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Investment in cocoa production in Nigeria: a cost and return analysis of three cocoa production management systems in the Cross River State cocoa belt.

INTRODUCTION

The Nigerian cocoa economy has a rich history which is well documented in literature. The contributions of cocoa to the nation's economic development are vast and have been reported by many authors [1, 2, 3]. In terms of foreign exchange earnings, no single agricultural export commodity has earned more than cocoa. With respect to employment, the cocoa sub-sector still offers quite a sizeable number of people employment, both directly and indirectly [4, 5]. In addition, it is an important source of raw materials, as well as source of revenue to governments of cocoa producing states.

Because of its importance, the recent Federal Government's concern of diversifying the export base of the nation has placed cocoa in the centre-stage as the most important export tree crop. Evidence has however shown that the growth rate of cocoa production has been declining, which has given rise to a fall in the fortunes of the sub-sector among other reasons [6]. Folayan, Daramola and Oguntade (2006), note that cocoa production in Nigeria witnessed a downward trend after 1971 season, when its export declined to 216,000 metric tons in 1976, and 150,000 metric tons in 1986, therefore reducing the country's market share to about 6% and to fifth largest producer to date. In fact, the recent cocoa stakeholders Stakeholders

All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government.
 forum held in Calabar, Nigeria by the Presidential Initiative on cocoa was to deliberate on the state of the cocoa sub-sector and reach consensus on how investments in the cocoa sub-sector can be strengthened and increased among other issues that bother on the sub-sector, in view of the Government's renewed interest to boost cocoa production, domestic utilisation and export.

Prior to the Structural Adjustment Programme (SAP), cocoa marketing was carried out by the erstwhile erst·while  
adv.
In the past; at a former time; formerly.

adj.
Former: our erstwhile companions.


erstwhile
Adjective

former

Adverb
 highly regulated Commodity Marketing Boards, which were known to pay farmers far less than the export price of cocoa. This situation affected cocoa production and export in the past as it served as a disincentive dis·in·cen·tive  
n.
Something that prevents or discourages action; a deterrent.


disincentive
Noun

something that discourages someone from behaving or acting in a particular way

Noun 1.
 to investment in cocoa production. Even after the abolition The destruction, annihilation, abrogation, or extinguishment of anything, but especially things of a permanent nature—such as institutions, usages, or customs, as in the abolition of Slavery.

In U.S.
 of the Marketing Boards structure, cocoa production has still not fared better as is evident in the declining production trend reported in previous studies. One of the possible reasons for this may be the nature of investment in cocoa production, as some worry has been expressed as to whether the returns from cocoa are not being threatened by such factors as rising costs of production, price instability, and differences in management systems and perhaps declining productivity due to ageing trees. Generally, if investment in cocoa production were attractive, farmers/investors would allocate To reserve a resource such as memory or disk. See memory allocation.  scarce resources to cocoa farming. However, the problem is that most individual investors and even governments have only a vague idea of the potential of the industry and as such are sometimes slow in committing investment funds Noun 1. investment funds - money that is invested with an expectation of profit
investment

assets - anything of material value or usefulness that is owned by a person or company
 into the sub-sector. Beyond this, information on how the different management systems affect costs and returns has scarcely been documented. Thus, this study empirically investigates costs and returns from different cocoa production/management systems in Cross River State cocoa belt with a view to provide some informed basis for investments in the sub-sector, and particularly a guide as to which management has the highest return, and hence would raise earnings from investment in cocoa for the producers as well as exporters.

From the empirical standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the , the key questions which need to be addressed are: What are the key socioeconomic characteristics of cocoa farmers in Cross River State? What are the various management systems in operation in the study area? What are the net present values, and benefit-cost ratios of the various management systems? Which of the management systems is more economically viable?

The sequence of this paper is as follows: the section which follows presents the methodology comprising the analytical framework, models specification and the data. Section 3 presents and discusses the results of the empirical exercise, while the last section summarises the study and concludes with policy implications.

