Epsilon Archive for Student Projects

Abstract

Rental rates and land prices have gone through substantial changes the last two decades. The prices have both gone up and down since 1990 but from 1995 to 2008 land prices increased with 272 percent and rental rates with 61 percent.

What factors that have the largest impact on rental rates and land prices are hard to determine but factors that may affect the price are the desire to live in the countryside and the expected profitability in agriculture. Prices of products and inputs are factors that affect the profitability in agriculture, but the profitability is also affected by agricultural policies. The economic for Swedish agriculture have changed several times over the last 20 years as a result of changing agricultural policies.

The agricultural policies largely affect farmers behavior and decisions. But how do the agricultural policies affect rental rates and land prices? Can we see any connections between past policies and the large increase in prices that has occurred during the last 20 years? In the year 2013 it is once again time for a new agricultural policy. The content of that policy is still unclear and it is therefore impossible to predict the new policy´s impact on rental rates and land prices. But by studying past agricultural policies impact on rental rates and land prices it might be possible to obtain an indication of future price developments.

The thesis aim is to describe the development of rental rates and land prices in Sweden the last two decades and to investigate if the development has been affected by agricultural policies.

The empirical material is based on a literature review and regression analysis that test subsidies, wheat prices, total production value and interest rates impact on rental rates and land prices in Sweden between 1994 and 2008. Because of the limited time, the essay has been conducted as a qualitative study and the statistical material consists of secondary data.

The conclusion is that rental rates and land prices have gone through substantial changes during the past 20 years. The last time Sweden experienced a fall in land prices was in the beginning of the 90´s, but since Swedens entry in EU there has been a strong increase in both rental rates and land prices. The thesis also concludes that the change in rental rates and land prices has been affected by the past agricultural policies during 1994 to 2008 and 1990 to 2008 respectively. But rental rates and land prices are both dependent variables that are affected by a large number of factors and it is therefore not reasonable to conclude that the agricultural policy in itself is responsible for the whole change in rental rates and land prices.