Abstract
This research aims to identify the financial feasibility of some agricultural activities benefiting from the initiative's lending funds, as well as to show the impact of the agricultural initiative on those projects in terms of raising the financial feasibility of their establishment, in the light of the results of the evaluation criteria addressed in the research. Between the years 2009-2011, the financial accounts of the projects were monitored until 2018 to obtain cash flows for the studied projects. Some projects, despite their high investment costs, have been shown to be able to recover the funds invested in a relatively short period of time, and feed plants and similar projects have the potential to recover their costs in a relatively short period. The index of profitability index also showed that most of the productive activities generate a return that exceeds the dinar invested in close proportions, and loans have a significant role in raising the efficiency and profitability of some projects that the state wishes to revitalize despite the non-profit projects in the natural conditions. The NPV values calculated using a discount factor of 10% in the studied projects were positive, indicating the feasibility of investing in these projects, with the exception of the dairy cattle breeding project, which has a net present value of about -8,730,905 dinars. Results came from the discounted profitability index standard. The project also achieved the largest value of the profitability index, as the value of the index reached about 2.408. The research recommended that the need to use lending funds for the agricultural initiative as a tool to raise the efficiency and feasibility of agricultural projects that would contribute to the process of agricultural development in Iraq.
Highlights
The agricultural system is an integrated set of activities performed by farmers in the field under cultivation conditions to maximize production and net income on a sustainable basis through types of agricultural systems and evaluate these possibilities to increase farm income through resource allocation (11)
To determine the level of technical and economic efficiency enjoyed by these projects, especially after the flows of the studied projects were obtained, the results of indicators and criteria were extracted financial evaluation using a discount factor of 10%, as studies show Previously, the discount rate for agricultural projects in most developing countries ranges between 8% and
By comparing the accumulated and discounted net cash flows with the 10% discount factor achieved by the projects studied during their useful lives with their investment costs, as shows in Table 1, there is a variation in the value of the recovery period criterion for agricultural projects in the recovery of the funds invested according to the method used in The calculation of the standard, as the calculation of the standard by way of net annual flow, gives an inaccurate indication in the ability of various projects to recover the invested capital and the loans granted to these projects
Summary
The agricultural system is an integrated set of activities performed by farmers in the field under cultivation conditions to maximize production and net income on a sustainable basis through types of agricultural systems and evaluate these possibilities to increase farm income through resource allocation (11). Whereas the NPV standard includes an assessment of the present value of cash flows represented by the expected profit dividend using a discount rate that takes into account the investment risk, the value obtained is compared to the initial cost (23). There are instances where the application of these criteria leads to conflicting results The reasons for this discrepancy are the different assumptions of the NPV and IRR regarding the rate at which the cash flows are reinvested, as the two methods assume that such funds invest at a different rate of return (20). As:NPV: Net Present Value.,Bn: inflows.investment.,Cn: outflows.,N: Age of Economic Project..R*: Internal Rate of Return. This rate will represent the profitability of the capital invested in the project throughout its useful life, that is, during the period in which it resides
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