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

James W. Julian (Department of Agricultural and Resource Economics, Oregon State University, Corvallis, Oregon, USA)
Clark F. Seavert (Department of Agricultural and Resource Economics, Oregon State University, Corvallis, Oregon, USA)

Agricultural Finance Review

ISSN: 0002-1466

Article publication date: 8 November 2011

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.

Keywords

Citation

Julian, J.W. and Seavert, C.F. (2011), "AgProfit™: a net present value and cash flow based decision aid for agriculture producers", Agricultural Finance Review, Vol. 71 No. 3, pp. 366-378. https://doi.org/10.1108/00021461111177620

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited