Own Grain Storage Structures: Is It Worth Investing?

Elisangela Domingues Vaz, Regio Marcio Toesca Gimenes, Joao Augusto Rossi Borges, Rafael Todescato Cavalheiro and Andreia Maria Kremer

Journal of Agricultural Studies, 2020, vol. 8, issue 2, 42-67

Abstract: Grain storage is strategic for agribusiness and therefore, it is important to consider the usefulness and benefits of its implementation. This study aims to identify the economic and financial viability of investing in grain storage structure at farm level using capital budgeting techniques. Considering the particularities of farms in the Midwest region of Brazil, the following investment valuation techniques were used- Net Present Value (NPV), Equivalent Uniform Annual Worth (EUAW), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), Discounted Payback (DP), Profitability Index (PI), Benefit/ Cost Ratio (B/C), Sensitivity Analysis and Monte Carlo simulation. The results of NPV and EUAW were positive. The results of IRR was 14.08% and MIRR was 11.39%, with a payback of 11.81 years, an PI of US$ 1.31 and a B/C ratio of 3.16. From the risk analysis, it can be inferred that the investment is low risk since there is a 99.97% probability of NPV being greater than zero. Therefore, grain storage is a potentially viable alternative for increasing the competitiveness and wealth of Brazilian farmers, even in the context of an emerging economy.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.macrothink.org/journal/index.php/jas/article/download/15704/12438 (application/pdf)
http://www.macrothink.org/journal/index.php/jas/article/view/15704 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mth:jas888:v:8:y:2020:i:2:p:42-67

Access Statistics for this article

Journal of Agricultural Studies is currently edited by Richard Williams

More articles in Journal of Agricultural Studies from Macrothink Institute
Bibliographic data for series maintained by Technical Support Office ( this e-mail address is bad, please contact ).