(edit title) The best real estate deals in Sweden 40 Hectares and a Moose Options

[SOIS.COM]

Sweden is blessed with one of the lowest population densities in Europe and on the other hand has a bounty of natural resources for the size of the population.

I have been in contact with farmers, agricultural students and teachers in Sweden for some time now and its quite interesting how farming is evolving in Sweden.

One key reason farming is changing is back in 1960 a person had to work 8 hours to afford a bag of oats, today the average person works about 20 to 30 minutes to be able to afford the same bag. Many farms that used to be economically productive no longer are under their current use but with careful planning may very well be as Sweden moved towards an increasingly sustainable economy.

Most people who imagine owning a farm in the south of Sweden a " Skånegård ". Anyone who has spent any time in the countryside of Skåne will quickly come to appreciate the farmers paradise that it is, with rich soils, beautiful and well kept homes and barns, and the climate allows for a wide variety of crops to be planted. In fact, go just a few counties to the North and the choices for varieties of crops to plant dwindle by as much as 90%. Equally though the Skånegård fetches a premium that further north could buy farms 2, 3 or even 20 times the size. While, the economics of traditional farming may still show the Skånegård as the ultimate winner this may not be the case over the next few decades.

For example, I am familiar with an area around Uppsala where out of 20 farmers only 2 have replacements to take over the farms. The rest of the farmers are either winding down their operations or getting ready to in the next decade or two. If we go further north in Sweden their is a downward spiral of people moving to the south or coastal areas and with that comes a smaller amount of government services and the trend is continuing. In some areas of Jamtland the farms are almost being given away. The third method of finding great deals on farms is finding the new generation of farmers in your area and ask them to keep you posted of good farm deals in the area as these farmers would most welcome other farmers who are producing complimentary crops or livestock. The key is if the farm is on the real estate market you have already missed the best part of the deal...farms via word of mouth are the best way to go.

How do you turn uneconomical farms into profitable farms? It depends and their are many possibilities as a primer for ideas I recommend this website (in Swedish) that show the top 100 farms in Sweden for receiving environmental grants.

Two organic farms on the list are very interesting. The first is Wanås Gods is a prime example of large scale organic farming perhaps one of the best examples in Europe. The farm has been in operation for 500 years and they have some exciting plans to decrease their environmental footprint in the next few years.

You do not have to be a 500 year old farm to benefit from environmental grants as evidenced by KC Ranch their beef products are widely available via ICA in Malmö and in my opinion you can taste the difference.

One key to being profitable is to find a cooperative of farmers and work to take your products as high up the vertical as possible. The caveat is you really have to know the products because in some cases taking it vertical is worth more than the gain. One example of a successful collective is Gröna Dalen

A few relatively new ways farmers are increasing their profitability on marginal farms are taking unused land and planting bio fuels such as willow trees in marshes, selling or using the chaff for biofuel, and one of my favorites using the leaves from the ubiquitous Swedish potato for bio fuel.

If any one point of advice can be taken is set up your farm to be both environmentally and economically sustainable. Traditional farming can be a quick way to getting in serious debt and the bank ends up owning the farm and you. A great story, from America, is the Global Village construction set's founder and physicist Marcin Jakubowski.

Great to hear member feedback if you are an organic farmer or looking to get into it in Sweden.

[skogsbo]

What are waffling on about, did you ask these famers about the weather? You certainly weren't looking at or talking too average farmers, about farming economics.

1. Wanas God, KC Ranch are massive farms, with 1000s of hectare of fields and or forest. Wanas God is about 4000hectares?

2. Gröna Dalen looks like any other local community hall and group? Didn't see anything in their site resembling a farming cooperative, enabling cheaper buying of products, but greater sales price? They look to have a range of social function likes 1000 of local communities across Sweden, I was at one of our events yesterday.

3. A 2006 table of EU grants, what you list doesn't show is how much matched funding they put in and the size of the farm? If you have 650 hectares of ploughed fields, then you outlays on building and machinery are huge, so some of these EU grants won't event put a little dent it. Have you googled the price of the farm machinery required to work 650 hectare, tractor, plough, harrow, rotavator, seed drill, sprayer, harvester, trailer etc? I would suggest about 2.5m krona, plus the harvester at the same again on it's out. Do you want to know the servicing and parts costs too?