METHODS

Analytical Framework

The analytical framework comprises both univariate univariate adjective Determined, produced, or caused by only one variable  descriptive statistical techniques and an investment decision model. Cocoa farmers' characteristics (such as age, educational attainment Educational attainment is a term commonly used by statisticans to refer to the highest degree of education an individual has completed.[1]

The US Census Bureau Glossary defines educational attainment as "the highest level of education completed in terms of the
, farm size, sources of funds, etc) were examined using descriptive statistics descriptive statistics

see statistics.
, while an investment decision model employing the use of the Net Present Value (NPV NPV

See: Net present value
) and Benefit-Cost Ratio benefit-cost ratio

the ratio of the net present values of measurable benefits to costs. Used in benefit-cost analysis.
 (BCR BCR B Cell Receptor
BCR Business Communications Review (magazine)
BCR Banca Comerciala Romana (Romanian bank)
BCR Breakpoint Cluster Region
BCR Benefit/Cost Ratio
BCR Bay City Rollers
) was deployed to determine the most economically viable of the three management systems of cocoa production identified in the State, namely, owner-managed, lease-managed, and share-crop managed systems.

The Investment Decision Model

Net Present Value (NPV)

The net present value can be used as an important tool in making a decision by an investor to invest in cocoa production. Benefits and costs are linked to the age of the trees. At the early stages, there are heavy costs which are then followed by annual benefits that continue over the full life of the trees once they have reached maturity. Thus, following Gotsch and Burger (2001), if we define [INC inc - /ink/ increment, i.e. increase by one. Especially used by assembly programmers, as many assembly languages have an "inc" mnemonic.

Antonym: dec.
.sub.it] as the net income (or benefit or return) from i-year-old trees as expected in year t, then the net present value of the expected net income from one hectare hectare (hĕk`târ, –tär), abbr. ha, unit of area in the metric system, equal to 10,000 sq m, or about 2.47 acres.  of cocoa in year t for one cycle of I years duration amounts to:

[NPV.sub.I,t] = [I.summation summation n. the final argument of an attorney at the close of a trial in which he/she attempts to convince the judge and/or jury of the virtues of the client's case. (See: closing argument)  over (i=0)] [INC.sub.i,t]/[(1 + r).sup.i] (1)

Meanwhile, the expected net income per hectare in year t is given as:

[INC.sub.t] = [I.summation over (t=1)] [REV.sub.i,t] - [TC.sub.it]) (2)

Where

[REV.sub.i,t] = the expected revenue per hectare from i-year-old trees in year t;

[TC.sub.i,t] = the total cost per hectare from i-year-old trees in year t;

r = the discount rate or the opportunity cost of capital; and

t = the time period.

The formal selection criterion for the net present value is to accept investments with net present value greater than zero. However, if the net present value works out to be negative, then we have a case in which, at the chosen discount rate, the present worth of the income or benefit stream is less than the present value of the cost stream. Hence the revenues are insufficient to allow for the recovery of the investment. An investment is technically and economically feasible if the net present value is positive.

Benefit-Cost Ratio (BCR)

The Investment Decision Model also utilizes the Benefit-Cost Ratio, which is another indicator of the worthiness of an investment decision. It is given as the ratio of the sum of discounted benefits to the sum of discounted costs. Thus, for a cycle of I years duration, the benefit-cost ratio can be represented by the formula:

[BCR.sub.I,t] = [I.summation over (i=0)] [DREV DREV Defence Research Establishment Valcartier (Canada) .sub.i,t]/[DTC DTC

See: Depository Transfer Check


DTC

See: Depository Trust Company


DTC

See Depository Trust Company (DTC).
.sub.i,t] (3)

Where:

[DREV.sub.i,t] = discounted revenue (benefits) per hectare from i-year-old trees in year t;

[DTC.sub.i,t] = discounted total costs per hectare from i-year-old trees in year t;

The decision rule is that for any project to be economically viable, the ratio must be greater than unity [9].

Sampling Procedure, Data and Implementation Techniques

The study area is Cross River State, Nigeria. A two stage sampling procedure was adopted in this study. The first stage involved the purposive pur·po·sive  
adj.
1. Having or serving a purpose.

2. Purposeful: purposive behavior.



pur
 selection of the two Local Government Areas known to be the largest cocoa producing areas in the State and which form the State's cocoa belt, that is Ikom and Etung Local Government Areas. The second stage involved the random selection of 50 farmers apiece a·piece  
adv.
To or for each one; each: There is enough bread for everyone to have two slices apiece.



