1. Introduction NEW MEDIT N. 4 /2003 Risk Analysis for Off-season Greenhouse Tomato Production IRENE TZOURAMANI*, KONSTANDINOS MATTAS** Jel classification: Q120, Q 160 Abstract An economic analysis of new greenhouse investment technologies in Greece is conducted by this study. The data used in the analysis were obtained from greenhouse enterprises, farm surveys and were supplemented with secondary data. Risk analysis techniques are used to take account of the uncertainties re- garding the yield and the price variability of protected tomato cultivation. The financial analysis reveals that the adoption of new technology for off-season tomato production is feasible provided that there are subsidies for the initial investment cost. In Greece, off-season vegetable production indicates different degrees of risk; south areas run less risk in contrast to areas in the north. There- fore the government policy to subsidize greenhouse investments had positive results. In order to ensure further development in the sector, the state has to keep granting these incentives for the implementation of new technology in greenhouse enterprises. Resume Cette etude presente une analyse economique sur les technologies introduites dans les serres en Grixe. Les donnees utilisees ont ete obtenues cl travers des enquetes concernant les serres et les exploilations agricoles. L 'analyse du risque permet de prendre en compte les in certitudes liees au rendement et cl la variabilite des prix des tomates cultivees sous serre. L 'analyse jinanciere revele que I 'adoption de nouvelles technologies pour la production de tomates hors de saison est possible pourvu que le cout d 'investissement initial soil sub- ventionne. En Grece, la production de cultures marafcheres hors de saison pose un different degre de risque; les risques etant moins importants dans le sud que dans les regions du nord. La politique gouvernementale de subven- tions des investissements pour les serres a produit des resultats positifs. Le developpement de ce secteur peut etre assure par ['etat cl travers des primes qui encouragent I 'application des nouvelles technologies sous serre. The changes that are taking place in agricul- tural policies following the conclusion of inter- national trade agree- ments can be expected to lead to competitive mar- ket forces with less pre- dictable consequences. However, there is no doubt that decisions on purchasing and adopting technologies in green- houses always bear risks and uncertainty and must be considered with much care and aware- ness. The economic per- formance is very impor- tant, notably in a world where funds available for agricultural investment are also extremely limit- ed. Considering the nu- merous investment op- Protected cultivations are among the most inten- sive farms and contribute significantly both to the a- gricultural and national income. Greek farmers expect to garner the high- est income returns culti- vating horticultural crops in greenhouses (Mattas et al., 1990; Mattas et al., 1997; Grafiadellis et al., 2000). Today, the sector of greenhouse enterprises seems to have bright op- portunities because of the enlargement of the Euro- pean market and the de- velopment of internation- al trade. Also, the in- creased consumers de- mand for fresh vegetables creates the appropriate in- centives to develop this sector and attracts the interest of farmers. Protected culti- vation was introduced into the Greek agriculture in the early sixties with great expectations. In the following decades while the total area of protected cultivation in- creased significantly, several financial problems halted the expansion of the greenhouse sector (Tzouramani et al., 1995). Throughout the last decade, an attempt to reverse this situation was undertaken by the EU to implement a new supporting government program (Reg.2328/91). It aims at introducing new technologies in greenhouse en- terprises to improve both the greenhouse economic effec- tiveness and the quality of off-season agricultural prod- ucts. The implementation of the above-mentioned sup- porting-framework offers the Greek greenhouse farmers a set of investment choices but some risks as well. tions available and the d- ifferences in cost, the modern greenhouse operator has to study the available information and perform the appro- p.riate economic analysis before financing any of his deci- SIons. * Agricultural Economics and Social Research Institute, Athens, Greece ** Dept. of Agricultural Economics, School of Agriculture, Aristotle U- niversity of Thessalonica, Thessaloniki, Greece 28 In this work an attempt was made to assess the effec- tiveness of the adoption of new technology in Greek greenhouses under risk and uncertainty. The most com- mon dilemma that most farmers face is whether to invest in a modern (expensive) greenhouse or in a traditional (cheap) one. Decisions on greenhouse investment are in- fluenced by several uncertain factors. Thus, enforcing changing options and through financial and risk analysis the investment in new greenhouse technology is assessed for two main greenhouse-producing areas of Greece.