Tartu Agro is a private sector firm but evolved from a state firm, which in turn had its roots in a collective farm business of the type prominent in Estonia during the Soviet occupation.

While the land in question was on a 25-year lease to Tartu Agro, that lease expired last year; the company has said it cannot survive if the sell-off goes ahead, while critics say the way in which the company originally obtained the land—at a lease price far below market value and to the benefit of the agricultural minister at the time—is questionable at best.

Minister of Regional Affairs and Agriculture Piret Hartman (SDE) told ERR: "The proposal does not take into account the position of the Ministry of Regional Affairs and Agriculture and does not ensure that valuable farmland remains in agricultural use."

She added: "Since the Ministry of Economic Affairs and Communications' proposal differs significantly from our own vision, we will do all we possibly can to meet with the responsible minister soon, and to resolve these differences."

Hartman further elaborated: "It is also important to consider the environmental and climate footprint, which is expected to be smaller if the land is used as a single unit."

"As a whole, there is a greater likelihood that all the land will remain in agricultural use. If rented out separately, smaller land units may not be viable for farming, creating a need to change the land's designated use," the regional minister went on.

She emphasized the need for a structured approach to land management, stating: "There must be comprehensive management of land improvement systems to ensure that land use takes into account the need for maintaining these systems. This reduces the risk of conflicts between different land users when making investments and saves resources by avoiding unnecessary administrative work."

Hartman stressed that the Ministry of Regional Affairs and Agriculture's primary concern remains long-term agricultural use, asserting: "Ensuring that the land remains in long-term agricultural use and that the auction results in a fair rental price remains our priority."

Minister of Economic Affairs Erkki Keldo acknowledged the need for compromise, explaining: "According to the State Assets Act, the state must obtain the highest possible market price for land leases, but a compromise is needed between economic considerations and agricultural logic."

Ministry of Economic Affairs spokesperson Kady-Ann Kogermann said: "Once we receive their feedback, we can proceed with announcing the auction and publishing its conditions."

Discussions over the new rental auction of Tartu Agro's land began in June last year, with initial hopes of finalizing the conditions by summer.

ERR has previously reported that dividing these lands into smaller parcels would, the company said, be bad news for Tartu Agro, which has leased them for decades.

The company has stated: "Such a move would likely force us to cease operations, as our business model is based on the use of contiguous land."

At the same time, this change would benefit competitors interested in participating in the auction.

The advantage held by Tartu Agro under the State Assets Act is that if it does not win the auction, it has the right to take over the land at the final auction price.

The Ministry of Economic Affairs has said the land should be divided into dozens of parcels, whereas the Ministry of Regional Affairs and Agriculture maintains it should be auctioned off in three chunks.

The economic affairs ministry initially proposed dividing the land into 51 parcels and auctioning them off on 12-year leases.

The regional ministry, however, rejected this and countered with a proposal to divide the land into three units.

The economic ministry later reviewed the matter and proposed a compromise to divide the land into 33 parcels.

However, this solution too remains unacceptable to the regional ministry.

Additionally, the regional affairs minister warned of risks related to land parceling, noting: "There is strong competition for more promising land parcels, but there are also risks: Less attractive packages may not find interested tenants, lease agreements may be terminated before the end of the rental period, or applications could be submitted to change the designated land use."

At the time of the restoration of Estonian independence in 1991, the land in question belonged to the Tartu experimental, model, and state farm—a collective farm, in other words.

However, in the 1990s, the government opted not to return it to its legal owners, at a time when land ownership was a particularly complex issue due to the mess made by the Soviet occupation.

At the time, Aavo Mölder was Minister of Agriculture; Mölder later became the owner of AS Tartu Agro.

Then in 1999, newly appointed Minister of Agriculture Ivari Padar (SDE) ruled to retain the 3,000 hectares of land under state ownership, in addition to the 90 hectares his predecessor in office, Andres Varik, had requested.

Under Padar's decision, the state leased the land to Tartu Agro for 10,000 Estonian kroons (approximately €639) per year, on a 25-year lease agreement, i.e., the lease has just expired.

The main Estonian farmers' association pointed out: "This rental price was nearly 30 times lower than the market rate."

The lands later served as the foundation for the then state-owned enterprise Tartu Agro, subsequently privatized via a management buyout.

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