Analysis of Investment and Insurance in Orange Production: A Case Study for Turkey

Uçar, Kubilay and Marković, Todor and Nastić, Lana and Kokot, Željko and Engindeniz, Sait and Meseldžija, Maja (2022) Analysis of Investment and Insurance in Orange Production: A Case Study for Turkey. Erwerbs-Obstbau. ISSN 1439-0302

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Abstract

In agricultural production, there are risks and uncertainties arising from production, market, financing, technology, policy and climate conditions. For this reason, it is of special importance to consider risk and uncertainty in future management decisions in agriculture. Orange is a perennial crop and is a continuous source of income generation to the farmers. Orange growing can have three basic destinations: processing industry, domestic market and external market. Turkey is one of the most important producers of oranges on an international level and consistently increases its production. Antalya is a province with significant orange production whose share in total Turkish orange production is steadily growing. On the other hand, there is not enough research related to economic feasibility of investments in the establishment of orange plantations as well as insurance of orange production in Turkey. Therefore, the purpose of this study is to determine the level of profitability of investments in orange plantations and to examine possibilities to introduce modern insurance concepts in this type of activity. The data of the Antalya province for 2018 were obtained from the Turkish Ministry of Agriculture and Forestry (TMAF), Antalya Provincial Directorate. In order to achieve that goal, net present value, internal rate of return and benefit/cost ratio are determined. It was found that investment in the establishment of orange plantation is economically feasible having positive net present value, internal rate of return of 15.04% and a benefit/cost ratio of 1.14. In addition, we demonstrate how the use of modern insurance approaches (such as Adjusted Gross Revenue type of insurance) could be beneficial to producers involved in orange production.

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