Financial evaluation of small-scale pig farming in central Hidalgo

Resumen

Objective: To evaluate the financial performance of small-scale pig farming in central Hidalgo.

Design/methodology/approach: Economic data from 32 pig farms were analyzed through the Cost-Benefit Analysis (CBA) methodology. This method includes a set of criteria to evaluate economically and financially an agricultural production system; among the most relevant there are Net Present Value (NPV), Internal Rate of Return (IRR), and Benefit-Cost Ratio (B/C R).

Results: The project is profitable in a horizon of 5 years, since the NPV was higher than 0 ($54,127.03), even when the initial capital investment is low ($141,008), the project financial yield (IRR = 25.84%) indicates that pig fattening evaluated as an investment option exceeds 2.3 times the potential yield that can be obtained with the annual CETES rate (11.25%).

Limitations on study/implications: The size of the sample used suggests a challenge to generate the results, given the heterogeneity of the economic variables in the small-scale pig production systems.

Findings/conclusions: The financial yield evaluated through the IRR shows the highest return provided by pig fattening in comparison to the traditional investment instruments. In conclusion, this study supports the notion that small-scale pig farming constitutes a profitable and sustainable agribusiness, with the potential of significantly contributing to the economic progress of Mexican rural areas.