Digest Finance

Modeling the Efficiency of Investment in Agricultural Business

Vol. 23, Iss. 3, SEPTEMBER 2018

PDF  Article PDF Version

Received: 30 May 2018

Received in revised form: 13 June 2018

Accepted: 27 June 2018

Available online: 28 September 2018


JEL Classification: G17, G32, Q14

Pages: 319-326


Samygin D.Yu. Penza State University, Penza, Russian Federation


Keleinikova S.V. Saransk Institute of Cooperation, Branch of Russian University of Cooperation, Saransk, Republic of Mordovia, Russian Federation

ORCID id: not available

Importance The article discusses how agricultural business can be made more lucrative for investors since there are not appropriate mechanisms to support investment decision-making. Financial measures are not enough to stimulate investing activities of agricultural producers, while the organizational and economic mechanism for creating the favorable investment climate got outdated. Key investment maneuvers are intended to find appropriate ways for outlining a strategy.
Objectives The research systematizes available research tools to evaluate the efficiency of investment, substantiate and devise strategic models for supporting investment decisions in agricultural business.
Methods The research is based on a financial management technique to evaluate the Economic Value Added (EVA) in agricultural business. We supplemented the technique with respective econometric models for measuring the efficiency of investment.
Results The research presents our model showing how the yield spread functionally depends on capital invested in agricultural business. We refer to the Penza oblast to perform all model and analytical computations, which reveal the existing motivation for capital investment and potential for raising the efficiency of agricultural investment.
Conclusions and Relevance There should be tools to substantiate the efficiency of possible investment and visualize the return on investment in the agricultural business so that the agricultural policy could be properly adjusted.

Keywords: agricultural business, investment attractiveness, Economic Value Added, WACC, yield spread


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