Capital investments in the presence of tenancy relations : a case study on farmers that lease land from institutional landowners

Abstract: The agricultural sector is one of the most important industries in Sweden. About 40% of Sweden's agricultural land is leased out, which means that leased farming is a significant part of Swedish agriculture. Since Sweden joined the EU in 1995, the prices of leasing land have almost doubled. This means that leasing farmers must organize and streamline their businesses to achieve similar results. Therefore, farmers must invest in their businesses. Problems may arise between the landowner and the tenant farmer when the tenant wants to invest in the property that does not match the landowner's vision of the future or vice versa. In the long term, this can lead to lower profitability in the industry if a large part of Swedish agriculture is not optimally farmed. This study aims to give the reader a greater understanding of tenant farmers, willingness, and opportunities to invest in their business. In the form of farm buildings or land improvement measures. The study examines farmers that lease land institutional landowners. Moreover, the study examines how the relationship between the actors affects the decision-making process and what factors are crucial for a decision to be made. In order to study this issue, a qualitative research method has been applied consisting of several case studies with tenant farmers and institutional landowners in the areas of Götalands Norra slättbygder (GNS) and Svealands slättbygder (SS). The interviews are semi-structured and based on thematic issues where origin comes from the literature review and are related to the theoretical synthesis. To create a contextual understanding of farming through tenancy and factors that affect the opportunities for investing in the business are identified. Good relationships, trust, and communication are three factors that the study has found to have a major impact on the investment processes. The study also notes that the willingness of both farmers and institutions to invest is high, which facilitates the decision-making process. Furthermore, influencing factors on an investment are profitability, tenancy prices, family, friends, colleagues, and age of the tenant farmer