Evaluation of economic efficiency of orchards investment project with respect to the risk

Zlata Sojková and Izabela Adamičková
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Zlata Sojková: Faculty of Economics and Management, Slovak University of Agriculture in Nitra, Nitra, Slovak Republic
Izabela Adamičková: Faculty of Economics and Management, Slovak University of Agriculture in Nitra, Nitra, Slovak Republic

Agricultural Economics, 2011, vol. 57, issue 12, 600-608

Abstract: Continuous elimination of the acreage of orchards in Slovakia has a negative impact on the overall fruit production. Improvement of the conditions could be achieved by introducing new technological systems into orchards and supporting the measures motivating farmers. Three investment strategies for planting apple orchards are presented in the paper: slim spindle, high density and extended orchards. Economic efficiency of the systems is evaluated through the return of investment, net current value and inner profit percentage. Within the assumption of the objective evaluation of input parameters, we can expect an acceptable economic efficiency of the investment only in the "slim spindle" technological system. The simplified deterministic evaluation of economic efficiency is further deepened with the identification of the relevant risk factors, followed by its quantification by the simulation processes. Taking the risk into account leads to a significant decrease of the economic attractiveness of investments.

Keywords: apple orchard; investment project; economic efficiency; simulation model; risk (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:caa:jnlage:v:57:y:2011:i:12:id:104-2011-agricecon

DOI: 10.17221/104/2011-AGRICECON

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