[Middle English a pece : a, a; see a
 from the three management systems of cocoa production (a total of 150 respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy. ) identified in the study area based on a sampling frame constructed to identify key cocoa farmers in the area. A structured survey instrument was used to obtain the information utilised in the study. The data from the questionnaire was augmented with secondary information from the respondents who kept records, and with data from the Cross River State Ministry of Commerce and Industry, Ministry of Agriculture, Planning, Research and Statistics, the Central Bank of Nigeria The Central Bank of Nigeria was established by the CBN Act of 1958 and commenced operations on July 1, 1959.[1]

The major regulatory objectives of the bank as stated in the CBN act of 1958 is to: issue legal tender, maintain the external reserves of the country,
 (CBN CBN - call-by-name ), as well as United Nations Environmental Programme (UNEP UNEP United Nations Environment Program(me)
UNEP Unbundled Network Element Platform
UNEP University of Northeastern Philippines
).

For the cross-sectional survey of the respondents which took place in 2002, cocoa output was measured in bags of 64kg or 0.064 tons. Average cocoa price at the period was N8,864 per bag; that is N138,500 per ton; labour cost per man-day was put at N200. Age was measured in years and represented how old the farmer was at the time of his study. The per hectare establishment costs, maintenance costs before maturity were obtained from the Ministry of Agriculture. Straight line depreciation method was used to get the actual value of the fixed cost of the assets during the 2002 production season. A discount rate of 10% was used to represent the interest rate or the opportunity cost of capital. The justification for the choice of 10% is because of the preferred rates of interest for agricultural investments, which are always lower than the market rates of interest [10].

Since one of the major changes in tree stock occur due to time, that is as the trees grow older, they first become more and later less productive, a time horizon of thirty years which approximates the expected life of a cocoa tree was used in the investment decision analysis checking for differences across the management systems. Thus, the yield profile of cocoa trees in Nigeria with respect to age of tree and year of planting was obtained from UNEP in Nigeria, and used to project the yield of trees thirty years back, based on the observed 2002 yield. Similarly, projections were made for cocoa prices based on 2002 cocoa price in Naira per ton following the growth rate of cocoa producer prices reported for Nigeria by the FAO FAO,
n See Food and Agriculture Organization.
. This also applied to the per hectare costs of maintenance from maturity obtained from UNEP.

These values were then used in estimating NPV and BCR for the various management systems with the assumption that differences would only be due to how the various systems were run.

RESULTS

Socioeconomic characteristics of cocoa farmers Age composition and educational level

Table 1 shows a summary of the socioeconomic characteristics of the respondents. On average, the owners are the oldest group of farmers and the lease-managers the youngest, with share-croppers being intermediate. The sharecroppers have the lowest education on average and the lease-managers the highest.

Farm size

The farm size distribution of the respondents reveals that under the three management systems, majority of the plots ranged between 1 and 5 hectares. Moreover, 28% of plots under owner-managers fall within the 6-10 hectare bracket In programming, brackets (the [ and ] characters) are used to enclose numbers and subscripts. For example, in the C statement int menustart [4] = ; the [4] indicates the number of elements in the array, and the contents are enclosed in curly braces. , while it was 10% for lease-managed systems and 4% for sharecrop share·crop  
v. share·cropped, share·crop·ping, share·crops

v.intr.
To work as a sharecropper.

v.tr.
To work (land) or grow (crops) as a sharecropper.
 systems. These results hint that cocoa farm owners reduce risks by leasing out their farms in rather small units than giving out very big units to a single lease manager or sharecropper.

Sources of funds

Results indicate that majority of the respondents in the three management systems funded their production activities from personal savings. Particularly, 6% of the owner-managers and 12% of the lease-managers obtained bank loans while share croppers did not obtain funds from any formal credit source. On the other hand, more farmers under the sharecropping sharecropping, system of farm tenancy once common in some parts of the United States. In the United States the institution arose at the end of the Civil War out of the plantation system. Many planters had ample land but little money for wages.  system obtained funds from relations compared with the other two systems.

Marketing channels

Of the two marketing channels identified, one is from the producer to the licensed buying agent Buying agents (also known as relocation agents or property search agents) is a term used in the UK to describe people acting as agents on behalf of a buyer and not the seller, as do traditional Estate agents (or, in the United States, Real estate brokers) whose job is  (LBA (Logical Block Addressing) A method used to address hard disks by a single sector number rather than by cylinder, head and sector (CHS). LBA was introduced to support ATA/IDE drives as they reached 504MB, and Enhanced BIOSs in the PC translated CHS addressing into LBA ), the merchant and finally exports, while the other is from the producer to the small-scale buyer, the licensed buying agent, the merchant and then export. Table 1 shows that majority of the respondents from the three management systems taken together market their cocoa through the small scale buyers, who sell to the licensed buying agents, onto the merchants and finally to the export market, while the remainder pass through the licensed buying agent to merchant to the export market. This may be due to the fact that most of the farmers do not produce enough individually to sell directly to the licensed buying or merchants.

