Economic potential of using micro-terracing in coffee plantations: a case study

Ednaldo Lino Alves, Fernanda Aparecida Castro Pereira and Flavio Carlos Dalchiavon

Revista IPecege, 2017, vol. 3, issue 1

Abstract: Among the main problems currently faced by mountain coffee farming is the high cost of production, decisively influenced by the scarcity and high cost of labor. This work aimed to carry out an economic feasibility analysis of the use of micro-terracing in coffee plantations in the interior of São Paulo state. The study compared the production costs in two systems: semi-mechanized (micro-terracing) and manual, over a period of 10 years. The data were collected on a rural property in the municipality of São Sebastião da Grama, São Paulo, in an area of ​​12 ha, already established and in production. For revenues, the value of a 60 kg bag of processed Arabica coffee was considered at R$ 410.00. The financial indicators used were: Net Present Value [NPV], Internal Rate of Return [IRR] and discounted payback. Micro-terracing presents itself as an economically viable alternative; The project's cash flow demonstrates positive NPV values ​​using minimum attractive rates of return ranging from 6% to 20%; an IRR of 41% and a discounted payback period of two years. The largest contribution to reducing the production cost of the terraced land comes from the labor budget item, both in cultivation practices and harvesting. The cash flow considering the micro-terraced area is positive and higher than that of the compared area.

Keywords: Crop; Production/Industries (search for similar items in EconPapers)
Date: 2017
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