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Investing in Agricultural Land

Have you ever pictured yourself owning acres of arable farmland or a small forest in the mountains of Bulgaria? Investing in agricultural land is becoming more and more popular with knowledgeable investors looking to make large gains from a small expenditure base. Bulgarian agricultural land is often described as the most undervalued asset – it’s cheap to buy and the gains to be made are large, but what puts a lot of people off is tying up their capital whilst they wait for prices to rise.

Now there is another way to reap the benefits of your Bulgarian land investment by renting it out to the agricultural community who are literally clambering to find more available land to farm.

 

Bread basket of Eastern Europe

Bulgaria was renowned throughout the Soviet bloc as “the bread basket of Eastern Europe” because its favourable climate made it perfect for successful crop production. Farming has a long tradition in Bulgaria and there are plenty of schools and colleges which offer courses in modern Agriculture.

 

Nearly half of the country is classed as cultivated agricultural land and for the large international farming conglomerates as well as local farmers alike, Bulgaria has become the place to farm. The reasons are twofold; land here is currently around 12 times cheaper than the EU average and the European Union is making vast subsidies available to anyone who farms Bulgarian land. In 2007 subsidies amounted to 450 million Euros, which works out at 10 Euros per decare or around 10% on current land prices.

 

 

The EU factor

Membership of the European Union also means that agricultural land is protected from external competition through the “Fortress Europe” policies. Additionally, EU membership also brings open borders between member states, which means there is a larger marketplace for Bulgarian grown goods. The EU also doles out a host of export subsidies, tax-breaks and tax-incentives for production of bio-fuel crops and wind farm construction. These aspects alone makes investing in agricultural land an excellent choice and one set to bring high returns over the next few years as land prices shoot up as demand increases.

 

Global factors

There are important global factors, which are also starting to drive up Bulgarian agricultural land prices. Did you know that the rapid economic growth taking place in China and India, which will lead to higher meat and cereal consumption as living standards grow will push up the price for agricultural land?

Another factor is the constant increase in energy prices as we eat away at fossil fuel reserves; people are being forced to use for alternative fuels like wind farms, solar panels and bio fuels, fuels make from products such as corn and sugar – in effect fuel from plants, all of these alternative energy industries need agricultural land.

 

We also need to consider the economic impact of global warming, something we readily brush off as being another urban myth, but in the agricultural world, global warming has already started to have a big effect on crop yields and it has all worked in Bulgaria’s favour.

 

Were you aware that worldwide grain reserves are dwindling or that land availability is becoming limited because the global population growth and continued urbanization means that there is less and less land to farm?

 

Organic

Another consideration within Bulgaria is that a massive percentage of the land available is organic. Bulgarian farmers have been unable to finance such things as pesticicides. Thus land in Bulgaria is particularly suitable for organic farming.