As a consequence of the described trends, prices for farmland have been increasing strongly in recent years – for example in East Germany by 50-70 per cent since 2007. Good soil today costs 20T€/ha in Mecklenburg-Vorpommern and 10-15T€/ha in Brandenburg. This still is 30-50 per cent below the price level in West Germany – at comparable or better productivity. Large farms and large scale operations are more expensive than smaller ones.
AgroEnergy believes in further price increases and thinks a doubling of prices is possible in 10 to 15 years: at current price levels, operating returns are still relatively high at 5 to 7 percent per year. Current operating results will increase when prices for produce go up and additional value added potential (e.g. biomass) is utilized.
The offering of large, well managed farms with high freehold is limited. Local farmers buy all available land for rounding – at almost any price. Professional investors are increasingly monitoring the asset class. As a consequence the price differential to West Germany will probably diminish.