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Flexible Investment Strategies for Maximizing Returns under Spatial Variation and Uncertainty in Beef Cattle Investment Decision-Making
Bulent Celebi * 1, Vedat Ceyhan2
1- Ondokuz Mayıs University, Samsun Vocational School, Department of Accounting and Tax, Samsun, Türkiye , bcelebi@omu.edu.tr
2- Ondokuz Mayıs University, Faculty of Agriculture, Department of Agricultural Economics, Samsun, Türkiye
Abstract:   (223 Views)
Designing the flexible investment strategies for maximizing returns under spatial variation and considering uncertainty in beef cattle investment decision-making are vital.  Therefore, the objectives of the study were (i) to explore the real options and its values spatially for beef cattle investments in Türkiye, and (ii) to evaluate the adequacy of government support for beef cattle investment spatially. Research data were collected from randomly selected 385 beef cattle farms by using questionnaires. The valuation of real options was assessed by using Binomial Valuation, Black-Scholes Method and Monte Carlo simulation. Tornado diagram was used for exploring sensitivity of decision variables for beef cattle investment. The results of the research showed that the classical net present value (NPV) value was -200,82 thousand US $. The NPV values of the options of wait, expand and input-output change for the beef cattle investment were 102,37 thousand US $, 43,87 thousand US $, and 24,50 thousand US $, respectively. The research findings also showed that the value of real options and adequacy of government subsidies varied spatially. Based on the resuts of the sensitivity analysis, the most important variables affecting the investor's decision are carcass meat price, yield rate, capacity utilization rate and fattening feed price, respectively. The research suggests that policy makers should consider the spatial distribution of investment subsidies and policies to the specific needs of different regions to increase efficiency of investment support policy.

 
Keywords: Beef Cattle Investment, Valuation of Real Options, Sufficiency of Investment Subsidies, Flexible Investment Strategy
Full-Text [PDF 596 kb]   (200 Downloads)    
Article Type: Original Research | Subject: Agricultural Economics/Agriculture Production and Farm Management
Received: 2023/07/19 | Accepted: 2024/01/11 | Published: 2024/03/31
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