Financial Benefit-Cost Analysis of Agricultural Production in Musanze District (Rwanda)

This study considered the profitability analysis of agricultural production in Rwanda with special reference to Musanze District. Data collection was conducted through well structured questionnaire administered on 107 farmer respondents selected purposively. The method of data presentation used was descriptive statistics. The benefit-cost ratio (B-C ratio) was used to analyze the agricultural profitability in the study area. The results revealed that, in the short run, agricultural investment is a profitable business in the study area. This is reflected by the BC ratio of 1.47. The analysis also shows that all individual crops (potato, wheat, corn, tomato, onion, and cabbage) are profitable except for bean. Similarly, the results of the long run profitability analysis show that the BC ratio is 1.003102. The corresponding NPV is RwF 4,912.84; the IRR is 17.046% with the discount rate (the prevailing lending interest rate) of 16.749%. The sensitivity analysis shows that the agricultural productivity is responsive to the increase of total operating costs, the decrease in average price, the decrease in total production, as well to the increase in the discount rate. Consequently, farmers should improve their equipment and allocate rationally the inputs to improve the profitability of agricultural investments.