Agricultural farms to lease - in Poland

Generational change in Polish agriculture:

The collapse of communism in Eastern Europe in 1989/90, paved the way for a parliamentary democracy and market economy in Poland. This led, among other things to, that the large Polish state farms went bankrupt and that Polish farmers were given better opportunities to lease or buy land from the state-owned agency set up to privatize the Polish agriculture.

Many Polish farmers took advantage of the new opportunities and expanded or established in the following years. The opportunity to lease a larger area gave new chances. Subsequently, one could then buy the leased land once the economy allowed it. Some foreign farmers also took advantage of the new opportunities and the vast majority have since cultured large farms successfully.

When Poland joined the European Union in 2004, the Polish farmers became opportunity for production - and investment support. This gave a boost to the economies of many agricultural farms, a possibility that farmers still benefit greatly from.

Many of the farmers who established themselves for 20-25 years ago have now come to retirement age and a generational change is in progress in Polish agriculture. Unfortunately, the Polish government recently introduced rules that make it harder for foreigners to establish themselves as farmers in Poland, but there are still good opportunities if one know how the system works.

Lease of land may in some situations provide more economic benefits for both the tenant and landlord than a purchase/sale can do.

Older well consolidated farmers, who want to retire themselves, often have great financial advantages compared to interested buyers. By leasing out the land rather than to sell, it will be possible to utilize the financial situation is for the benefit of both parties. Especially after the financial crisis, the older generation may have a greater incentive to lease cheap out until a better conjecture makes it more profitable to sell.

A newly established farmer can lease his new business, without necessarily having to raise approximately the same capital as if he is buying the farm right away.

The landlord may also have a low debt ratio, which the tenant can benefit from because the landlord can rent the land at a lower price than the newly established farmer can self-finance for purchasing land.

If the seller’s current debt ratio is low, and the buyer needs to put a large amount of financing for the purchase, it will probably not be easy for the seller to make a good deal. In such case it may be necessary for the seller to leave a part of the sales price in the farm in the form of a seller note. A situation that can bring the seller's equity at risk in a way seller can not foresee.

We suggest that young farmers, who want to start up business, consider starting with a lease of a farm and first focuses on building up production. That way, he can get started for less money, consolidate his business and then maybe buy the land when there is room in the economy for it. The core business comes from know-how, access to agricultural land, inventory and infrastructure. Ownership of the land may give some security for certain investments, but it also contains elements of risk. Acquisitions may be considered as speculative economic gain. It's a chance to utilize once the economy has room for it.

We have brokered agriculture in Poland since 2004 and have contacts with several local farmers who are willing to lease out their farm. After a period of e.g. five years, where one have had time to consolidate, one can use ones right of first refusal and possibly begin a smooth takeover.

There are a variety of investment opportunities. We broker mainly farming in Poland with more than 500 ha, but we can offer solutions of all sizes.

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