ECONOMIC EVALUATION OF INVESTMENTS IN PUMP IRRIGATION SYSTEMS IN BAUCHI STATE, NIGERIA

Abstract

ABSTRACT A major constraint to increased agricultural production in Nigeria, is inadequacy of rainfall in trie northern states. This problem has led to heavy government investment in the development of irrigated agriculture involving both large and small-scale irrigation systems. The recent government intervention in the small-scale irrigation systems has been mainly through the fadama development activities of the Agricultural Development Projects (ADPs). This study evaluated the performance of the small-scale irrigation system within the Western Zone of Bauchi State ADP comprising four local government areas (Bauchi, Dass, Tafawa-Balewa and Toro) during the 1987/88 dry season cropping year. The data generated were projected over a five year period (1988- 1992) using the annual growth rate of the consumer price index. Discounted cash flow measures were used for analysing the profitability of the investments. The findings of the study showed that investment in small-scale irrigation farming was profitable when family labour was assumed to have a very low or zero opportunity cost. The NPV and the IRR obtained were Nl5.582.64/ha and 159%, respectively, under this scenario. On the other hand, NPV and IRR dropped to 4/ha and 24%, respectively when family labour was costed. A number of factors were identified, as contributors to the rather low returns obtained. These included water shortages, unavailability of improved seeds, and low product prices during the peak harvest period.