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

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.

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