Risk analysis of investments in-farm milk cooling tanks

A risk analysis for the installation of milk cooling tanks (250, 500 and 1,000 L) on Brazilian rural properties was conducted in this study. The results showed that all investments had a return higher than the annual 12% minimum rate of attractiveness. There was a direct relationship between tank size and investment profitability and an inverse relation between size and risk. The probability of achieving returns lower than the opportunity cost was highest for the smallest tank (42%). In order to make the investment in small cooling tanks more attractive, the dairy industry incentives offered t...