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Agricultural investments analysis in farms: use of real options in the sugarcane crop

Grant number: 18/12175-3
Support type:Scholarships in Brazil - Scientific Initiation
Effective date (Start): September 01, 2018
Effective date (End): August 31, 2019
Field of knowledge:Applied Social Sciences - Administration - Business Administration
Principal Investigator:David Ferreira Lopes Santos
Grantee:Samara Marques Gomes
Home Institution: Faculdade de Ciências Agrárias e Veterinárias (FCAV). Universidade Estadual Paulista (UNESP). Campus de Jaboticabal. Jaboticabal , SP, Brazil


Brazil is the world's largest producer of sugarcane and is the leader in the production of sugar, sugarcane ethanol and energy through biomass, thus contributing to the world's food security. Investments for the formation of sugarcane require a more robust financial strategy, since it is a crop that can last from six to thirteen years of harvest, after its implantation. In addition, there is a need to rotate the crop with grains as a way to preserve the soil and increase the sustainability of production. The purpose of this research is to model a structure of investment analysis through the Real Options Theory that adds the possibilities of diversification and managerial flexibility in the succession/rotation of crops in the portfolio of small and medium rural producers in the Alta Mogiana region of the state of São Paulo, where the largest productive sugarcane parcel in the country is located. The methodological approach involves extended models of the original proposal of Cox, Ross and Rubinstein (1979), and is innovative for the sugarcane sector whose economic, social and environmental impacts to the producers and the interior of the State of São Paulo are relevant. The materials that support the research will be taken from primary sources with producers certified by the Bonsucro protocol. This group will represent the modal profile of the region, according to classification criteria of the main association of producers of the region. Secondary information regarding crop yields in rotation/succession will be collected from different official and academic sources. It has as expectations of results for this study, products of academic nature such as publication in scientific periodical and of a practical nature through informative and seminars for rural producers of the region.