Economic Evaluation of Investment in Animal Traction a Case Study of Katsina State, Nigeria

This study was designed to assess the profitability or otherwise of investing in animal traction technology adopted by small scale farmers in Katsina State, Nigeria. This was achieved through the estimation of the various rates of return to the investment. Sensitivity analysis was also conducted to test the effects of varying the costs and returns on the rates of return to the investment on the technology. Data used for the study came from a field survey conducted in three local government areas of the state. A structured questionnaire was designed and distributed to ninety (90) animal traction farmers using only one pair of workbull. The analytical tool employed was the cost and return analysis using the rates of return model of investment analysis. Specifically, the net present value (NPV), internal rate of return (IRR) and payback period (PBP) were adopted. The rates of return to the investment established an NPV of N149, 343.00, an IRR of 71 % and the value for the PBP of 2 years, thus, indicating that the investment was highly profitable. These rates remain profitable even if revenue is decreased by 10 % or investment cost increased by the same percentage. The results also showed that the investment was more sensitive to a decrease in output or revenue producing a greater magnitude of decreases in NPV of 16 % compared to a decrease in NPV of 6 % when investment cost was increased by the same proportion.