Profitability of Cassava Production: Comparing the Actual and Potential Returns on Investment Among Smallholders in Southern Nigeria

Abstract

An analysis was conducted of the productivity of smallholder farmers enrolled into an out-growers’ scheme to supply cassava to commercial starch processors under the Nestlé-IITA cassava starch value chain project. Under the project, improved cassava varieties–cloned to be high-yielding, early maturing and disease-resistance–would be supplied to the farmers without charge. Also, to be provided would be training on good agronomic and farm management practices, like land preparation, soil management, stem-cutting habits, treatment of planting materials, fertilizer and herbicides quantity, time and method of application, and number, time and methods of weeding. It was envisaged that combined use of certified planting materials and good practices would substantially lead to increased yield and profitability. The actual performance based on baseline data was compared with the projected profitability under the project. The study was carried out using a sample of ninety-six farmers randomly selected from the eight states that participated in the project. Designed feedback form was used to assemble data on the farmers’ characteristics, previous cassava production state of affairs, including yield, experiences, and constraints to farming and marketing, input acquisition and use, and output flow and prices. Data were analyzed using descriptive statistics, inferential statistics and budgetary techniques. Results revealed N277400 (about US$1,840) as the baseline gross revenue, but this could have risen by over 114% to N596000 (about US$3947), if farmers adopted the package of practices recommended under the project. The gross margin, calculated as N150536 (US$1003.57) could have increased by about 120% to N330536 (or US$2189). Also, the return on variable cost investment calculated as 0.33 under the prevailing farmers’ practice could have risen to as high as 1.25, reflecting a return of N1.25 (rather than N0.33) on every N1 investment in the variable cost. Even though cassava production was a viable farm initiative, the farmers’ adoption and complementary use the recommended package of practices would guarantee higher yield, profitability and return on investment.

Keywords: Cassava production, farm management, package of practices, profitability, smallholders, Nigeria.