
handle: 10419/265286
Brazil is the world's largest producer of sugarcane, product with history and importance in the Brazilian agribusiness. The State of São Paulo is responsible for 50% of Brazilian production. Harvested area is estimated at 4.25 million hectares. The metropolitan region of Ribeirão Preto, in São Paulo, is the largest sugarcane producer in the country, accounting for 25% of São Paulo production. In the domestic market, the profitability of sugarcane production at the mills, as well as the market price, are impacted not only by production costs, but also by the costs of land leasing to local owners. The landowners of sugarcane farms have the flexibility of sugarcane production, or to lease the area to the mills. In scenarios of high costs and low productivity, such as 2018/2019 harvest, there was an increase in contract lease cancellation by the mills. In the previous harvests (2016/2017), the increased demand for lease contract was correlated to an increase in land productivity and more competitive lease prices. The flexibility between production and leasing in rural properties is well known by the sector's agents, but it needs to be appropriate addressed using decision analysis methods. This type of decision under uncertainty can be properly conducted by Real Options Theory. Thus, in this study, is proposed a model to evaluate the managerial decision of sugarcane production by the landowners, using the land was previously leased to the mills. In the model, the sugarcane price in the domestic market of Brazil (açúcar total recuperável - ATR) is considered the main uncertainty of the project. The model was applied to the valuation of a rural property in Ribeirão Preto, in the state of São Paulo. The results show that the option to start the sugarcane production once the land was previously leased, adds 5.17% to the future cash flow of the landowner in present value, which represents an increase of US$ 1.7/t. The main contribution of the study is the decision model, which allows evaluating the impact of managerial flexibility of landowners on agribusiness in Brazil. The landowners using real options approach for decision making, can optimize their resources.
flexibility, agricultural economy, ddc:330, G13, R14, land leasing, sugarcane production, Q12, Real Options
flexibility, agricultural economy, ddc:330, G13, R14, land leasing, sugarcane production, Q12, Real Options
| selected citations These citations are derived from selected sources. This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically). | 0 | |
| popularity This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network. | Average | |
| influence This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically). | Average | |
| impulse This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network. | Average |
