Lantbrukarens inställning till skuldsättning och val av kreditinstitut : en fallstudie av expansiva lantbruksföretag

Abstract: The agricultural sector is characterized by larger crop farms and more extensive livestockproduction. The efficiency improvement is partly a result from a stronger competition in theglobal market. The agricultural products need to be produced at a lower cost than competitorsin order to survive as a farmer. The solution is larger firms that benefit from economies ofscale. This brings large investments that create a greater need for leverage and closer relationto the credit agency. What influences the farmers’ decision to increase leverage and enact onecomprehensive investment plan? Those who choose to make the investment are dedicated todevelop their business.The aim of this master thesis is to identify how the farmer's quest to develop their farmsimpact leverage and choice of credit agency and what criteria for the agency that are valuedby the farmer.In addition, the study attempt to analyze how higher leverage affects farmer's riskmanagement strategies.In order to answer the aim of this thesis, seven case study interviews are conducted amongfarmers in the agriculture intensive areas in Sweden. These interviews form the core of thisstudy.Some of the conclusions that emerge from this study are that farmers want to create a farmthey feel satisfied and proud with rather than create any fortune. This is because the farmoften has been in the family's possession for several generations. To expand the farm is alsoan opportunity to hire staff and get more time off. The quest to develop the farm is reflectedmore by soft goals, rather than economic motives. However the economic result is aprecondition for achieving these goals and is often a sub goal to achieve a purpose in thelonger term. The main ability of development lies at the farmer. However guidance, adviceand external discussions contribute to the farmers’ ability to develop the business in asuccessful manner.It is not the economic factors that have the highest priority of the farmer before an investment.It is rather criteria attributed to the production process that are important. Reducing hours ofwork and to improve the production processes is primary. This is obviously a part aim toachieve a higher economic result. Before the investment process, many farmers haveencountered obstacles in order to borrow capital. They were then forced to switch bankbecause of their strong determination and desire to develop their farm.There are soft values that are valued highest by the farmers in their relations with the creditagency, such as personal contact, knowledge of the agricultural sector and confidencebetween the parties involved. Almost all famers experience a risk with their business, butperceive that it is acceptable in relation to what they managed to create. Ambition and thewillingness of farmers to diversify and spread risks are obvious. There are however obstaclessuch as lack of capital and time to engage in multiple enterprises on the farm. The leverage offarmers in this study is in the most cases high. Five out of seven has a debt-equity ratio of75% or more. They are considered to be risk prone by means of their debt leverl but they alsotake risks with its interest rate policy even if the aim is to reduce the risk exposure.