Investments in precision agriculture technologies include the purchase of equipment, installation costs, and the time and effort required to learn how to use and maintain it. These costs are normally not recoverable when the use of the technology is terminated. The most popular tools for analysing the profitability of precision agriculture technology come from investment analysis and include financial ratios such as net present value and internal rate of return (IRR) (Shockley, 2016). But these tools might be insufficient as a decision criterion. First, the value of the waiting time for new information that reduces the uncertainty of the cash flows generated by the investment is often ignored (Tozer, 2009). Second, uncertainties regarding yield and price, as well as the irreversibility of costs, may be neglected. Therefore, it is crucial to consider uncertainties and risks, when making investment decisions in precision agriculture technologies.
Literatur
Finger, R., Swinton, S., El Benni, N., & Walter, A. (2019). Precision Farming at the Nexus of Agricultural Production and the Environment.
Shockley, J. (2016). Precision agriculture economics and decision making—beyond profitability. Crops and Soils, 49(6), 16-19.
Tozer, P. R. (2009). Uncertainty and investment in precision agriculture–Is it worth the money? Agricultural Systems, 100(1-3), 80-87.
Investments in precision agriculture technologies include the purchase of equipment, installation costs, and the time and effort required to learn how to use and maintain it. These costs are normally not recoverable when the use of the technology is terminated. The most popular tools for analysing the profitability of precision agriculture technology come from investment analysis and include financial ratios such as net present value and internal rate of return (IRR) (Shockley, 2016). But these tools might be insufficient as a decision criterion. First, the value of the waiting time for new information that reduces the uncertainty of the cash flows generated by the investment is often ignored (Tozer, 2009). Second, uncertainties regarding yield and price, as well as the irreversibility of costs, may be neglected. Therefore, it is crucial to consider uncertainties and risks, when making investment decisions in precision agriculture technologies.
Literatur
Finger, R., Swinton, S., El Benni, N., & Walter, A. (2019). Precision Farming at the Nexus of Agricultural Production and the Environment.
Shockley, J. (2016). Precision agriculture economics and decision making—beyond profitability. Crops and Soils, 49(6), 16-19.
Tozer, P. R. (2009). Uncertainty and investment in precision agriculture–Is it worth the money? Agricultural Systems, 100(1-3), 80-87.
Comparison of different approaches for the evaluation of investments in precision technology and development of a simple investment model for precision agriculture technologies taking into account risks and uncertainties.
Comparison of different approaches for the evaluation of investments in precision technology and development of a simple investment model for precision agriculture technologies taking into account risks and uncertainties.