STUDIES

ECONOMIC ANALYSIS OF A MODERNIZATION INVESTMENT AT A DOMESTIC DAIRY CATTLE FARM

Author:
KÓNYA GERGELY – SZŰCS ISTVÁN – TÓTH SÁNDOR
CC-BY-NC_SA
Q10, Q11, Q12
JEL-code
515-529
Pages
JEL-codes: Q10, Keywords: animal husbandry, Q11, Q12, return on investment, robotic milking
Keywords

Összefoglaló


In this article, we dealt with a modernization investment in the dairy cattle sector in Hungary. This investment was the establishment of a new cattle farm using European-standard milking robot technology. During the research, we examined the last decades of dairy production in Hungary and identified the key issues that are economically important in dairy production. In addition, the cost components of the plant investment was also examined. During the research, calculations were made regarding the timeframe and the possible results for the return on investment of the farm. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), Net Present Value (NPV), Profitability Index (PI) and Internal Rate of Return (IRR) were used as economic indicators to assess the investment. During the research, we hypothesized that with the operational parameters we have designed – and in the absence of any force majeure situation –, the investment can be recovered within 10 years. Based on our research, we can state that our hypothesis has been confirmed, as the investment paid off in the 8th year, assuming the current economic environment.