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AgProfit™: a net present value and cash flow based decision aid for agriculture producers

Author

Listed:
  • James W. Julian
  • Clark F. Seavert

Abstract

Purpose - The purpose of this paper is to present AgProfit™ as a tool for users to assess economic risks associated with adoption of new technologies or production practices in production agriculture. Design/methodology/approach - This paper presents the AgProfit™ software program, its approach to capital investment analysis and demonstrates the program use by developing a scenario for analysis and discusses the process and results of the analysis. Findings - AgProfit™ was developed to assist growers in understanding the risks associated with technology adoption. The example presented in this paper demonstrates the value of the software program as a decision-making tool on the complex question of how many acres are required for an economically beneficial adoption of a new technology. Thus, with this software program, a grower can base investment decisions on the net present value and internal rates of return on an investment rather than a sales pitch or “gut” feeling. Originality/value - AgProfit™ is a recently developed software program that fills a void in available decision tools, providing users with the ability to assess the profitability and feasibility of production investment decisions.

Suggested Citation

  • James W. Julian & Clark F. Seavert, 2011. "AgProfit™: a net present value and cash flow based decision aid for agriculture producers," Agricultural Finance Review, Emerald Group Publishing, vol. 71(3), pages 366-378, November.
  • Handle: RePEc:eme:afrpps:v:71:y:2011:i:3:p:366-378
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    References listed on IDEAS

    as
    1. Vedenov, Dmitry V. & Power, Gabriel J., 2008. "Risk-Reducing Effectiveness of Revenue versus Yield Insurance in the Presence of Government Payments," Journal of Agricultural and Applied Economics, Cambridge University Press, pages 443-459.
    2. Vedenov, Dmitry V. & Power, Gabriel J., 2008. "Risk-Reducing Effectiveness of Revenue versus Yield Insurance in the Presence of Government Payments," Journal of Agricultural and Applied Economics, Cambridge University Press, pages 443-459.
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