Evaluation Models for Decision Support in the Context of Organic Farming System

Abstract

This paper presents the application of the combination of simulation model and multi-criteria decision models for evaluating investment in agricultural processing. The simulated alternatives are evaluated with multi-attribute decision tools expert system. The simulation system consists of deterministic production simulation models that enable different types of costs calculations for organic production and on farm food processing in the framework of supplementary activities. Simulation models were further evaluate by a qualitative multi-attribute decision modelling methodology using the software tool DEX-I and quantitative analytical hierarchical process (AHP). The simulation model was also evaluated by the standard financial analysis (i.e., cost benefit analysis). These results show that there was the difference before and after investment into specific processing equipment of three organic products with respect to positive financial values. The financial analysis reveals that after 10 years the farm had constant annual cash flow with an investment return at 9.43%. This showed that investments into organic farm was feasible financially. The integrated simulation model as the discount cash flow and multi-criteria decision analysis are the suitable methodological tool fordecision support system on organic farms. The system takes into consideration different independent criteria and enables ranking of farm business alternatives. The model is useful in minimizing risk and inappropriate decision in investment.