Comparative Analysis of the Agriculture Land Price Assessment in Albania

Abstract

The common worldwide practice for agricultural land valuation is based on average market prices of the similar plots, close to the land being evaluated. However, the land valuation based on average market prices requires the functioning of a well-developed market for land sale/purchase transactions. Several reasons have limited the number of transactions which could serve as a base for setting a price for agricultural, pasture and forest land in many parts of Albania. In the absence of a land market, during a period of time (between 1990 and 2012), it was advisable to apply indirect land evaluation methodologies in the country. The principle of this method is net profit capitalization for which some parameters need to be calculated. The profit was calculated based on the yield, the cost of production and income of the unit surface. The direct land valuation method which is more commonly used in Albania since 2012, is based on the market value – a method used in developed countries where the high number of transactions and relative transparency of price are considered the most important. This study is focused in finding the differences and gaps between the direct and indirect methods of land valuation taking into account the numerous variables of climate and land, including the land use, agronomic potential expressed in the categories of land, commodity agricultural prices, rent, yield, crop structures, social issues and economic policies. To find the gaps and the advantages of different methods of land price in Albania this survey analyzed and compared the prices based on three well known international methods: directly-based on market price method, indirectly-based on ground rent and net profit capitalization. Comparing the values between regions the three methods showed many differences; the value of agricultural land prices were higher in Fier and Korça while it was lower in Berat according to net profit and rent capitalization methods. Farmland prices were the highest when market price method was applied, followed by rent capitalization method and lower for net profit method. The values according to three methods were higher than average land prices in the EU countries. The land values in Albania varied between 20,000 and 37,000 Euros ha-1.