Risk in Investment Decision Making and Greenhouse Tomato Production Expansion in Florida

The outcomes of agricultural investment decisions are affected by the risk in price, cost, and yield outcomes. To examine those risks, net present value models with Monte Carlo simulation are used to analyze the viability of greenhouse tomato investment decisions. The analysis is further extended by utilizing a real options approach. The results indicate that a grower would choose to continue field-grown tomato production due to high option values and risk aversion. Moreover, some policies or market conditions which increase credit availability, decrease energy prices, reduce tomato price fluctuation and/or facilitate effective risk management strategies would make the greenhouse production preferable.


Issue Date:
Nov 01 2014
Publication Type:
Journal Article
DOI and Other Identifiers:
(ISSN#: 1559-2448) (Other)
PURL Identifier:
http://purl.umn.edu/188706
Published in:
International Food and Agribusiness Management Review, Volume 17, Issue 4
Page range:
1-26
Total Pages:
26
JEL Codes:
D81; Q14; Q16
Note:
The IFAMR is published quarterly by the International Food and Agribusiness Management Association. www.ifama.org
Series Statement:
Volume 17
Issue 4




 Record created 2017-04-01, last modified 2017-08-28

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