Risk analysis and probability of return on invested capital in an intensive beef cattle production system in Minas Gerais, Brazil

Abstract

-The study evaluated the average return on invested capital (ROIC) in function of the variations in the historical prices of beef cattle and the odds of return on that capital gain within the system of beef cattle fattening on a farm in the state of Minas Gerais, Brazil, from 2004 to 2007. To calculate the risk of ROIC, monthly data of beef cattle prices (BM&F) were used from July 1997 to December 2013, revised by the General Price Index of the Fundação Getúlio Vargas in December 2013. The corrected data were divided into five classes that correspond to the risk scenarios. In light of these classes, the observed frequencies and their respective probabilities were calculated. The cumulative and updated ROIC were -3.02 and 0.24%, respectively. The odds for obtaining returns above 8.4% (Brazilian Selic Rate) per year were median, corresponding to 32.0 and 34.94% for the calculation of operating profit (ROIC OP) and total profit (ROIC TP), respectively. The expected average annual return was 6.26 and 7.66% for ROIC OP and ROIC TP, respectively. The standard deviation and coefficient of variation showed a high risk of ROIC because the scale and extent of dispersion per unit of expected return were elevated in the accumulation period and the risk for 2013 was reduced according to the price of beef cattle. The expected risk of ROIC was considered high between 2004 and 2007 and average for 2013. The probability of return on capital invested in the intensification of fattening beef cattle is a function of the selling price of cattle and purchase of inputs, in which the high scenario ranching provides greater probability of getting a return above the bank interest rates.

Improve Pasture or Feed Grain? Greenhouse Gas Emissions, Profitability, and Resource Use for Nelore Beef Cattle in Brazil’s Cerrado and Amazon Biomes

“…Whole-farm profits ranged from US$57 to 91/ha for pasture improvements including re-seeding in Acre state in the Amazon [45]. Profits were US$66.72/ha for pasture fertilization in Minas Gerais state in Brazil's Atlantic Forest biome [50]. Pasture-based grain supplementation (GS) economic analyses have previously been limited to two studies on temperate cattle finished on the productive, diversified temperate pastures in Brazil's southern Pampas biome.…”

Türkiye sığır besiciliğinde yapısal durum ve sektörel analiz

“…Entansif besi sığırcılığında risk yönetimi açısından, yatırım sermayesinin geri dönüşünün, hayvan satış fiyatları ile satın alınan girdi miktarı ve maliyetlerine bağlı bir fonksiyon olduğu ve banka faizlerine göre yüksek bir getirinin sağlanmasının önemli olduğu bildirilmiştir (23).…”