Profitability of Avocado Production for Export Trade amongst the Smallholder Farmers in Rungwe and Hai Districts, Tanzania
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Date
2023-11-28
Journal Title
Journal ISSN
Volume Title
Publisher
Scientific Research Publishing Inc.
Abstract
The growth of an investment with perfect cash flow is the aim of every inves-
tor. Avocado is emerging as one of the important “new export crops” in de-
veloping countries and smallholder farmers are expected to benefit enorm-
ously from the production and selling of the crop. Based on this proposition a
study was conducted to investigate the profitability of avocado production
among the smallholder farmers in Hai and Rungwe districts in Tanzania. The
study employed a multistage random sampling method to select the sample
households and primary data were collected from 120 smallholder farmers
producing avocado for exportation. The Cost and Benefit Analysis (CBA)
approach was employed to analyse the viability of avocado production in the
study areas. Specifically, the Net Present Value (NPV), Benefit Cost Ratio
(BCR), and Internal Rate of Return (IRR) were used as metrics of economic
viability. These metrics were calculated using the discounted rate of the Bank
of Tanzania (BoT) for fixed accounts. The study findings suggest that the
production of avocado for exportation yielded high NPV, BCR, and IRR. Its
IRR ranged from 11.11% to 14.60% which was far higher than the BoT rate
for fixed accounts of 2.16% indicating that the investment in avocado pro-
duction for foreign trade was economically viable.
Description
Open Journal of Business and Management, pp. 3343-3360
Keywords
Avocado, Tanzania, Profitability Analysis, NPV, BCR, IRR