Epsilon Archive for Student Projects

Abstract

Since Sweden joined the EU in 1995 there has been a noticeable increase in the value of arable land occurred. This paper is intended to study the inflation of farmland prices. In order to ascertain what affects the market prices so much since Sweden affiliated with the EU three regions has been selected for a detailed study on the subject. These three regions are selected because each of them represents different parts of the Swedish farmlands. The time period that has been examined is the year 1995 until 2009.

The price raises in the three observed regions was overall fairly even at the end of the studied period. What was notable on the other hand was that the price changes year to year had been very different in the regions. What is this depending on?

In some regions the price has increases relatively stable, while in others it has been more erratic over periods. For example in Central Norrland there has been a low rise in farmland prices. It has been relatively stable at around a 4% increas, which is low in comparison to most other regions, from 1995 until 2005. Then in 2005 the value of farmland rose by as much as 113.5%, which is more than twice as much as other regions. This can be briefly explained by the payment scheme that was introduced for the benefit of farmers with less fruitful farmlands.

There are several happenings that have affect land prices. Examples of such are the economic crises and policy decisions such as involving the EU grants. Generally speaking arable land values are based on what it can give in return. Over the studied period political decisions have been the factor that has affected the prices of most. The increases price generally is depending on the differences in what form of agricultural production the land is used for in the region. Regions of southern Sweden and East Central Sweden produces more grain than Central Norrland. There has been an increase in prices of cereals in the current period, which benefited the South Sweden and East Central Sweden. In addition, there have been depopulation in the north while the population has increased in South Sweden and East Central Sweden.