Agronomy journal, Vol. 69 No. 3, 2007.
Original scientific paper
THE SIMULATION MODEL FOR COST-BENEFIT ANALYSIS ON ORGANIC FARMS
Karmen Pažek
Č. Rozman
Abstract
The paper describes the methodology of technological and economic simulation model KARSIM 1.0 (DSM) application for decision-making support on organic farms. The model is deterministic and integrates the enterprise budget calculations for individual organic farm product and Cost-benefit Analysis. The DSM was applied on two sample organic farms for simulation of different business alternatives before and after investment into farm product processing. The simulation model results present input parameter for Cost-benefit Analysis (CBA). Two basic financial indicators were calculated: Net Present Value (NPV) and Internal Rate of Return (IRR). At presumed model input parameters (after 10 years of constant cash flow and 8% discount rate) the results show that investments into farm food processing on both sample organic farms are financially feasible. The business alternative on sample organic farm 2 (the combination of animal, fruit and field crop food processing) results with the maximal NPV value (NPV = 7 705,26 €).
Keywords
simulation modelling; KARSIM 1.0; organic farming; Cost-benefit Analysis; decision support system
Hrčak ID:
18196
URI
Publication date:
20.6.2007.
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