers good investment opportunity

Arable producers fed up with farming in the UK and Ireland might want to consider a rare large eastern European opportunity, says Adam Oliver of land agent Brown & Co.


Mr Oliver, who heads the firm’s Polish office, is selling Farmstar, a farming company running 2115 acres of soil at Zelazno and Letowo, 70km from Gdansk in northern Poland.


Priced at 1.1m (745,360), including houses but excluding machinery, the deal looks a relative bargain until closer inspection reveals that the land is only leased from the Polish government on a long-term tenancy until 2025 and is not available with vacant possession.


But Mr Oliver said the investment still made sense and could be a step to owning a large chunk of the land outright, as well as a source of income.


“There is a practical right that the sitting tenant can apply to the government to buy the land.”


Land values have been increasing sharply since Poland joined the EU last year, he said, and the value of the farm had risen by about 30% to 2000/ha (1355/acre) over the past two years.


Technically, foreign companies are barred from owning Polish property outright unless 51% of the shares are owned by a Polish national, but Mr Oliver said little-known legislation enacted recently made it possible for companies to buy back those shares once the land had been purchased.


But any one company is only allowed to buy up to 500ha (1235 acres) from the government, he added.


Farmers wield far more political clout in Poland than in Western Europe, said Mr Oliver, who reckoned this would appeal to farmers disenchanted with the lack of support from their own governments.


“Almost 30% of the Polish population is involved with farming.”


Farming profits are also tax-free in Poland and agricultural production is subsidised by the EU.


In 2004, Farmstar received 137,845, equating to about 93,400 and this was set to rise to 189/ha by 2009, said Mr Oliver. Support payments would be decoupled within a few years, so it would not be necessary to farm all the land to receive them.


The rent payable to the Polish government is linked to cereal prices and is now about 40,000 (27,100).


Property and land taxes total to the same amount and Mr Oliver said the business made a 62,000 (42,000) profit from wheat, oilseed rape and malting barley in 2004.


Some of the land has also been let previously for seed potatoes.