Cost Benefit Analysis of Rice (Oryza Sativa, L.) And Maize (Zea Mays, L.) Production. A Comparison Study in Rwangingo Marshland, Nyagatare and Gatsibo Districts

Abstract

The marshlands in Rwanda have been developed to increase production by contributing to the reduction of agricultural products imports. To analyze the cost-benefit ratio between rice and maize production in Rwangingo Marshland aimed to see the crop that can give maximum returns through profitability analysis. The research was designed as an analytical study that compared the CBR of rice and maize production. The stochastic production function was used to estimate the impact of drivers’ cost of production on the production and CBR for profitability comparison analysis. Data were collected from 271 respondents and randomly selected using multistage sampling techniques. Stochastic production function results indicated that rice production: capital and labor were statistically significant at 1%. Maize production: labor was statistically significant at 1% and positively affected production, capital had an inverse relationship to the production, and the capital and labor (α+β) indicated a CRTS of 1. Profitability analysis was based on three measures of CBR, and NPV. Rice and maize production gave CBR of 1.9 and 1.5, NPV of 1,103,684Rwf and 1,011,970Rwf, and IRR of 7% for rice and maize respectively. The results recommended that rice production should be cultivated in this marshland because it indicated the maximum return or both crops could be considered under the measures that could maximize the outputs.