Analysis of Enterprise Budgeting and Profit Efficiency of Cassava Production in Nigeria

Abstract

This study evaluated the profitability and profit-efficiency of cassava production among registered sole producers in Delta State, Nigeria, and identified key drivers of per‑unit profit. Using multistage random sampling, 300 cassava farmers were surveyed and enterprise budgets, sensitivity analysis, and a profit‑function regression were applied. Aggregate results showed total revenue (TR) of N83.8 million, total cost (TC) of N59.7 million, and net farm income (NFI) of N24.03 million, yielding a mean NFI per farm of N100,110 and a total net return on investment (NROI) of 0.402 (40.2%); the profit margin (NFI/TR) averaged 28.7%. Late‑planting farms recorded marginally higher gross margin and NFI per hectare than early‑planting farms (gross margin: N101,020 vs N92,102; NFI/ha: N93,005 vs N85,101). Profit‑function estimation (R2 = 0.657) identified per‑unit output price (PPO, positive), per‑unit labour price (PPL, negative), age (negative), household size (positive), education (positive), and farming experience (positive) as significant determinants of per‑unit profit (p < 0.10 – 0.01). Sensitivity analysis revealed that a 10% decline in revenue reduced gross margin by 32% and NFI by 35%, indicating revenue shocks were more damaging than equivalent cost increases. Findings underscored the viability of cassava production while highlighting opportunities to raise profitability via price‑and‑market access, labor-saving technologies, human‑capital investments, and revenue‑risk mitigation (e.g., forward contracting). Results informed targeted extension, credit, and value‑chain interventions to improve smallholder returns in line with national and international policy priorities