Economic viability of value-added cashew products processed in Southeast zone, Nigeria

Abstract

The “Agricultural Promotion Policy (2016–2020)” is an initiative of Nigeria’s government, designed to create jobs and wealth for participants in the agricultural value chains through value addition to export crops such as cashew. However, it is not known how cashew processors have exploited this opportunity to improve their economic returns from value-added cashew products, processed in the Southeast zone, Nigeria. Consequently, this study analysed the economic viability of value-added cashew products processed in the Southeast zone of Nigeria. Specifically, the objective was to determine the cost-benefit analysis, rate of return on investment, net income, and variability of value-added cashew products processed in the Southeast zone, Nigeria. A descriptive research design involving a cross-sectional survey of 353 randomly sampled participants was administered with a structured questionnaire. Ratio statistics, gross margin, benefit-cost ratio analysis, rate of return and ANOVA were applied to analyze the data. The results show that variable cost constitutes >96 but ≤98% of the total cost of cashew value addition. The average net income from 1 kg of value-added cashew products is profitable with cashew kernel yielding the highest net income (N2,724.4 (US $7.6) > cashew nut (N2,547.9 (US $7.1)) > both cashew products (N2,340.4 (US $6.5)). The benefit-cost ratios for 1 kg of value-added cashew nut and cashew kernel were slightly higher (1:1.4) respectively than that of both cashew products (1:1.3), suggesting that value-added cashew products deliver positive net income to the processors. Equally, the rate of returns (RORs) for 1 kg of value-added cashew products yield the highest (38.1%) in cashew kernel > cashew nut (37.4%) > both cashew products (34.1%). The coefficient of dispersion (COD) in revenue and cost of value-added products shows the least risk in cashew kernel (0.097) and the highest risk in both cashew products (0.122). The study provides empirical evidence for potential small and medium-scale investors to make an informed investment decision about value addition to cashew products. It is recommended that government should encourage people to engage in value addition to cashew products because of its high rate of return, and assist processors with credit to procure modern processing equipment to enhance profitability and income generation.