On August 8, the Ministry of Agriculture announced that the government had decided to approve the auctioning of agricultural land that had been leased to Tartu Agro for nearly 25 years. The state owns 57 properties in the area, and a new lease agreement is planned for 12 years. However, the specific conditions and the number of parts into which the land will be divided were supposed to be decided by Minister Piret Hartman, according to the press release.

Now, however, the ministry's advisor, Agnes Janson, has stated that the decision is no longer in Hartman's hands.

"By order of the prime minister, as of August 12, the tasks related to managing state-owned, undeveloped land under the jurisdiction of the Ministry of Regional and Agricultural Affairs have been transferred to Minister of Economic Affairs and Industry Erkki Keldo (Reform)," she said.

Janson added that the Land Board is currently working on dividing the properties to be leased where necessary, gathering the information required for appraisals and then proceeding with the evaluations.

"The minister will be able to make a decision once all the preliminary work is completed and comprehensive information is available in all aspects," Janson added.

The Ministry of Economic Affairs told ERR that they currently have no further information about the auction, as the preparations are still being handled by the Ministry of Regional Affairs. Therefore, it is not yet known when the conditions will be finalized or if they will be ready by the end of August.

While Hartman said as recently as June that the land would be put up for auction in four parts, Tartu Agro CEO Andres Härm protested the plan, saying that this would dismantle the agricultural producer's land use model.

Hartman met with representatives of Tartu Agro in early August, and while the government still decided to auction off the land currently leased by the company last Thursday, the decision no longer includes information about offering the land in four parts.

Tartu Agro's lease agreement and its colorful circumstances

Tartu Agro's predecessor was the Tartu Experimental, Model and State Farm, which operated during the Soviet era and owned the land now up for auction in the early 1990s. Despite the active return of land to rightful owners during that period, this particular land was not returned. At the time, the minister of agriculture was Aavo Mölder, a member of the People's Union, who later became the owner of Tartu Agro.

In 1999, newly appointed Minister of Agriculture Ivari Padar (SDE) decided to keep 3,000 hectares of land in state ownership, in addition to the 90 hectares desired by his predecessor, Andres Varik of the Coalition Party. Under Padar's decision, the state leased the land to Tartu Agro for 10,000 kroons (approximately €639) per year, with a 25-year lease agreement. At the time, the Estonian Farmers' Union stated that this rental price was nearly 30 times below market value.

The land was subsequently used to form the state farm Tartu Agro, which was privatized by its then-leaders. In a 2005 audit, the National Audit Office found that the Ministry of Agriculture had leased the property under terms unfavorable to the state, citing the Tartu Agro case among others.

The audit noted that although the ministry justified the symbolic rent with the obligation included in the contract requiring the tenant to cover all costs associated with maintaining and improving the land – including investing in upgrading land improvement systems, plant protection and more – the rent was not aligned with the tenant's ordinary business activities and did not convincingly show that the state would benefit from the transaction.

The National Audit Office stated that none of the tenant's obligations as outlined in the contract would significantly or permanently increase the land's value, which could be considered an improvement of the real estate. The audit also pointed out that the tenant was already required to maintain the property at their own expense and make necessary improvements for ordinary upkeep. Additionally, the company could apply for state subsidies for the maintenance and renewal of land improvement systems, as well as for liming the land.

Since 2005, the rent was increased to 80,000 kroons (approximately €5,113) per year.

Helir-Valdor Seeder (Isamaa), who served as minister of agriculture from 2007 to 2014, convened a commission to investigate the Tartu Agro land lease situation. The commission recommended, if possible, to revoke the 1999 order that kept the land in state ownership. In 2014, when Padar became minister of agriculture again, he promised that the ministry would conduct a legal analysis to determine whether this was possible.

In the same year, the European Commission received a complaint that the below-market lease agreement with Tartu Agro might constitute illegal state aid, as since Estonia joined the European Union in 2004, it has been required to adhere to EU competition rules. Estonia maintained that no illegal state aid had been provided.

In 2017, the European Commission launched a formal investigation and concluded in early 2020 that Tartu Agro had received incompatible state aid and must repay €1.2 million to the state.

Tartu Agro then appealed to the European Court of Justice, demanding that the EU General Court annul the Commission's state aid decision in its entirety. In 2022, Tartu Agro won the case in the EU General Court. The court found that the European Commission had unfairly simplified the situation in its decisions and had based its conclusions on inaccurate calculations.

Last year, Tartu Agro had a turnover of €10.56 million, marking an increase of over 10 percent compared to the previous year. Despite this growth, the company, which employs 117 people, recorded a loss of nearly €559,000. In 2022, however, Tartu Agro earned a profit of €2.6 million.

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