Risks and economic analysis of orange culture: case study of a producer from the interior of São Paulo State, Brazil

Abstract

The Brazilian citriculture is one of the activities that generate the most income within the agrobusiness, being responsible for providing opportunities for thousands of direct and indirect workers, besides being a sector that moves a great amount of financial resources. The orange crop has been going through great price swings in the recent years, and with this, many farmers are failing to invest in potential, as a result of the risks involved in the activity. A large part of these risks is related to the buyer market, which is controlled by the large juice industries and by the high capital required for the implementation of the new orchards. The objective of this work is to identify the risk factors for attractiveness and to analyze the economic viability of the orange crop in a farm in the municipality of Bauru, in the state of São Paulo. For this, the Monte Carlo method be used to simulate the probabilities of success in the scenarios analyzed and the NPV, IRR and Payback to determine the feasibility of the project. The research is characterized as a case study. The results obtained showed that the investment is feasible, only in the real and optimistic scenario and will provide a return between the 6th and the 7th year of the project, providing a balance of approximately R$ 4,190,252.94 after 10 years of investment which represents an attractive compared to the initial investment value of R$ 937,500.00.