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Abstract: The significance of the agricultural sector in the economy of Republika Srpska, as well as the importance of dairy cattle farming within agriculture, determined the thematic field of the research, which had several key research objectives. The first objective of the dissertation was to determine the economic efficiency of the investment in milk production and sales on family farms with 8-15 dairy cows in Republika Srpska. The second objective was to assess the risk, or volatility, of such investment projects. The third objective was to calculate the additional value of diversification in transitioning from selling milk to milk processing into cheese on the same farm and determine the additional project's strategic value. The final objective was to compare the case studies of the analyzed farms based on selected indicators. Primary data were collected by interviewing five farmers who produce milk and process it into cheese while secondary data were obtained from various sources. Key data processing methods included Cost-Benefit Analysis, Monte Carlo simulations, and Black-Scholes and Binomial methods for evaluating real options. Based on the results of the analysis of milk production projects on small farms in Republika Srpska, it was concluded that these projects are economically unsustainable due to their negative and insufficiently satisfactory indicators. Through Monte Carlo simulations, it was determined that changes in input and output prices have an impact on such projects. Diversification of milk production into cheese processing on small farms is economically efficient, as the option values of the additional project are satisfactory and the NPVS, representing the total value of the additional project, ranges from €28,000 to €143,000 for all five analyzed farms. Based on the farm analysis, the conclusion is that the farm with the highest number of dairy cows implements an extensive feeding method, and sells its products at a prominent tourist location in rural areas has the best indicators and represents the best business model for small milk farms in the territory of Republika Srpska.
Keywords: Agriculture, Milk farming, Cheese production, Cost-Benefit Analysis, Real Options Approach, Monte Carlo Simulation
Published in DKUM: 13.03.2025; Views: 0; Downloads: 34
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