How many farms have unused or marginal land that will grow a decent bio crop, not that many? Most have been used for forest, which is longer but better return. I have loads of heaps from thinnings etc waiting to be wood chipped for power stations in the Autumn, after the cost of the contractor I will get 6kr a cubic metre for it, then I have fuel costs to pay. Profit is marginal, I expect to make enough to pay for the fuel cost in getting the proper wood to the roadside that has already gone to the sawmill. I certainly won't be quids in!

if you plan to grow bio stuff in any volume, then you need to look the more specialist equipment, maize harvester, willow bunchers etc. again more outlay. If you are time rich then you do it by hand but it won't make you a fortune. Plus, at the moment these subsidies for some of this stuff in other countries, so it's a messed up market, plant now and by the time your crop is ready, do you know what the market situation will be?

The farms you list are very untypical in Sweden, the average small family unit is probably 100-300 hectares, usually at the smaller end. it will probably be at least 50% forest, often more. Families don't want these farms, because there is so little money in them, but they take a huge amount of work. I should know we have one. Land and animal regulations make these farms very hard to move with times and require major outlay, often to modernise an animals building for just a dozen or less cattle, these cost remove any profit margin for years and you won't see an EU grant for any of it.

Land management is harsh, like you 500yr old example our farm is located over the site of several older farms, medieval (allegedly), so we need permission to even break soil, but we are only allowed to dig within 50m radius of any of our existing buildings to put in electric or water, so expanding or modernising is almost impossible. Beyond this is all Nature2000 fields, so we can't build there either. So to put a new tractor shed or green house up, it needs to be either away in the forest, nearly 300m away. Not so practical, plus greenhouses are trees don't mix well.

Many farms with forest, have seen a major percentage of their mature forest wiped out in 2 different storms in the past decade. It means that when taking on a new farm, there isn't as much mature forest to harvest, to help pay the bills. Plus, you can only us forest profit towards paying the interest on your loan, not the actual loan sum, otherwise you get taxed heavily. Which means you need a second income otherwise, it's debt for life.

Plus when buying the farm the value of standing harvestable forest is subtracted from the value of the farm in terms of what you can borrow, because it could theoretically blow down tomorrow and the bank would have no way of getting it's money back. So say you have a 10,000,000 kr farm with 10,000m3 of standing forest. The bank will presume a higher rate at least 500kr per m3, even though much of the volume with go for nearer 300kr. They subtract 5,000,000 from the base value, so bank value of your farm is now 5,000,000. They expect you to put down 20%, so in order for the bank to lend you 4million kr, you need to put down 6m kr first? Farming doesn't sound so great now?

Basically, I just don't know who you've spoken to, what about and where you are getting your ideas from. I type this having been out for an hour already, eating breakfast. I'll be in an out all day. then finally in at about 9pm. It's a flexible lifestyle, but it's all work and the modern cost of a bag of oats has nothing to do with it. Now even the 80yr old veteran farmer needs a laptop and broadband just to register and manage his farm with the state authorities, there isn't a paperwork option.

If you want to start talking about the joys of Arla, as supposed cooperative, I can.

[SOIS.COM]

I don't disagree with what you are saying. Even if I did it would be rather disrespectful of me to argue with you as you are obviously a man who has put his blood, sweat, and tears into agriculture.

Perhaps I should have stated the rationale behind acquiring a Swedish farm.

1. I would not recommend anyone buy a farm unless they had supplementary external income or they really knew what they were doing. One potential business model is processing the harvests and sealing it in nitrogen packed containers and marketing them as "survival rations". Alpine House among others do pretty well in North America. No lack of educated Europeans seeing the writing on the wall for the demise of their economies if not in our lifetimes then the next generation or two.

2. Being profitable in today's economic model is not that interesting to me. Rather a farm is insurance against the post peak oil society. A farm collective could be thought of taking capital from a dying economic model, petroleum based, and placing it in a future diminished yet survivable economy.

3. In order to be successful in a peak oil society a collective of farmers and technicians capable of supporting a farm would be needed so it would need to be of a certain scale.

4. It would need to be organic due to the availability of petroleum based fertilizer would not be an option, but no matter how high oil prices go cows will always continue to poop.

