The economic feasibility of precision agriculture in Mato Grosso do Sul State, Brazil: a case study

Abstract

The objective of this study was to carry out a comparative analysis of the costs and economic profitability and viability indicators involved in implementing precision and conventional farming practices using maize and soybean crops in the state of Mato Grosso do Sul, Brazil. After identifying the production costs, analyses of the profitability indicators and viability indicators were carried out. The calculated profitability indicators (gross revenue, gross margin, break-even point, operational profit, and profitability index) presented better economic results under the precision system. For the analysis of the viability indicators, the net present value method and the internal rate of return method were used to analyze the two production systems, showing smaller investment attractiveness for the conventional farming system than for the precision system, though with a small difference in values. The Monte Carlo method was applied to evaluate investment risk. The selection of the variables to be simulated was based on the sensitivity analysis results, such as production, sale price and input price. The results obtained through simulation led to the conclusion that the risks are low for the two production systems analyzed.