Cost Benefit Analysis in Adaptation of Rice Combine Harvester Entrepreneurs

Chompunuch Nantajit

No 284887, 2017 ASAE 9th International Conference, January 11-13, Bangkok, Thailand from Asian Society of Agricultural Economists (ASAE)

Abstract: For the first time, NakhonSawan rice farmers changed their farm production from rice to maize during the2015 drought. This development affected also many businesses along the rice supply chain, including the rice combine harvester service which was heavily affected from the reduction of rice farming areas. Quick to respond, rice combine harvester entrepreneurs in NakornSawan began switching to harvester headers for maize, to be in line with the suddenly growing demand for maize harvest service in the area. This phenomenon led to a research question that whether to adapt or not adapt to the change would be more profitable for these entrepreneurs. This paper aims to first examine the principle of the rice combine harvester service. Then it attempts to analyze three different scenarios using cost-benefit analysis to determine the optimal choice for the entrepreneurs during drought. The first scenario is under the normal condition where drought is not a factor. The second scenario takes drought into account but the entrepreneurs choose not to adapt. The final scenario is where entrepreneurs choose to adapt with farmers during drought. Data are analyzed assuming the business’s lifetime is 10 years and each entrepreneur uses just one rice combine harvester. Cost-benefit analysis is then utilized to obtain net present value (NPV), internal rate of return (IRR), and benefit-cost ratio (B/C ratio). Results show that all three scenarios are profitable, with the third scenario being the most worthwhile in all three indicators.

Keywords: Demand; and; Price; Analysis (search for similar items in EconPapers)
Pages: 8
Date: 2017-01
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Persistent link: https://EconPapers.repec.org/RePEc:ags:asae17:284887

DOI: 10.22004/ag.econ.284887

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