5. From your post it would seem your sentiment on the challenges to farming mainly stems through the bureaucratic red tape farmers have to muddle through and the economic climate being unfavorable to Swedish farmers in general?

6. What is the future of Swedish agricultural policy and the plethora of abandoned farms? Is Sweden going to diminish further its national security by being dependent upon foreign imports for food predicated on the notion of forever low fuel prices?

[skogsbo]

your points.
1. So you are admitting it's a poor business for profit? You also have to be able to grow your crop in poor soil, before you even consider the packaging.
2. If you want post peak oil, then you need small, local farms, not big cooperative, as everything will be done by horse, sold within 10-15km. Plus you 4000hectare of field & forest on one of your super farms, will be tough work, without petrol or diesel?
3. You talk of peak oil cooperatives working well, like it's proven?
4. Yes cows poo, but I think this is where you knowledge of farming nutrition cycles ends?
5. In Sweden the problems compared to the UK are probably 75% climate, you can't produce food at a competitive european price, when you have a semi artic climate etc. Yet in the EU eyes a farm in Germany on great soil, is equal to Sweden. The global market will pay the same for their milk.
6. You link oil/petrol prices too much to farming. Consider the farms that now grow bio fuel, instead of food crops. That is more of an issue in the future. This especially a problem in the USA, when grain is used for fuel, not food more and more because the state subsidised it.

[skogsbo]

I should clarify I meant 60kr per cubic metre for wood chip biomass not 6, but compared to selling old beetle eaten timber for 300kr or small fresh stuff for wood pulp(paper) for roughly the same price, you can see that biomass doesn't pay so well. Yes you can grow it quickly, perhaps 3years for willow rotation, once they are established, but you still have overheads, soon everyone will be doing it and the market price could creep lower.

Peak oil? It's just an urban myth, you could get progressively more expense oil, as extraction and refining costs go up, but this could easily be balanced out as more efficient ways of pumping out a greater percentage from fields are put in place, the more cost effective refining of so called heavy oils too, which until now has been quite limited, so price and supply may not shift much for at least another decade or more. You've also got the fracking of shale oil etc. Which is probably no more environmentally friendly that your packing of foods in nitrogren!?

[Gamla Hälsingebock]

A very interesting topic and posts!

Thanks, guys!

[hjoian]

Nothing like real life experience to quash myths. Some of the farming families around me are heavely into debt,with a very long time period of paying it all off. Even with cheap interest rates, a debt of 1.6 million Kr for a new John Deer, is going to take a long time to pay off. Farming is not a get rich quick scheme, more of subsistance and sustainable lifestyle and a lot of very hard work.

[skogsbo]

farmings is tough game even in good times. In southern Sweden Gudrun took a massive percentage of people mature forest. Most lost money, as the bottom fell out of the market and extraction cost were more than the selling price. In Sweden it was their equivalent of the UK's foot and mouth, with many 60/70yr old foresters watching a lifes work, sold for loss. Many gave up completely, but can you imagine planting trees yourself in the 40s, 50s, 60s, then thinning it in perhaps the 70 and 90s, then waking up one morning and it's all wrecked. Not good.

Milk prices are dire, meat is little better, apart from Lamb. Feed and bedding costs are on the rise, probably rocketing later in the year once the impact of the weather is really known this year.

Many kids just don't want to take over the family farm because they've seen how much their parents have sacrificed and don't want the loss of earnings and career if they change direction and take over. Others take over reluctantly.

SOIS.com's tale of huge profits and never a better time to buy a farm is a fairy tale, that's for sure. Farming and the grants scheme needs an overall, it's all wrecked, but even a decade ago when they were paying farmers to not grow anything, it was hardly setting the basis of a sound system. It was good to see the UK farmers unite together and force the big dairy companies to pay a slightly better price.

[SOIS.COM]

SOIS.com's tale of huge profits and never a better time to buy a farm is a fairy tale, that's for sure. Farming and the grants scheme needs an overall, it's all wr ... (show full quote)

SOIS.com's tale of huge profits and never a better time to buy a farm is a fairy tale, that's for sure. Farming and the grants scheme needs an overall, it's all wrecked, but even a decade ago when they were paying farmers to not grow anything, it was hardly setting the basis of a sound system. It was good to see the UK farmers unite together and force the big dairy companies to pay a slightly better price. ... (hide full quote)

You are misconstruing my post. I never said there exist high profits in farming rather I did state one can get great deals on farms in Sweden due to the flight of the next generation to take over many farms. It is not a myth that farms can be bought for a very low price off the traditional real estate market.

