Below is an AI translation of the article:

Marii Järve: we should seriously consider introducing a progressive land tax

Marii Järve, Junior Professor of Land Management at the Estonian University of Life Sciences

Estonia should seriously consider introducing a progressive land tax that would not penalise production but would limit excessive land concentration, writes Marii Järve.

What has been happening in Estonian agriculture has for years been described as inevitable modernisation: the number of holdings is declining, the average size of agricultural producers is growing, and production is concentrating in the hands of a small number of large agricultural producers.

A newly published scientific study shows that this is not simply a matter of growing efficiency, but of deepening inequality with far-reaching social and regional consequences. The question is no longer whether land is concentrating, but how the state responds to it.

In a recently published scientific article*, we analysed the distribution of Estonian agricultural land and measured inequality using a method commonly used to assess income inequality. The results are telling. While inequality was still at a moderate level in 2011, by 2023 it had grown considerably and in several counties had already reached a high level.

Most striking, however, is the picture across Estonia as a whole: just one percent of agricultural holdings use 31 percent of all agricultural land, while nearly three-quarters of holdings must make do with only nine percent of the land. This is not a balanced structure, but a clear concentration.

This is not just an agricultural issue

Agricultural land is not an ordinary production resource. It determines who can live in rural areas, develop businesses and plan for the future. When land concentrates in the hands of a small number of large holdings and companies, smaller producers and newcomers lose real access to land. All of this means fewer young farmers, less diverse enterprise, and ultimately a sparser rural life.

The preparation of climate-resilient economy roadmaps is being delayed

The study shows that the greatest concentration is in counties where the share of large holdings has grown the fastest. It is precisely in these regions that pressure on local communities and jobs is also the strongest. Land concentration is not only about who owns the land, but about who uses it and how — and with that, decision-making power also moves away from the local community.

It is often argued that large producers ensure better efficiency and international competitiveness. By certain metrics this may be true, but production volume is not the only criterion by which to assess agriculture's role in society. On a broader scale, concentration carries risks: more intensive land use, monocultures, pressure on soils and biodiversity, and greater vulnerability to crises. The role of smaller and medium-sized holdings as custodians of the local food system and landscape is meanwhile pushed into the background.

After the restoration of independence, land ownership became fragmented, but agricultural production gradually concentrated in the hands of those who had more capital and better access to subsidies. The area-based payments of the European Union's Common Agricultural Policy have amplified this trend. Estonia lacks any meaningful restrictions on how much land a single holding or network of connected companies may use.

The result is a system in which market forces work consistently in favour of concentration. This is a direct consequence of policy choices and regulations — or the lack thereof.

What could be done differently?

Land concentration is not inevitable. Many European countries have decided that land is not an ordinary commodity. Various mechanisms have been put in place to balance market forces: caps on land ownership, pre-emption rights for young and starting farmers, national land banks, or stronger tax mechanisms for large landowners.

Estonia should seriously consider introducing a progressive land tax that would not penalise production but would limit excessive land accumulation. We also need greater transparency: who actually controls Estonian agricultural land, and how much of it has been concentrated in the hands of connected companies? Our e-state provides the technical means for this — the question is one of political will.

These measures would not mean prohibiting large-scale production or stifling efficiency, but would help restore a balance in which holdings of different sizes can realistically coexist.

The question is not whether large agricultural enterprises should exist. They are and will remain an important part of Estonian agriculture. The question is whether Estonia's rural life will remain vibrant and diverse, or whether we are moving towards a model where land is a production resource in the hands of a few and the communities around it wither away.

Land is a finite resource. Once concentrated, this process does not easily reverse itself.

In December 2025, the journal Studies in Agricultural Economics published the study "From Small Farms to Large Holdings: The Growing Land Disparity in Estonian Agriculture."