Descriptive statistics of costs and returns

Some descriptive statistics of costs and returns for the three management systems are presented in table 2. Lease-managed cocoa farms have a larger mean costs and returns per hectare followed by owner-managed farms. Standard deviations show that costs of owner-managed farms and sharecrop-managed farms are more clustered around the mean than lease-managed farms. Similarly, standard deviations also indicated that returns from the three management systems are widely dispersed dis·perse  
v. dis·persed, dis·pers·ing, dis·pers·es

v.tr.
1.
a. To drive off or scatter in different directions: The police dispersed the crowd.

b.
 from their means. The reason for the above structure, among others, may be the fact that the lease manager is primarily profit-motivated, unlike the sharecropper in this region, whose basic motivation is subsistence subsistence,
n the state of being supported or remaining alive with a minimum of essentials.
: the leaseholder lease·hold  
n.
1. The fact or condition of holding property by lease.

2. Property held by lease.



lease
 needs a large outlay if he is to earn enough returns to cover lease and other costs and still make profit, whereas a sharecropper is a resource-poor worker, constraint Constraint

A restriction on the natural degrees of freedom of a system. If n and m are the numbers of the natural and actual degrees of freedom, the difference n - m is the number of constraints.
 by a lack of cash to own land/other inputs and cannot enjoy size economies beyond the limitations set by the landlord. A look at the sources of funds for the three systems (table 1) indicates the credit worthiness of lease managers: 12% of them have access to bank loans while no sharecropper had such access. The owner managers are just in between the two, combining both profit and subsistence motives at varying degrees.

Investment decision analysis Owner-managed farms

The benefit cost analysis for cocoa per hectare at 10% discount rate for owner-managed farms for a thirty-year period is shown in table 2. Results indicate positive NPV of N57,166.37 per hectare and estimated benefit-cost ratio of 4.27, which is greater than one. These results imply that owner-managed cocoa production systems are viable since they can pay for the factors of production and still make some profit.

Lease-managed farms

The results in table 4 above show that the calculated NPV is positive with a value of N6,9408.6 per hectare. This figure is higher than the calculated NPV for owner- managed farms. However, the benefit-cost ratio for leased-managed farms (4.04) is lower than 4.27 estimated for owner-managed farms. The results imply that lease-managed farms are more viable in terms of NPV than owner-managed farms.

Sharecrop-managed farms

The results indicate that the NPV for sharecrop managed farm is positive and estimated to be N28,956.83, while the benefit-cost ratio is 2.71. Although these results imply viability of the sharecrop managed systems in absolute terms (Alg.) such as are known, or which do not contain the unknown quantity.

See also: Absolute
, it is quite evident that it is the least viable relative to owner-managed and lease-managed systems. Obviously farmers only choose this option if they do not have the capital to own or lease land.

DISCUSSION

The study examined costs and returns in cocoa production in Cross River State in the context of three identified management systems of cocoa production in the area, namely owner-managed, lease-managed and sharecrop managed systems, using the hundred and fifty randomly selected cocoa farmers. Data were collected using structured questionnaires through the participatory approach using ADP (1) (Automatic Data Processing) Synonymous with data processing (DP), electronic data processing (EDP) and information processing.

(2) (Automatic Data Processing, Inc., Roseland, NJ, www.adp.
 extension agents as well as from secondary sources.

From the study, it can be inferred that majority of the cocoa farmers were in their prime ages. This may be due to the fact that cocoa production activities require physical energy and are labour intensive and thus require the young and energetic to be involved. Another important reason may be that since cocoa production is known to give relatively higher incomes than the other farming endeavours, it is the most likely farming activity that will attract young people. This was confirmed in a study by Amalu and Abang (1997).

Also, farmers' level of education in the study shows that education affects the nature in which farms are managed as well as their overall productivity, hence income. This is in line with economic theory. Accordingly, the viability of the various management systems may have been influenced by the level of education of the farmers. Furthermore, the analysis of farmers' sources of funds points to the fact that it is easier for owner-managers and lease-managers to obtain credit from formal sources than sharecroppers because they can provide what it takes to obtain such loans. Generally, the results show that access to bank loans by farmers is a big problem due to several reasons of which collateral and the risky nature of agricultural production are just but two.

