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Development of Agricultural Land Market in the Russian Federation

 

This article has been published at www.fig.net as Article of the Month of October 2011

 

The development of Agricultural Land Market is unique in Russia compared to other countries. Our Russian Colleagues have developed a new method for calculating the value of agricultural land because the banks have not accepted the cadastral value as a basis for Agricultural Land Mortgages. This value was calculated on the basis of the Land Market Auction Price Model of a certain Region.

Key words: Agricultural Land Market, Russian Federation.

SUMMARY

Development of Agricultural Land Market is unique in Russia as compared to other countries. The super goal of modern Russian Agrarian and Land Reform is to create the conditions and incentives to provide sustainable development of agricultural production and to solve the country's food problem.

The state's land monopoly in Russia was abolished and two main forms of land ownership: public uses and private farming were introduced. Land may be converted into individual private property of citizens for personal use, farming, horticulture, and animal husbandry as well as to accommodate buildings and constructions for individual enterprise, to build and maintain dwelling houses, country cottages, garages. In 2001, the Land Code based on market economy principles was adopted by the Russian Parliament. The Agricultural Land Market Act was introduced in February 2003. According to the Law any parcel of agricultural land may be sold or purchased. As a result the number of Agricultural Land Market Transactions has been increased. However, the total agricultural land area has been reduced.

On July 24, 2007 the State Real Estate Cadastre Act was issued. According to the Law the State Real Estate Cadastre was introduced on March 1, 2008. The Law governs the Real Estate Cadastre Survey Activities as well as collection, processing and usage of Real Estate Cadastre Information. On December 29, 2010 the Agricultural Land Market Act was amended to stimulate land consolidation as well as development of agricultural production in the Russian Federation.

Development of Agricultural Land Market in Russian Federation is mostly depended on Regional Land Policies. One of the successful examples based on legal framework included the Federal Legislation as well as a local regulation is Orel Region Land Policy. In that sense it's very important to make land cadastre information more understandable and transparent for customers. It must be pointed out that cadastral value of agricultural land is not applicable for Agricultural Land Market Transactions because there is no relation to market land value. As a result, the banks have not accepted cadastral value as a basis for Agricultural Land Mortgage Transactions. Because of it, outside investors as well as other customers have not been able to get reliable information about the value of agricultural land plots and participate as educated and well-informed agents (buyers or sellers) in Agricultural Land Market Transactions. Due to it the Agricultural Land Mortgage Values were calculated on the basis of Land Market Auction Price Model for Orel Region.

 

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