Investment Analysis of Gari Processing Machineries in Ondo State, Nigeria
World Journal of Food Science and Technology
Volume 1, Issue 2, September 2017, Pages: 32-38
Received: May 1, 2017; Accepted: May 12, 2017; Published: Jul. 10, 2017
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Author
Ajila Abiola Samuel, Department of Agricultural and Resource Economics, Federal University of Technology, Akure, Nigeria
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Abstract
The study examined the investment analysis of gari processing machineries in Ondo State, Nigeria. Multi-stage sampling technique was used to select a sample of 45 respondents. Data was collected from primary sources through the use of well-structured questionnaires. Tools utilized included descriptive statistics and budgetary analysis. In addition, tools of investment analysis (NPV, BCR and IRR) were used to appraise investment in a model mechanized gari processing plant. The study revealed that there are gari processors who procure cassava tubers and use processing facilities owned by other entrepreneurs to process their cassava into gari. They hence incur no fixed cost. It also revealed that there are entrepreneurs, though fewer in number, who invest in gari processing machines and set up processing centres. They charge tolls (rates) for the use of their machines by other processors. The operations of both the processors and owners of the processing centres were found to be profitable. The empirical results of budgetary analysis revealed that the gross margin to gari processors was ₦148,029 per annum. The ratio of the gross margin to the average variable cost was 1:0.16. It also revealed that the estimated net revenue of owners of gari processing machineries was ₦1,286,400 per annum which represent 125.7% of the total cost of production. The implication is that for every one nairainvested, the processor gained 125.7 kobo. The investment analysis for a model mechanized gari processing centre was also found to be profitable with an NPV of ₦6,248,430, BCR of 1.1 and IRR of 46%. The result of the study showed that gari processing enterprises are profitable and investment in mechanized gari processing could be profitable if there is adequate supply of cassava tubers. It was therefore recommended that Credit facilities should be channeled to processors through the current micro-credit scheme of the Government to enable producers strengthen their enterprises by acquiring processing inputs which they claim are currently beyond their reach.
Keywords
Investment, Gari Processing Machineries, Budgetary Analysis, Discounted Cash Flow Analysis
To cite this article
Ajila Abiola Samuel, Investment Analysis of Gari Processing Machineries in Ondo State, Nigeria, World Journal of Food Science and Technology. Vol. 1, No. 2, 2017, pp. 32-38. doi: 10.11648/j.wjfst.20170102.11
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Copyright © 2017 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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