Importantly, the investment analysis results show that cocoa production is a profitable business irrespective of irrespective of
prep.
Without consideration of; regardless of.

irrespective of
preposition despite 
 management system, since all of them had positive NPV at 10% discount rate. The NPV for lease-managed farms is highest. The benefit-cost ratio at 10% discount rate was greater than one for the three management systems, which indicates that the returns from cocoa production are high. Owner-managed farms had the highest BCR followed by lease-managed farms in that order. Lease-managed farms were more viable compared with other management systems in terms of their high NPV.

CONCLUSION

The study recommends that given the high benefits relative to costs involved in cocoa production irrespective of management system, investments in cocoa production can be increased tremendously by providing expanded access Expanded access refers to the inclusion of patients in a clinical trial for a new therapeutic treatment or chemical entity, where those patients would not satisfy the enrolment criteria for the scientific study in progress.  to cheap and flexible credit and land, which have presented as limiting factors in cocoa production in the State based on the descriptive statistical analysis in the study.

REFERENCES

[1.] Olayide SO Some Estimates of Supply and Demand Elasticities for Selected Commodities in Nigeria's Foreign Trade. Journal of Business and Social Studies. 1969:1(9): 176-193.

[2.] Olayemi JK Some Economic Characteristics of Peasant peasant

Any member of a class that tills the soil as small landowners or agricultural labourers. The peasant economy generally has a simple technology and a division of labour by age and sex. The basic unit of production is the family or household.
 Agriculture in the Cocoa Belt of Western Nigeria. Bulletin of Rural Economics and Sociology. 1973; 1: 24-30.

[3.] Folayan JA, Daramola GA and AE Oguntade Structure and Performance Evaluation Performance evaluation

The assessment of a manager's results, which involves, first, determining whether the money manager added value by outperforming the established benchmark (performance measurement) and, second, determining how the money manager achieved the calculated return
 of Cocoa Marketing Institutions in South-Western Nigeria: An Economic Analysis. Journal of Food, Agriculture and Environment. 2006; 4 (2): 123-128.

[4.] Abang SO Stabilization Stabilization

The action undertakes a country when it buys and sells its own currency to protect its exchange value.
Actions registered competitive traders undertake by on the NYSE to meet the exchange requirement that 75% of their traded be stabilizing, meaning that sell orders
 policy: An Economic Analysis and Evaluation of its Implication for Nigerian Cocoa Farmers. PhD Thesis, Oklahoma State University Oklahoma State University, at Stillwater; land-grant and state supported; coeducational; chartered 1890, opened 1891 as Oklahoma Agricultural and Mechanical College, renamed 1957. , Stillwater. 1984: 212.

[5.] Folayan JA, Daramola GA and AE Oguntade Structure and Performance Evaluation of Cocoa Marketing Institutions in South-Western Nigeria: An Economic Analysis. Journal of Food, Agriculture and Environment. 2006; 4 (2): 123-128.

[6.] Nkang NM, Abang SO, Akpan OE and KJ Offem Cointegration and Error Correction Modelling of Agricultural Export Trade in Nigeria: The case of Cocoa. Journal of Agriculture and Social Sciences; 2006; 2(4): 249-255.

[7.] Folayan JA, Daramola GA and AE Oguntade Structure and Performance Evaluation of Cocoa Marketing Institutions in South-Western Nigeria: An Economic Analysis. Journal of Food, Agriculture and Environment. 2006; 4 (2): 123-128.

[8.] Gotsch N and K Burger Dynamic Supply Response and Welfare Effects of Technological Change on Perennial perennial, any plant that under natural conditions lives for several to many growing seasons, as contrasted to an annual or a biennial. Botanically, the term perennial  Crops: The Case of Cocoa in Malaysia. American Journal of Agricultural Econonomics. 2001; 83(2): 272-285.

[9.] Gittinger JP Economic Analysis of Agricultural Projects. The John Hopkins University Press, London. 1989: 299-362.

[10.] Federal Ministry of Agriculture, Water Resources, and Rural Development Agricultural Policy Agricultural policy describes a set of laws relating to domestic agriculture and imports of foreign agricultural products. Governments usually implement agricultural policies with the goal of achieving a specific outcome in the domestic agricultural product markets.  for Nigeria. Directorate for Social Mobilization mobilization

Organization of a nation's armed forces for active military service in time of war or other national emergency. It includes recruiting and training, building military bases and training camps, and procuring and distributing weapons, ammunition, uniforms,
, MAMSER, Abuja, Nigeria. 1988; 1-65.

