Investment in cocoa production in Nigeria: a cost and return analysis of three cocoa production management systems in the Cross River State cocoa belt.
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 . 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
In the past; at a former time; formerly.
Former: our erstwhile companions.
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
Something that prevents or discourages action; a deterrent.
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
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.
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.
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)
[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
See: Depository Trust Company
See Depository Trust Company (DTC). .sub.i,t] (3)
[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 .
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
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
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.
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 .
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.
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.
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  = ; the  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
To work as a sharecropper.
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.
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
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
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.
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.
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.
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
Without consideration of; regardless 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.
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.
[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.
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[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: email@example.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: firstname.lastname@example.org
(3) Professor, Department of Agricultural Economics and Extension, University of Calabar, P. M. B. 1115, Calabar - Nigeria. E-mail: email@example.com
(4) Assistant Lecturer, Department of Agricultural Economics and Extension, University of Calabar, P. M. B. 1115, Calabar - Nigeria. E-mail: firstname.lastname@example.org
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