Feasibility of Business Expansion in the Seed Industry
Sarah Lukach, Streator, IL, defended her thesis, “Feasibility of Business Expansion in the Seed Industry” on March 26, 2017. She works as a Food and Agribusiness Principal Credit Officer for Compeer Financial. Lukach graduated from Kansas State University in May 2017 with a Master of Agribusiness (MAB) degree.
In the changing environment of the United States seed industry today, the logistics and method at which seed is sold to customers continues to evolve. Many seed dealers are pursuing business expansion to meet these shifts and fit customer demand. Using a seed dealership in Illinois investigating future expansion as her example, Lukach evaluated if the dealership should pursue this expansion into another market territory from a net present value and rate of return perspective.
“Researching and evaluating a proposed capital project or investment is an important part of any investment decision and at times is overlooked by the investor. My research in business expansion in the agriculture industry allowed me to evaluate the net present value of capital purchases and evaluate if the rate of return would meet hurdle rates. The analysis models created will be a valuable tool in future investment analysis for agricultural businesses” Lukach said.
By projecting cash-flow for the Illinois dealership for ten years, Lukach concluded that the net present value and internal rate of return for the business was profitable under most sensitivity scenarios. She also made recommendations for additional research that could be performed to maximize and diversify the businesses product offerings and net outcome.
Dr. Allen Featherstone, Agricultural Economics Department Head, Professor, MAB Program Director and Lukach’s thesis advisor, said, “Investment decisions are the most important decisions that managers make. They involve large amounts of financial capital and rely on uncertain future cash flow projections. Sarah developed an excellent tool to analyze those investment decisions for the seed business.”
The full thesis publication can be found online on Kansas State University’s Research Exchange at http://hdl.handle.net/2097/35297.