The Dutch and Germans are coming to Sweden in increasing numbers to buy those farms and for the most case its working out for them.

Whether or not people can make a profit on farms is something for them to determine. One alternative is taking their raw goods vertical depending on what it is may be lucrative or not.

Perhaps the highest and best use for a given farm is not as a farm at all. Eco-tourism, horse stables, dog kennels, micro breweries, or as a hobby are other potential niche highest and best use options for some farms.

If you believe peak oil is an urban myth then you are welcome to hold that belief. I am not going to get into a pissing match over this point its up to people to decide.. the movie Fuel is a basic primer ... after that its relatively easy to find industry experts who have left the business who will contend peak oil is a reality.

your points.. 1. So you are admitting it's a poor business for profit? You also have to be able to grow your crop in poor soil, before you even consider the packaging.

No, not at all. Again, the price of farms is low off market, I was simply pointing out potential alternatives, mileage may very on the success or failure of the business model from operator to operator.

2. If you want post peak oil, then you need small, local farms, not big cooperative, as everything will be done by horse, sold within 10-15km. Plus you 4000hectare of field &a ... (show full quote)

2. If you want post peak oil, then you need small, local farms, not big cooperative, as everything will be done by horse, sold within 10-15km. Plus you 4000hectare of field & forest on one of your super farms, will be tough work, without petrol or diesel? ... (hide full quote)

In a previous post you counter with the farmers will use their own bio-fuel. Its unlikely we will slide back to a horse...I know a farmer whose wife is a marine engineer and their "last resort" is using steam power...horses would be on their farm just for aesthetics. Horse's cannot compete against even the most primitive forms of mechanized agriculture.

3. You talk of peak oil cooperatives working well, like it's proven?

Thats a leading question. Since we have not reached extremely low amounts of fossil fuels then the answer would be no. However, there are no limits to sustainable and organic farm cooperatives that have succeeded. Obviously, the farm coops that produce their own fuel are in the lead. The challenge now is to develop sustainable logistics both incoming and outgoing. Sustainable transport if the last mile in the sustainable chain and with current low fossil fuel prices is difficult to economically justify.

4. Yes cows poo, but I think this is where you knowledge of farming nutrition cycles ends?

I am not here to get into personal attacks but apparently you are.

6. You link oil/petrol prices too much to farming. Consider the farms that now grow bio fuel, instead of food crops. That is more of an issue in the future. This especially a ... (show full quote)

6. You link oil/petrol prices too much to farming. Consider the farms that now grow bio fuel, instead of food crops. That is more of an issue in the future. This especially a problem in the USA, when grain is used for fuel, not food more and more because the state subsidised it. ... (hide full quote)

Food, depending on location, travels 100's of kilometers before it reaches the consumer. While farmers largely externalize this now when fossil fuels are not so readily available the option to do that may dwindle. In Sweden, shrimp is sent to Egypt for processing, Vietnam for packaging, and then ends up back in Sweden.

Norwegian cod is shipped to china to be filleted...Half of Europe's peas are packaged in Kenya.

Such ideas are predicated on the idea of "global trade" however, the current economic models have nothing to do with resource based economics and rather are based upon an economic model which is unsustainable.

[Svensksmith]

I am an organic gardener and have been for the last 35 years. I also raise free-range turkeys, chickens and ducks and heat my house with wood. I do this to achieve a bit of independence and to eat better quality food. But, if the truth were to be told, if I factor in my labor, it would be cheaper just to buy my food from the store and heat my house with gas.

There are a few farmers around here (northern Illinois) with organic CSA operations that are (hopefully) making a profit and there is a farm near where I lived in Öland http://www.solbergagard.se/ that has been in business a long time. I have no idea what their profit margin is but I bet it isn't too impressive.

If you like the lifestyle and aren't worried about making lots of money, then it may be the life for you, but buying the land, equipment and materials is gonna set you back a few dineros. Most people aren't willing to take the risk.

