The viability of introducing milk futures contracts in Brazil was assessed through a combination of multiple criteria decision analysis and the application of traditional principles from the theory of success and failure of futures trading. Commodity-specific attributes and market-related aspects were analyzed for chilled raw milk, ultra high temperature (UHT) milk, and milk powder. The analytic hierarchy process methodology was used to rank the commodities in terms of their feasibility prospects. Among them, it was ascertained that chilled raw milk is the most suitable for futures trading. Major reasons for this result are the product's high price volatility, the competitive nature of its markets, the absence of competing risk-management tools, and the impossibility of cross-hedging. Complementing the analysis, interviews were conducted with the 100 largest milk producers in the country to assess their perceptions regarding futures trading. Approximately 92% of these farmers expressed an interest in adopting milk futures contracts as price risk management tools. In conclusion, the analysis indicated that the introduction of a milk futures contract in Brazil has a high probability of success. [EconLit citations: Q130, C610, 0220]. © 2008 Wiley Periodicals, Inc.

A series of decision support systems (DSS's), developed as part of a government program to promote the implementation of small scale agroindustrial projects in rural areas, is described. The DSS's constitute an alternative to the use of printed agroindustrial profiles to disseminate information on technical and economic aspects of such projects. Users have access to information on the potential projects and can evaluate their feasibility considering their own data and relevant assumptions. Information is presented in hypertext and graphical formats, and in conventional data tables. The hypertext files provide descriptions concerning the technological processes, related legislation and potential markets, while graphical images present plant floor plans and 3‐D views of facilities and equipment lay‐out. Data is available on several items, including technical coefficients, equipment costs, raw material and other input costs, interest rates, other loan conditions, and product mixes and prices. They can be easily changed by the user, so as to better reflect specific conditions. Economic‐engineering models allow the computation of standard financial evaluation indicators. Sensitivity analysis is also performed. Results can be either displayed on screen, saved or printed. 15 systems have been developed, covering a wide array of agroindustrial projects. Usability tests were performed with a sample of potential users. Results were extremely favorable, confirming the initial hypothesis of the potential of the proposed approach as an effective means to promote agroindustrial investments.

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 to farmers for supplying cooled milk could be increased. However, this approach might make investments in bulk milk collection by dairy companies infeasible. Thus, a recommendable strategy for a successful modernization of the Brazilian dairy sector’s inbound logistics would be to promote an increase in the volume of the milk produced per farm

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