[11.] Amalu UC and SO Abang Survey and Constraint Analysis of Yam-based Cropping Practices in Two Rainforest communities of South-East Nigeria. Nig. South-East Journal of Agricultural Economics Agricultural economics originally applied the principles of economics to the production of crops and livestock - a discipline known as agronomics. Agronomics was a branch of economics that specifically dealt with land usage.  and Extension. 1997; 1(1): 19-22.

Nkang N M * (1), EA Ajah (2), SO Abang (3) and EO Edet (4)

* Corresponding author e-mail: nkangm@yahoo.com

(1) Lecturer lecturer A person who is primarily–if not entirely—involved in the teaching activities of an academic center, who is not expected to perform research or Pt management; in general, lectureships are non-tenured positions , Department of Agricultural Economics and Extension, University of Calabar The University of Calabar (Unical) is a university situated in Calabar, Cross River State, southeastern Nigeria. It is one of Nigerian's second generation universities. The motto of the university is "knowledge is power".

The Vice Chancellor is Bassey Asuquo.
, P. M. B. 1115, Calabar - Nigeria.

(2) PhD Candidate, Department of Agricultural Economics and Extension, University of Calabar, P. M. B. 1115, Calabar - Nigeria. E-mail: agomajah95@yahoo.com

(3) Professor, Department of Agricultural Economics and Extension, University of Calabar, P. M. B. 1115, Calabar - Nigeria. E-mail: soabang@yahoo.com

(4) Assistant Lecturer, Department of Agricultural Economics and Extension, University of Calabar, P. M. B. 1115, Calabar - Nigeria. E-mail: eyoorok@yahoo.com
Table 1: Socioeconomic characteristics of cocoa farmers in Cross River
State.

Variables              Owner-Managers           Leased-Managers

                   Frequency    Percentage   Frequency    Percentage
Age
21-30                   7           14           10           20
31-40                  20           40           20           40
41-50                  15           30           10           20
Above 50                8           16           10           20
Total                  50          100           50          100

Educational
Level
No formal              10           20            4            8
education
Primary                13           26           10           20
Secondary              14           28           26           52
Tertiary                6           12            7           14
Others                  7           14            3            6
Total                  50          100           50          100

Farm Size
1-5                    32           64           45           90
6-10                   14           28            5           10
Above 10                4            8            0            0
Total                  50          100           50          100

Sources of
funds
Personal Savings       38           76           37           74
Bank loans              3            6            6           12
Informal Loans          2            4            3            6
Others
Total                  50          100           50          100

Marketing
Channels
P-LBA-M-E              25           50           20           40
P-S-LBA-M-E            25           50           30           60
Total                  50          100           50          100

Variables             Sharecrop-Managers

                   Frequency    Percentage
Age
21-30                  10           20
31-40                  15           30
41-50                  15           30
Above 50               10           20
Total                  50          100

Educational
Level
No formal              11           22
education
Primary                20           40
Secondary              15           30
Tertiary                2            4
Others                  2            4
Total                  50          100

Farm Size
1-5                    43           86
6-10                    2            4
Above 10                5           10
Total                  50          100

Sources of
funds
Personal Savings       39           78
Bank loans              0            0
Informal Loans          6           12
Others
Total                  50          100

Marketing
Channels
P-LBA-M-E              21           42
P-S-LBA-M-E            29           58
Total                  50          100

Source: Field survey, 2002

Table 2: Descriptive statistics of costs and returns per hectare for
the three management systems.

            Costs

Statistic   Owner-       Lease-       Sharecrop-
            managed      managed      managed

Mean        3,902.83     7,118.41     3,816.16
Median      2,080        1,840        1987.50
Standard    4,362.97     12,979.71    4,350.07
Deviation
Minimum     575          575          545.00
Maximum     17,150       51398.13     17,150

            Returns

Statistic   Owner-       Lease-       Sharecrop-
            managed      managed      managed

            21,057.42    26,033.30    12,928.35
Mean        14,192.03    17,544.56    8,713.11
Median      28,954.95    35,798.20    17,776.72
Standard
Deviation   0            0            0
Minimum     139,355      172,296.19   85,556.14
Maximum

Source: Compiled from tables III, IV, and V

Table 3: Benefit-cost analysis for owner-managed farms.

