Financial Evaluation, Under Conditions of Risk, in a Family Dairy Production System

Main Article Content

César Otaviano Penna Júnior
Rogério Figueiredo Daher
Paulo Marcelo de Souza
Niraldo José Ponciano
Gercílio Alves de Almeida Júnior
Ismail Ramalho Haddade
Ivan Jannotti Wendling
Wanessa Francesconi Stida
Kesia Faria Vidal
Rafael Souza Freitas

Abstract

Aims: This study analyzed, in comparative terms, the competitive potential of family farming using an intensive milk production system based on the intermittent stocking in irrigated tropical pasture; it also evaluated the financial results before and after the implementation of an appropriate technology in the intensification process.

Study Design: The article is based on an opinion about a subject of major interest aimed at generating discussion. 

Place and Duration of the Study: The study was conducted based on data collected from a family farming property located at the municipality of Alegre, State of Espírito Santo, Brazil, between 2011 and 2013.

Methodology: Cash flow spreadsheets were organized, taken into consideration two deterministic scenarios (with and without the implementation of the proper technology), evaluated the net present value (NPV at 6%) and the internal rate of return (IRR). Subsequently, a sensitivity analysis was carried out, and, considering the items with the greatest contribution in the financial indicators, the Monte Carlo Simulation method was used, obtaining the risk in the decision to invest under each situation studied.

Results: The results of NPV6%, estimated according to the opportunity costs of capital, and the IRR would exceed the values of alternative investments with returns of 6% by US$ 1,830.71 and would return the capital by 6.25%, respectively.

Conclusion: It was concluded that the intensive pasture milk production system has potential to be an alternative for income generation for family farming.

Keywords:
Competitiveness, intensification, internal rate of return, technology transition, net present value, Monte Carlo Simulation.

Article Details

How to Cite
Otaviano Penna Júnior, C., Figueiredo Daher, R., Marcelo de Souza, P., José Ponciano, N., Alves de Almeida Júnior, G., Ramalho Haddade, I., Jannotti Wendling, I., Francesconi Stida, W., Faria Vidal, K., & Souza Freitas, R. (2019). Financial Evaluation, Under Conditions of Risk, in a Family Dairy Production System. Journal of Experimental Agriculture International, 41(6), 1-10. https://doi.org/10.9734/jeai/2019/v41i630435
Section
Opinion Article

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