A Real Options Approach To Evaluating Agricultural Investments Under Uncertainty: When To Get In And Out Of Sugarcane Production
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Date
2018
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Sumy State University
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Abstract
This case study presents an application of the Real Options approach to evaluate a farming enterprise under
sugarcane in the lower Herbert district of north Queensland, Australia. It demonstrates how this approach
may be used to calculate the value of a farming enterprise using real-world data as well as the critical prices
at which it is optimal for the farm operator to exercise managerial options in order to maximise the value of
their investment. In practical terms, this information is useful to assist farmers to make optimal decisions
regarding whether or not to plant their field crops for the current season and at which price it is worth considering
alternative uses for their crop land, such as rotating their crops or converting their land for other
industrial uses.
Keywords
аналіз реальних варіантів, анализ реальных опционов, real options analysis, оцінка сільськогосподарської продукції, оценка сельского хозяйства, agricultural evaluation, вартість активів, стоимость активов, asset value, інвестиційні рішення, инвестиционных решений, investment decisions, виробництво цукрового очерету, производство сахарного тростника, ugarcane production
Citation
Smith, M. (2018). A Real Options Approach To Evaluating Agricultural Investments Under Uncertainty: When To Get In And Out Of Sugarcane Production. SocioEconomic Challenges, 2(1), 21-34. DOI: 10.21272/sec.2(1).21-34.2018