Cost analysis of a blueberry producing farm in the Cundiboyacense highlands, Colombia: A case study

Abstract

The blueberry industry is growing significantly in Colombia. For investors, cost analysis plays a key role in project planning for any agribusiness. This paper is an exploratory study, with a descriptive scope to identify components of establishment and production costs of growing blueberries in Colombia. Data were collected and analyzed from a project aimed at establishing a 1 ha blueberry crop in Zipaquirá and 18 blueberry small farms in the Cundiboyacense highlands. Components were applied to estimate the capital investment and to identify the establishment, production, and maintenance costs of this project. Decision investment analysis, including discount rates for the capital asset pricing model (CAPM), were used to compute the net present value (NPV), internal rate of return (IRR), and the return on investment (ROI). Production costs are still expensive due to the Colombian peso (COP) exchange rate compared to the US dollar (USD). Results show advantages for promoting the establishment of blueberry crops because of suitable climatic conditions for continuous production throughout the year in Colombia. Labor costs and utilities are cheaper compared to other countries and represent a competitive advantage in the investment. Intermediation suppliers affect establishment costs for commercial reasons. Blueberry production cost analysis in Colombia may facilitate agribusinesses to promote projects in Colombian agriculture.

Keywords

• cost of production
• net present value
• internal rate of return
• capital asset pricing model
• weighted average cost of capital