How credit managers in their lending strategies is taking into account the potential risk factor of that security in the form of arable land falls in value

The increase in farmland value in Swedens plain areas is a well known fact in today's Swedish agricultural. In connection with the fluctuating prices of crops and inputs, are increasing the risk exposure to agriculture. The increased value of agricultural land has in Sweden over the years been due to a high demand for land that has existed and exists in Sweden. The increasing demand is linked to a structural rationalization of Swedish agriculture, leading to fewer and larger farm units (www, privataaffärer, Carl Johan Jurss). The purpose of this study is to examine the potential risks associated with the farmland value falls or remains unchanged, according to a farm credit administrator's perspective. The idea is to get a picture of the main factors taken into account when lending and the problems with falling or stable land prices into account when lending. To analyze the results, appropriate theories used. The work has been performed in cooperation with LRF Konsult. The study was conducted with the help of a literature survey and a quantitative study of the survey questionnaire form. 150 agricultural credit managers have participated in the survey. The participating credit managers operating in one of Sweden's three plain areas and working in any of the Swedish banks that have an agricultural and forest department in all of the three areas. The results show that, the risk of falling or stable land prices, considered a relatively high degree. The results show that the factors that credit managers care most about is farming company's ability to repay and how skillful the farmer is to manage and operate its business. The results also show that a relatively risky investment can not be compensated by more stringent lending conditions. The results also show that the credit officers' own subjective assessment, there is a correlation between the declining profitability of farming and the risk of falling or declining land prices, which means that when profitability drops increases the risk of a decline in farmland prices