[SOIS.COM]

Definitely its a way of life that a person has to be accustomed to.

The farm you mentioned appears to have done a great job of maximizing its potential! Great options for tourists and its very affordable with a Swedish Tourist Association membership. Looking at the staff and the way of life they lead on the farm, for me at least, is what true wealth is plus they get the opportunity to spread the word on sustainability to visitors via the way they live. Definitely a destination well worth visiting from the looks. Thanks.

[Svensksmith]

True wealth...ahh now that's what I've got. Wait till I tell my wife! "Hey honey, we're millionaires!"

[skogsbo]

You are misconstruing my post. I never said there exist high profits in farming rather I did state one can get great deals on farms in Sweden due to the flight of the next gen ... (show full quote)

You are misconstruing my post. I never said there exist high profits in farming rather I did state one can get great deals on farms in Sweden due to the flight of the next generation to take over many farms. It is not a myth that farms can be bought for a very low price off the traditional real estate market. ... (hide full quote)

But don't you see that if you say you get something for a great price, it implies that you might actually make a decent living or profit from it as a business.

The Dutch and Germans are coming to Sweden in increasing numbers to buy those farms and for the most case its working out for them.

I haven't heard this before. Many smaller farms are buying bought a few Swedes who have cash. The fields are allowed to grow over, the barns rot and collapse, along with many of the farm houses. They only want the forest, because this brings an economy of scale, if they have the area of forest that was previously belonging to 5 or 6 farms, then they have enough to make a living. Take our example earlier of the 10,000m3 of harvestable forest, you could take say 10%, which would probably balance out with growth rate (depending on many variables though), so you take 1000m3, you'll get about 700m3 of high end timber(18cm+), 150m3 medium (12-18cm), 150m3 pulp wood(5-12cm). prices are roughly 500,400,300 respectively. So that's 350000,60000,45000=455,000kr income. If you contract this out, you'll pay about 700kr per hour for harvesting and extraction, depending on distance to the roadside etc. If you do it yourself then you need to factor in machine costs + fuel, at perhaps 10l/hr for the more intense operations. Out sourcing you'll lose between 1/2 and 2/3 on cost. So that leaves you with an income of 150,000kr, to pay your loan interest off or live off, but it doesn't cover replanting etc..

The Danish and German are far too sensible, they have moved into the the clean work of building work, electrical & plumbers, but not heard of them buying farms.

Whether or not people can make a profit on farms is something for them to determine. One alternative is taking their raw goods vertical depending on what it is may be lucrative or not.

It's all great sounding words, but words don't sell farm produce at good prices, because consumers don't want to pay high prices, people's food budgets are proportionally smaller than 10,20,30 years ago, which means somebody in the chain isn't make the same profit and it certainly isn't the supermarkets.

Perhaps the highest and best use for a given farm is not as a farm at all. Eco-tourism, horse stables, dog kennels, micro breweries, or as a hobby are other potential niche hi ... (show full quote)

Perhaps the highest and best use for a given farm is not as a farm at all. Eco-tourism, horse stables, dog kennels, micro breweries, or as a hobby are other potential niche highest and best use options for some farms. ... (hide full quote)

Dog Kennels, might work near a city or airport, which applies to about 5% of Sweden. Breweries - legislation is quite heavy in Sweden if you hadn't noticed and the investment is huge, Stables - so many people have land in Sweden, it's not in big demand, everyone knows someone etc.. Eco tourism I'll give you, but the season is very short for most place, you are looking at about 3month where you get 75-100% occupancy then the rest of the year perhaps 1 in 6 weeks will be occupied as far a accommodation goes, if there is nobody staying locally, there is no point in creating other attractions, like an open farm, summer cafe etc. Most local village halls have summer cafes and fetes etc. which are all competition. But, yes, there are some gaps in the market, but none will pay off a 5mil loan.