Year   yield (kg)   Price     Revenue    Cost       Discount
                    (N/ton)   (N/Ha)     (N/Ha)     Factor
                                                    (10%)

1      0            1000      0          875        0.909
2      0            1453      0          625        0.826
3      0            2356      0          575        0.751
4      0            3259      0          718.33     0.685
5      273.11       4162      1136.67    861.67     0.621
6      273.11       5065      1383.29    1005       0.564
7      273.11       5968      1629.91    1148.33    0.513
8      546.22       6871      3753.05    1291.67    0.467
9      546.22       7775      4246.83    1435       0.424
10     819.3        8678      7110.09    1578.33    0.386
11     819.3        9581      7849.94    1721.67    0.35
12     819.3        10484     8589.78    1865       0.319
13     910.36       11387     10366.26   2008.33    0.29
14     1001.4       12290     12307.14   2151.67    0.263
15     1001.4       13193     13211.4    2295       0.239
16     1092.2       14096     15398.91   2438.33    0.218
17     1092.2       15000     16386.46   2581.67    0.198
18     1092.2       15000     16386.46   2725       0.18
19     1092.2       15000     16386.46   1600       0.164
20     1092.2       15000     16386.46   1850       0.149
21     1051.97      15000     15779.56   2850       0.135
22     1011.5       15000     15172.65   3450       0.122
23     1011.51      20000     20230.2    4850       0.112
24     933.7        30000     28011.05   4993       0.102
25     933.7        40000     37348.06   5145       0.092
26     855.89       50000     42794.66   10500      0.084
27     855.89       60000     51353.59   11797      0.076
28     855.89       60000     51353.59   12100      0.069
29     778.09       100000    77808.47   12900      0.063
30     700.28       199000    139355     17150      0.057

Year   Discounted   Discounted
       Cost (N)     Revenue
                    (N)

1      795.38       0
2      516.25       0
3      431.83       0
4      492.06       0
5      535.1        705.88
6      566.82       780.18
7      589.09       836.14
8      603.21       1752.67
9      608.44       1800.65
10     609.24       2744.49
11     602.59       2747.48
12     594.94       2740.14
13     582.42       3006.22
14     565.89       3236.78
15     548.505      3157.53
16     531.56       3356.96
17     511.17       3244.52
18     490.5        2949.56
19     262.4        2687.38
20     275.65       2441.58
21     384.75       2130.24
22     420.9        1851.06
23     543.2        2265.78
24     509.29       2857.13
25     473.34       3436.02
26     882          3594.75
27     896.57       3902.87
28     834.9        3543.4
29     812.7        4901.93
30     977.55       7943.23

NPV = N57,166.37
BCR = 4.27
Data analysis

Table 4: Benefit-cost analysis for lease managed farms.

Year   yield (kg)   Price        Revenue      Cost         Discount
                    (N/ton)      (N/Ha)       (N/Ha)       Factor
                                                           (10%)

   1   0            1000         0            955          0.909
   2   0            1453         0            625          0.826
   3   0            2356         0            575          0.751
   4   0            3259         0            685          0.685
   5   337.64       4162         1405.26      795          0.621
   6   337.64       5065         1710.15      905          0.564
   7   337.64       5968         2015.04      1015         0.513
   8   675.29       6871         4639.92      1125         0.467
   9   675.29       7775         5250.38      1235         0.424
  10   1012.89      8678         8789.86      1345         0.386
  11   1012.89      9581         9704.5       1455         0.35
  12   1012.89      10484        10619.14     1565         0.319
  13   1125.44      11387        12815.39     1675         0.29
  14   1237.98      12290        15214.77     1785         0.263
  15   1237.98      13193        16332.67     1895         0.239
  16   1350.48      14096        19036.37     2005         0.218
  17   1350.48      15000        20257.2      2115         0.198
  18   1350.48      15000        20257.2      2225         0.18
  19   1350.48      15000        20257.2      1600         0.164
  20   1350.48      15000        20257.2      2216.67      0.149
  21   1300.54      15000        19508.1      2833.33      0.135
  22   1250.43      15000        18756.45     3450         0.122
  23   1250.43      20000        25008.6      4850         0.112
  24   1154.28      30000        34628.4      4993         0.102
  25   1154.28      40000        46171.2      5145         0.092
  26   1058.1       50000        52905        14395.63     0.084
  27   1058.1       60000        63486        23646.25     0.076
  28   1058.1       60000        63486        32896.88     0.069
  29   961.91       100000       96191        42147.5      0.063
  30   865.81       199000       172296.2     51398.13     0.057

