Economic efficiency of investment limit in dairy farming management using risk analysis: Number of cows and increment
2020
Kameyama, H.
Dairy farming in Japan has required a longer work and an intensive investment. Those are the primary reason that farmers do not handle management succession or new farming. Regarding the economic evaluation measurement of investment, the net present value (NPV) is mainly used, but uncertainty is not explicitly taken into consideration. Unlike another business model, in farm management analysis, the risk analysis framework has seldom been applied. This study aimed to illustrate to apply it to one dairy farm using cash flows in the financial statement. The simulation was employed by setting the number of cows and increment as input. The result showed that there was not a significant difference between deterministic and stochastic settings. The timing of the year was around five years when cumulative capital recovery amount by the cow that increased and is less than investment limit. As the advantage of this research, the output was visualized by the probability distribution function.
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