If you believe peak oil is an urban myth then you are welcome to hold that belief. I am not going to get into a pissing match over this point its up to people to decide.. the ... (show full quote)

If you believe peak oil is an urban myth then you are welcome to hold that belief. I am not going to get into a pissing match over this point its up to people to decide.. the movie Fuel is a basic primer ... after that its relatively easy to find industry experts who have left the business who will contend peak oil is a reality. ... (hide full quote)

Oil will run out, I don't contend that, but there are many huge reserves out there, yet fully unexplored or even untapped, the waters around Cuba and the Bahamas are just being surveyed right now, potentially massive reserves. A company in the North Sea is working on a new heavy oil reserve that is as big as any of the fields that were discovered in the 70s. Oil is out, but yes we need to plan for the future.

No, not at all. Again, the price of farms is low off market, I was simply pointing out potential alternatives, mileage may very on the success or failure of the business model ... (show full quote)

No, not at all. Again, the price of farms is low off market, I was simply pointing out potential alternatives, mileage may very on the success or failure of the business model from operator to operator. ... (hide full quote)

The price of farms is low, because the income is too, otherwise demand would push it up. Why do you think the next generation doesn't want them, because they don't need the cash? You make it sound like it's the owners fault if they can't make a good living off a farm. Dare I ask have you ever lived or worked a day or week on a farm? Or have you just been reading lots of economics books about rural life and diversification?

In a previous post you counter with the farmers will use their own bio-fuel. Its unlikely we will slide back to a horse...I know a farmer whose wife is a marine engineer and t ... (show full quote)

In a previous post you counter with the farmers will use their own bio-fuel. Its unlikely we will slide back to a horse...I know a farmer whose wife is a marine engineer and their "last resort" is using steam power...horses would be on their farm just for aesthetics. Horse's cannot compete against even the most primitive forms of mechanized agriculture. ... (hide full quote)

Steam, curious, a steam engine to plough field, cut grass, gather hay? There might be some ground compaction issues, not mention what pulls the steam engine out when it gets stuck? Horses can't compete, but without oil, then there is no alternative. Personally I think the horses might have their day again. Imagine a power outage like in India, there would be no fuel available, once reserves are used up on the farm, how long until the horses need to come back into action?

However, there are no limits to sustainable and organic farm cooperatives that have succeeded. Obviously, the farm coops that produce their own fuel are in the lead. The chall ... (show full quote)

However, there are no limits to sustainable and organic farm cooperatives that have succeeded. Obviously, the farm coops that produce their own fuel are in the lead. The challenge now is to develop sustainable logistics both incoming and outgoing. ... (hide full quote)

How many farms coops produce their own fuel? If people shopped more locally, then logistics would be cheaper and easier. More farmers markets would be better option.

[skogsbo]

I am not here to get into personal attacks but apparently you are.

I wasn't meaning to attack, sorry. My point is you talk lots of economic waffle, but I don't think you understand the nuts and bolts of farming. Even maintaining good soil is a science in itself and most of Sweden's soil will never be good soil and to qualify for krav etc. you can't just go hurling any fertilisers on you like.

Food, depending on location, travels 100's of kilometers before it reaches the consumer. While farmers largely externalize this now when fossil fuels are not so readily av ... (show full quote)

Food, depending on location, travels 100's of kilometers before it reaches the consumer. While farmers largely externalize this now when fossil fuels are not so readily available the option to do that may dwindle. In Sweden, shrimp is sent to Egypt for processing, Vietnam for packaging, and then ends up back in Sweden. ... (hide full quote)

Yes, but it doesn't need to, but it's the supermarkets and consumer demands. People don't buy seasonal produce anymore. They want salad in winter, fruit in spring, flowers at anytime of year etc.

Half of Europe's peas are packaged in Kenya.

The food from Egypt and Kenya won't be around for ever, because they are pumping water out from deep aquifers that have taken centuries to fill, it will run out and then they'll be truly stuffed. You can add in green beans too etc. which are flown here.

Such ideas are predicated on the idea of "global trade" however, the current economic models have nothing to do with resource based economics and rather are based up ... (show full quote)

Such ideas are predicated on the idea of "global trade" however, the current economic models have nothing to do with resource based economics and rather are based upon an economic model which is unsustainable. ... (hide full quote)

It is unsustainable, the bubble will burst eventually, it's just a question of when. Perhaps when China and India are wealthier, then they will be prepared to pay more for food from Spain, Africa etc than we are, then suddenly our supply lines will dry up, forcing shops here to source more locally. This could be another 10years away though.