Analysis of the economic profitability of the production of the cashew walnuts in the municipality of Tchaourou in north eastern Benin

Abstract

The increase in sown areas and production of cashew walnuts in Benin calls for the financial analysis of the related activity. The objective of this article is to evaluate the economic profitability of the production of cashew walnuts for producers in the municipality of Tchaourou in the north eastern part of Benin. The methodological approach used here is based on a semi-structured questionnaire addressed to 243 cashew walnuts producers, randomly selected from five of the seven districts of this municipality. The analysis was carried out using Excel software with two investment profitability evaluation criteria, the NPV (Net Present Value) and the IRR (Internal Rate Return). The results showed that cashew production in the study area is economically profitable for producers with an NPV of 202,423.56 FCFA/ha for a discount rate of 10% over the 25 years plant life cycle, and an IRR of 13.26%, which is higher than the discount rate but significantly lower than the interest rate of around 24% charged by the local financial institution, i.e. the “Caisse Locale de Crédit Agricole Mutuelle” (CLCAM). Under these conditions, recourse to CLCAM financial services by the producer proves to be ineffective. These modest results, although positive, nevertheless call for economic policy recommendations for better profitability. To this end, it is necessary to observe independent market functioning mechanisms and undertake agronomic research to maintain this profitable trend for the national economy.

Keywords: Cashew, Net Present Value, Internal Rate of Return, Economic profitability

Classification JEL :  Q10, Q20

Type de l’article : Empirical research paper