Lasha Dolidze - Land Market Reform - EPRC

7/29/2019 Lasha Dolidze - Land Market Reform - EPRC

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CURRENT STATE OF LANDMARKET IN GEORGIA

ANALYSIS AND RECOMMENDATIONS

MARCH 23RD, 2013

About creating prerequisites for speeding up the registration ofagricultural land and establishment of agricultural land market


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Content

Brief history of land reform in Georgia

Problem description

Land Registration Program

Positive impact of the land registration

Methodology and cost of proposed solution


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Brief history of land reform in Georgia

The reform of agricultural land in Georgia was launched in1992;

The reform was not built upon any conceptual basis, nor did

it have any long-term vision of possible socio-economic

outcomes; The government failed to establish mechanisms

guaranteeing ownership rights;

The state initially transferred some 760, 000 ha of land to the

population;As a result of land privatization, the land parcels became

extremely fragmented in Georgia;

According to the Agricultural Census of 2004 by Geostat,

98% of plots are less than 5 hectares irrespective of use.


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Relative frequency of parcel sizes in %

of total

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

Frequency


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Frequency of Parcel Size Under 5 ha by categories

(%of Total)

92.00%

93.00%

94.00%

95.00%

96.00%

97.00%

98.00%

99.00%

100.00%


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Brief history of land reform in Georgia (2)

In 1997, the process of creating formal mechanisms necessary

for establishing the land market and improving the legislation

was launched;

1998 and 1999 should be considered as a turning point in the

recognition of agricultural land ownership in Georgia;

Within the period of 1999-2004 approximately 2.4 millionownership certificates were issued;

In 2004 the GoG established the National Agency for Public

Registry (NAPR);

GoG further bolstered the process by adoption/amendment oflaws governing land property issues in 2007;

In 2008 KfW helped institutionalization of the cadastral system

housed with NAPR;

In 2011, the state terminated long-term lease agreements.


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Lack of structured information on agriculturalland;

Complications related to those who have onlyland ownership certificates but are not fullyregistered in accordance with NAPR;

Questionable legality of land ownership;

Problem Description


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Land Registration ProgramArgument #1 against registration program: The processof agricultural land registration will be dealt by marketmechanisms;

Counterargument #1 in favor of registration program:The process will not be completed as rapidly by leaving it to

the market alone as in the case of implementing an overall

registration program.

Argument #2 against registration program: The landreform in Georgia was implemented no worse than in any

other country of the former Soviet Union and there is noneed of further interference.

Counterargument #2 in favor of registration program:that does not mean that there is no need of improving the

results.


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Land Registration Program (2)

Argument #3 against registration program: GivenGeorgias high poverty level among rural population, the

formal registration of ownership on land may be unjustified;

Counterargument #3 in favor of registration program: the

establishment of land market will have a positive impact onits productivity and create additional jobs;

Argument #4 against registration program: The processof registration program may be too costly and no investments

are expected as parcels are small in size and scattered;

Counterargument #4 in favor of registration program:formalization of land ownership rights is a necessary but not

the only condition for the attraction of investments.


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Costs needed for the land registrationAverage size of farm in hectares 1.22Average number of parcels per farm 2.33Average size of parcels in hectares 0.52Average cost of registration per hectare (GEL) 407

Size in

hectare Amount Frequency Sales price Amount FrequencyLess than 1

ha 39 23.64% Less than 360GEL 12 7.27%From 1 to 2

ha 36 21.82% GEL 360 - 720 31 18.79%From 2 to 3

ha19 11.52% GEL 720

108051 30.91%

From 3 to 4

ha 24 14.55% GEL 10801334 38 23.03%From 4 to 5

ha 7 4.24% GEL 13341440 0 0.00%More than 5

ha 40 24.24% More than 1440GEL 33 20.00%Average 9.12 Average 1334.00

Average size of land sold by the Ministry of Economy and average price paid perhectare (GEL)


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Positive impact of the land registration


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Methodology and cost of proposed

solutionA well-formulated registration program should beimplemented, considering consolidation of landparcels;

One of necessary objectives is preparation and

implementation of agriculture developmentprograms as well as resolution of environmentalissues;

Inventorying of all types of documentation;

Framework program should be developed efficiently; Timeline of the program with corresponding costsshould be drawn up and duties and responsibilitiesof main actors should be defined;


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Methodology and cost of proposed

solution (2)Adequate amounts and technologies ensuring the

cheapest possible implementation of the program

should be sought;

State approach towards various forms of landownership should be clearly determined;

The legislation certifying the land ownership

should be improved ;

Implementation of the program should be

launched in coordination with other program

directions developed by the government.


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Thank you very much for your attention

Electronic version of the report is available atwww.eprc.ge

Lasha Dolidze - Land Market Reform - EPRC

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