Premium
INVESTMENT IN PRACTICE: WITH SPECIAL REFERENCE TO GRANT‐AIDED PRODUCTION OF CROPS UNDER GLASS
Author(s) -
Folley R. R. W.
Publication year - 1972
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.1972.tb01425.x
Subject(s) - investment (military) , revenue , return on investment , production (economics) , economics , rate of return , sample (material) , agricultural economics , fixed asset , internal rate of return , return of capital , finance , business , investment performance , microeconomics , chemistry , chromatography , politics , political science , law
A pilot study of investment was made on twenty glasshouse‐crop holdings in Kent on which action had been taken under the Horticulture Improvement Scheme. Attention was given to behavioural aspects as well as to financial results, in the expectation that large discrete investments would provide knowledge of investment practice. Most growers in the sample were found not to make a prior evaluation of new investment or to be concerned with its economic efficiency. They paid more attention to technical matters and their own relative eficiency (their comparative standing within the industry). All growers in a financial sub‐sample of nine increased their annual revenue by investment, but the proportionate aggregate increase was very little greater than that in the aggregate value of fixed assets created. In the latest year of the post‐investment period, the average return per invested‐half this investment being two to three years old‐was shown by accounts to be less than 10 per cent. The economic test of rate of return on added capital is shown to be impracticable. It is postulated that major investments may not provide forecast cash flows as quickly or as fully as frequently anticipated. Past forecasts must often have been made without empirical knowledge of post‐investment situations.