Agriculture minister: MKM wants to put Tartu Agro land up for auction in 51 pieces

Although Minister of Economic Affairs and Industry Erkki Keldo did not confirm that the agricultural land long used by Tartu Agro is planned to be divided into 51 parcels for a new auction, Minister of Regional and Agricultural Affairs Piret Hartman stated that this is precisely the plan that has been communicated to them by the Ministry of Economic Affairs and Communications (MKM).
The issue of determining the future use of state-owned land that has been leased to agricultural producer Tartu Agro for decades, as well as being at the heart of European Commission illegal state aid investigations, has remained unresolved since June of last year, with the current lease set to expire in the fall.
On Tuesday, Minister of Economic Affairs and Industry Erkki Keldo (Reform) said the terms of the lease agreement should be clarified this week, but there is no specific plan yet to divide the land into smaller parcels. However, Minister of Regional and Agricultural Affairs Piret Hartman (SDE) countered that this claim is inaccurate.
Hartman told ERR that last summer, ministerial areas of responsibility were reorganized and land policy — including the management of Tartu Agro's leased lands — was transferred from the Ministry of Regional Affairs and Agriculture to the Ministry of Economic Affairs and Communications (MKM). According to Hartman, Keldo has delayed resolving the issue of the state land under Tartu Agro's management.
Hartman explained that during the transition period, the government, under the leadership of the regional ministry, decided that land near Tartu would be leased for agricultural purposes through a public auction for a term of 12 years.
"Therefore, as early as last August, the regional and agricultural minister handed over all matters related to Tartu Agro to the minister of economic affairs and communications, along with guidelines for a possible solution for future land use. Six months have passed and no progress has been made during this time," Hartman said.
She added that MKM has now submitted an informal proposal to hold a lease auction in such a way that the state-owned land currently leased to Tartu Agro as a single unit would be divided into 51 separate parcels, with 51 individual leasing procedures to be carried out.
"We cannot agree to this approach because it does not support the integrated and systematic agricultural use of these lands in the future," Hartman stated.
Under the current lease agreement, Tartu Agro manages approximately 3,000 hectares of state land. Based on previous government decisions, this area is expected to be reduced by about 20 percent, meaning around 2,400 hectares will be made available for lease during the next period, according to the regional minister.
"Some of the state-owned land currently used by Tartu Agro will be allocated to the Estonian University of Life Sciences, while other portions will be reserved for future road construction projects, including the planned northern bypass for Tartu, which already fragments agricultural production today," Hartman said.
The minister stressed the importance of managing existing fields as efficiently as possible with minimal environmental impact, noting that dividing an established agricultural operation into smaller parcels would result in numerous production methods and use of different farming machinery.
"Large agricultural enterprises are key contributors to food security," Hartman added.
In addition to the regional and agricultural ministry, Climate Minister Yoko Alender (Reform) has also urged MKM not to divide the Tartu Agro lands into smaller parcels. Alender recommended organizing the auction in a way that supports the continued use of the land for its designated purpose, aligned with circular economy and climate goals. Tartu Mayor Urmas Klaas has also sent a letter of support emphasizing the importance of maintaining the biogas production model that relies on the land.
"From an agricultural production perspective, it is crucial that Tartu Agro lands remain dedicated to agricultural use and that the lease terms reflect market conditions. It is reasonable to lease the land in as large parcels as possible," Hartman said.
On Tuesday, Keldo acknowledged that, under the State Assets Act, the state must secure the maximum market price for leased land. However, he noted that agricultural considerations and economies of scale must also be taken into account, with a compromise currently being sought between the two.
Dividing the land into smaller parcels would be bad news for the current tenant, Tartu Agro, which has stated that such a move would likely force it to cease operations, as its business model relies on integrated land use.
Conversely, such a division could be advantageous for competitors interested in participating in the auction. If the land were auctioned as a single parcel, it would be difficult for competitors to challenge Tartu Agro, which, under the State Assets Act, retains the right to lease the land at the final auction price if it does not win the bid.
The land in question was part of the Tartu Experimental and State Farm during Estonia's re-independence period. In the 1990s, the government decided not to return the land to its rightful owners. 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, then-Agriculture Minister Ivari Padar (Social Democratic Party) decided to keep 3,000 hectares of land under state ownership, in addition to the 90 hectares previously proposed by his predecessor Andres Varik of the Coalition Party. The land was leased to Tartu Agro at a cost of 10,000 kroons (approximately €639) per year, with a lease term of 25 years. At the time, the Farmers' Union noted that the lease price was roughly 30 times below market value.
Based on this land, the state farm Tartu Agro was established, which was later privatized by its then-management.
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Editor: Marcus Turovski