ECONOMIC FEASIBILITY OF FARM MACHINERY INVESTMENTS: A FARM-LEVEL INVESTMENT ANALYSIS

Dejan  Vukosavljević; Danijela  Vukosavljević; Milovan Mirkov; Jovana  Radulović

doi:10.59267/ekoPolj2603821V

Authors

Dejan Vukosavljević Nemanjina 1A, University “Union - Nikola esla”, Faculty of Management - FAM, Sremski Karlovci, Serbia https://orcid.org/0000-0001-7475-2764
Danijela Vukosavljević University “Union - Nikola Tesla”, Faculty of Management - FAM, Sremski Karlovci, Serbia https://orcid.org/0000-0002-6967-5423
Milovan Mirkov Municipal Public Library “Veljko Petrović” Žabalj, Nikole Tesle 40, 21230 Žabalj, Serbia https://orcid.org/0009-0008-0568-5121
Jovana Radulović Belgrade Academy of Business and Art Vocational Studies, Kraljice Marije Street no. 73, 11050 Belgrade, Serbia https://orcid.org/0009-0005-8837-4385

DOI:

https://doi.org/10.59267/ekoPolj2603821V

Keywords:

farm mechanization, investment analysis, net present value, sensitivity analysis, farmlevel economics, agricultural investment

Abstract

Investments in agricultural machinery represent animportant factor in the modernization and increase in theproductivity of agricultural production. However, highinitial investment costs and relatively slow returns oncapital often limit the investment decisions of small andmedium-sized farms, especially in transitional agrarianeconomies. The paper analyzes investment in agriculturalmachinery of a typical agricultural farm that cultivates 20hectares of agricultural land. The analysis was conductedusing investment analysis methods based on discountedcash flows, including net present value (NPV), internal rateof return (IRR), scenario analysis and sensitivity analysis.The results show that the investment without institutionalsupport is not financially justified, while the inclusionof the subsidy significantly improves the economicindicators of the project. The findings contribute to a betterunderstanding of investment decisions in agribusiness andindicate the importance of institutional incentives for themodernization of agricultural production.

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