ECONOMIC ANALYSIS OF SUGAR CANE PRODUCTION BY SMALL GROWERS CONSIDERING OUTSOURCING OF AGRICULTURAL OPERATIONS: A ONE FARMER CASE STUDY

Abstract

Farmers are switching to sugar cane production, increasing the importance of the economical analysis of the activity. The objective of the study was to examine the economic feasibility of sugar cane production for ethanol and sugar industry by growers that outsource mechanized operations in western São Paulo State, Brazil, Rural Development Office of General Salgado. The data were obtained from a farmer, in an area of 24 hectares cultivated with sugar cane, in the municipality of Sud Mennucci, São Paulo State, Brazil. It was calculated the setting up total operational cost (TOC) of the crop and 5 cuts. It was also proceeded a cash flow analysis to analyse the investment in the activity. The economic data were not favorable. The payback (return) of the investment occurred after the 5th cut. The Net Present Value (NPV) was negative (R$ -278.48). The Internal Rate of Return (IRR) was 2.54%. This condition is not feasible in sugar cane production for industry by farmers who outsourced agricultural operations.

KEY-WORDS: Costs; analysis investment; Sacharum spp; outsourcing operations.