Serbia: Use of state-owned agricultural land for non-agricultural purposes

Introduction

In general, the Serbian Agricultural Land Act ("ALA") envisages granting the use of agricultural land, free of charge, to state-owned subjects, or, in instances where particular plots have not been leased for three or more agricultural years, agricultural land may be tendered for to be used by registered agricultural holdings.

However, as an exception ALA prescribes government-regulated use of state-owned agricultural land for non-agricultural purposes. On this note, in July 2021 the Government of the Republic of Serbia adopted a Decree on the conditions, manner and procedure for granting state-owned agricultural land for non-agricultural purposes ("Decree").

General remarks and conditions

Detailed conditions, the manner and procedure for granting state-owned agricultural land for non-agricultural purposes, as well as the criteria for determining the amount of compensation for such use, are regulated.

The Decree only applies to land which is registered in the real estate cadastre maintained by the Republic Geodetic Authority as agricultural land in ownership of the Republic of Serbia. Cadastral parcels which are subject to restitution may not be subject to use for non-agricultural purposes.

The Land which is subject to the Decree is uncultivated state agricultural land (pastures, reeds and swamps), and/or arable state agricultural land (fields, meadows, gardens, orchards and vineyards) of sixth, seventh and eighth cadastral class.

The land subject to use may not be disposed of by giving the right of use to third parties, whilst the period of granted use cannot be longer than 30 years.

Eligibility

State-owned agricultural land may be granted for use to natural persons or companies in the following instances:

• when energy is produced using renewable energy sources (wind and solar), by building or installing:

1. a wind power plant with accompanying infrastructure and equipment; or

2. a solar power plant with accompanying infrastructure and equipment;

• when performing geological exploration works and/or exploitation of raw minerals (clay, gravel, sand, stone, oil and natural gas, etc.), and/or preforming works on disposal of tailings, ash, slag and other hazardous and harmful substances on agricultural land for a determined period of time with submission of necessary approvals issued by the ministry for mining and geology; and
  
  
• when performing activities related to the construction of facilities that have been declared as facilities of importance to the Republic of Serbia, as well as activities that are related to the construction of energy and communal infrastructure, telecommunication and protection against natural disasters, which due to natural and other characteristics, cannot be built elsewhere.

Procedure and Remuneration

The competent authority of the local self-government unit ("LSG") groups state-owned agricultural land which is planned for use in particular public bidding units.

A decision on the publishing of the public bidding announcement is adopted by the competent authority of the LSG with prior consent of the ministry dealing with agricultural affairs.

Granting of state-owned agricultural land for use is carried out via public bidding in accordance with the application of regulations governing the leasing of state-owned agricultural land.

The starting annual remuneration in the public bidding is:

• five-times the amount of the average lease price per hectare of state agricultural land in the territory of the Republic of Serbia – for use in production of energy from renewable sources and/or performing activities related to the construction of facilities; and
• thirty-times the amount of the average lease price per hectare of state agricultural land in the territory of the Republic of Serbia – for use in performing geological exploration works and/or exploitation of raw minerals and/or preforming works on disposal of tailings, ash, slag and other hazardous and harmful substances.

Such remuneration is paid once a year upfront.

The designated user of the land is obliged to deposit 30 % of the amount intended for the return of the land to its previous state, to the bank account of the ministry responsible for agriculture, before the execution of the use agreement with the ministry. The remaining 70 % must be deposited by the designated user no later than five years before the expiration of the use term.

After the conducted public bidding, the competent body of the LSG, with the prior consent of the competent ministry, adopts a decision on granting state-owned agricultural land for use to the most favourable bidder. Against such decision, an appeal may be lodged within 15 days as of the adoption of the decision.

Finally, on the basis of such decision, and upon payment of a land use fee, the competent ministry and the best ranked bidder will conclude an agreement on the use of state-owned land.

authors: Aleksandra Petrović and Andrej Zorić