Determinants and Profitability of Rice production in Cyabayaga Watershed, Eastern Province, Rwanda

Abstract

The aim of this study was to analyze the determinants of rice production and its financial profitability in the watershed of Cyabayaga, Eastern Province of Rwanda. The study was composed of a stratified sample of 46 rice growers and members of CODERVAM cooperative operating in the same watershed. The Cobb-Douglas production function was adapted and estimated to indicate individual effects of labor, land, and capital on rice production. In addition, a Cost-Benefit Analysis (CBA) approach was opted to compute the financial profitability of rice growing in the study area. Results from the analysis substantiate that cultivated area (land) and labour had significant (5% significance level) contribution to rice yield. However, capital investment in form of inputs ( seeds and fertilizers) was not statistically significant even at 15 % significance level, indicating lower contribution to production of rice in the study area, all else equal. Some farmers reported insufficient income to invest in rice production thus making the overall contribution of the investment factor insignificant for this case study. Findings from the Cost Benefit Analysis (CBA) indicated that only one category of farmers, among the three sampled, had positive Net Present Value (NPV). The implication for negative NPVs is that rice growers do not invest appropriately, leading to lower returns. The two analytical approaches led to a similar conclusion that the capital factor represented by investments in seeds and fertilizers does not explain significantly the rice production observed in the Cyabayaga Watershed. It is recommended to support these farmers to have access to inputs and agricultural trainings. These constitute the major area of their investments and constraints for improved and well sustained rice production in the study area.

Key words: Financial profitability, Rice production, Cyabayaga Watershed, Rwanda