Year   Discounted   Discounted
       Cost (N)     Revenue
                    (N)
   1   868.1        0
   2   516.25       0
   3   431.83       0
   4   469.23       0
   5   493.7        872.67
   6   510.42       964.52
   7   520.7        1033.71
   8   525.4        2166.84
   9   523.64       2226.16
  10   519.17       3392.89
  11   509.25       3396.58
  12   499.24       3387.51
  13   485.75       3716.46
  14   469.46       4001.49
  15   452.91       3903.51
  16   437.09       4149.93
  17   418.77       4010.93
  18   400.5        3646.3
  19   262.4        3322.18
  20   330.28       3018.32
  21   382.5        2633.59
  22   420.9        2288.29
  23   543.2        2800.96
  24   509.29       3532.1
  25   473.34       4247.75
  26   1209.23      4444.02
  27   1797.12      4824.94
  28   2269.89      4380.53
  29   2655.29      6060.03
  30   2929.69      9820.88

NPV = N69,408.60
BCR = 4.04
Data analysis

Table 5: Benefit-cost analysis for sharecrop-managed farms.

Year   yield (kg)   Price        Revenue      Cost         Discount
                    (N/ton)      (N/Ha)       (N/Ha)       Factor
                                                           (10%)

1      0            1000         0            725          0.909
2      0            1453         0            600          0.826
3      0            2356         0            545          0.751
4      0            3259         0            692.5        0.685
5      167.67       4162         697.85       840          0.621
6      167.67       5065         849.26       987.5        0.564
7      167.67       5968         1000.67      1135         0.513
8      335.35       6871         2304.16      1282.5       0.467
9      335.35       7775         2607.31      1430         0.424
10     503.02       8678         4365.2       1553.89      0.386
11     503.02       9581         4819.42      1677.78      0.35
12     503.02       10484        5273.65      1801.67      0.319
13     558.91       11387        6364.3       1925.56      0.29
14     614.8        12290        7555.9       2049.44      0.263
15     614.8        13193        8111.06      2173.33      0.239
16     670.69       14096        9454.07      2297.22      0.218

17     670.69       15000        10060.37     2421.11      0.198
18     670.69       15000        10060.37     2545         0.18
19     670.69       15000        10060.37     1600         0.164
20     670.69       15000        10060.37     1850         0.149
21     645.85       15000        9687.76      2635.75      0.135
22     621.01       15000        9315.16      3421.5       0.122
23     621.01       20000        12420.21     4207.25      0.112
24     573.24       30000        17197.22     4993         0.102
25     573.24       40000        22929.62     5145         0.092
26     525.47       50000        26273.52     10500        0.084
27     525.47       60000        31528.23     11300        0.076
28     525.47       60000        31528.23     12100        0.069
29     477.7        100000       47770.04     12900        0.063
30     429.93       199000       85556.14     17150        0.057

Year   Discounted   Discounted
       Cost (N)     Revenue
                    (N)

1      659.03       0
2      495.6        0
3      409.3        0
4      474.36       0
5      521.64       433.37
6      5556.95      478.98
7      582.26       513.35
8      598.93       1076.04
9      606.32       1105.5
10     599.8        1684.97
11     587.22       1686.8
12     574.73       1682.29
13     558.41       1845.65
14     539          1987.2
15     519.43       1938.54
16     500.79       2060.97
17     479.38       1991.95
18     458.1        1810.87
19     262.4        1649.9
20     275.65       1499
21     355.83       1307.85
22     417.42       1136.45
23     471.2        1391.06
24     509.29       1754.12
25     473.34       2109.53
26     882          2206.98
27     858.8        2396.15
28     834.9        2175.45
29     812.7        3009.51
30     977.55       4876.7

NPV = N28,956.83
BCR = 2.72
Source: Data analysis
COPYRIGHT 2009 Rural Outreach Program
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Author:Nkang N.M.; Ajah, E.A.; Abang, S.O.; Edet E.O.
Publication:African Journal of Food, Agriculture, Nutrition and Development
Article Type:Report
Geographic Code:6NIGR
Date:Mar 1, 2009
Words:4993
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