AGRICULTURAL CREDIT CO-OPERATIVES AS VAIBLE SUPPLEMENTS FOR FINANCING SMALL SCALE FARMING IN NIGERIA (A CASE STUDY OF SELECTED AFRICULTURAL

CREDIT CO-OPERATIVES IN UMUDIKE, IKWUANO L.G.A) ABSTRACT Financing is an important area in any business today. In agriculture, it is also important in most of its business has been financed in one way or the other through retains, banks, governments, financial institution and so on. The small-scale farmers are mostly handicapped in the art of obtaining finance for the production. At times, they are really putting in their effort but end receiving lesser result because of lack of finance. From the findings, these smallscale farmers need a finance institution credit organization that can be able to operate at their level. It can be said that agricultural credit co-operatives is viable supplement to finance small-scale farmers due to the nature of their operations.
i

TABLE OF CONTENTS Title page--------------------------------------------Certification-----------------------------------------Dedication-------------------------------------------Acknowledgement----------------------------------Abstract---------------------------------------------Table of contents-----------------------------------i ii iii iv vi vii

CHAPTER ONE
1.0

Introduction-----------------------------------

1 1 2 3 4 4 6 6 7

1.1 Background of the study--------------------1.2 Statement of the problem-------------------1.3 Objectives of the study---------------------1.4 Scope of the study-------------------------1.5 Research Questions-------------------------1.6 Significance of the study--------------------1.7 Limitations of the study---------------------1.8 Definition of terms---------------------------

ii

CHAPTER TWO
2.0

Literature Review----------------------------------- 9

2.1 The nature of Agricultural credit co-operatives---- 10 2.2 Agricultural Credit---------------------------------2.3 The nature of small scale farming-------------2.4 Role of credit in Agricultural development------2.5 Problems of small-scale farmers in Agricultural finance------------------------------2.6 Role of co-operative in financing Agricultural Farming in Nigeria------------------------------Reference---------------------------------------27 32 23 11 14 17

CHAPTER THREE
3.0

Research methodology--------------------------

33 34 35 35 36

3.1 Research Design--------------------------------3.2 Sampling Design-------------------------------3.3 Method of data Collection--------------------3.4 Method of data Analysis------------------------

iii

CHAPTER FOUR
4.0

Presentation and Analysis of data---------------

38 38 41 44

4.1 Presentation of data----------------------------4.2 Analysis of Data--------------------------------4.3 Decision or Interpretation----------------------

CHAPTER FIVE
5.0

Summary, Conclusion, Recommendations-------

48 48 51 53 67 60 62

5.1 Summary-----------------------------------------5.2 Conclusion----------------------------------------5.3 Recommendation--------------------------------Bibliography------------------------------------Appendix----------------------------------------Questionnaire-----------------------------------

iv

CHAPTER ONE 1.0 INTRODUCTION 1.1 BACKGROUND OF THE STUDY Agriculture is an art and a way of life, it yet remains a business and like any other business cannot be carried on much less expanded without adequate funding. In Nigeria Agriculture, it had a prime place in the past economy but oil industries. Infact agriculture was until the 70s the principal foreign exchange earner in the country. For instance in 1962 it accounted for 82% of the total export value of the country but by 1983, it has fallen to two time of 3.62% and as at 1985 total non-oil export accounted for only 5.2% of the country total export, so one can imagine what share would be. This poor performance of the agriculture sector can be attributed to general neglect and funding of the sector. Therefore, there has been a great concern on the inability of the agriculture sector in Nigeria to adequately fulfill its expected roles which include ensuring food security for a rising population, providing raw materials for the

industrial sector, generating employment and at the micromacro levels, earning foreign exchange and contributing to a healthy balance of trade. Subsistence oriented small holders dominate Nigeria agriculture. This account for the low level of investment. The basic agricultural finance problem is poverty among peasant smallholder. Agricultural credit is extended to farmers to cover expansion before crops and livestock are ready for sale and to cover crop storage. So agricultural credit co-operative will be available supplement for financing small-scale farming in Nigeria.

1.2 STATEMENT OF THE PROBLEM Financing is the art of rising and using of funds by individuals co-operatives and governmental organizations for the day to day operations, running and management of a business undertaking. The above definition, financing of agriculture generally has been and is still a serious problem in Nigeria, financing

of large and medium scale farming have been improved but financing of small scale farming so far have defiled all effort, with the reform that various attempt made by state and federal government have yielded little or no result. This research project looked at agricultural credit cooperatives as viable means of financing small scale farming since all the conventional means seems to have failed. The research involves studying these agricultural credit cooperatives of financing small scale Agriculture in Nigeria.

1.3

OBJECTIVES OF THE STUDY This research project is intended to accomplish the

main objectives which are to determine how agriculture credit co-operatives can act as viable supplements for financing small scale farming. Other objectives include:a)

Determine the sources of finance available to agricultural credit co-operatives.

b)

Determine the level of access of farmers to credit from their agricultural credit co-operatives

c)

Determine the potential of agriculture credit cooperatives to help in finance, management and members.

1.4 SCOPE OF THE STUDY The researcher found the impossibility of covering many small-scale farming in Nigeria, so she focuses her investigation in selected Agriculture credit co-operatives in Umudike Ikwuano L.G.A in Imo state. The research which is based on finding a solution to the problem of financing a small-scale farming in Nigeria by agricultural credit cooperatives.

1.5 RESAERCH QUESTIONS In carrying out this research work, the researcher asked the following questions in the agricultural credit cooperatives in Umudike Ikwuano L.G.A.

1.

Could there be any solution for financing based on the agricultural credit co-operatives scheme?

2. Will financing by the agricultural credit co-operatives provide small scale farmers with growth, expansion and development? 3. Is contribution of co-operative organization in financing agriculture in Nigeria especially small scale farming feasible?

1.6 SIGNIFICANCE OF THE STUDY The importance of agriculture to the economy and need of Nigeria can never be over emphasized. It is agriculture that provides the need of the country and it is the small scale farmer that do realization of this goal of supplying food from the agricultural sector. The benefit you are to derive form this study will be if small-scale are finance, there will be enough food at affordable prices to the people. It is then quite significant to study why all the available means of financing the small scale farmer have not worked and to look for a new way of financing it so that it would contribute its quote effectively to the economic development of the nation.

1.7 LIMITATIONS OF THE STUDY This research has not been easy at all. There are lots of factors inherent in the research situation that affects the results. These factors include:-

Time Constraint: This is because the research project has to be completed within three months and so the researcher has to combine the lecture and the research work which has to make it longer as never expected. Shortage of finance: This is another big obstacle, which has to involve the money used in going to various places, then the money for typing and binding it not excluded. But all these not withstanding, all best applied to see that research work was successful.

1.8 DEFINITION OF TERMS APMEU: Agricultural evaluation unit. ACDI: Agricultural International. ACGS: ACGSF: CCMS: CPMS: Agricultural Credit Guarantee Scheme Agricultural Credit Guarantee Scheme Fund. Co-Operative Credit and Marketing Societies. Co-Operative Produce Marketing Societies. Co-Operative Development Project monitoring and

FACU: FEAP: FMCS:

Federal Agricultural Co-Ordinating Unit. Family Economic Advancement Programme Farmers Societies Multi-Purpose Co-Operative

GFS: NACB:

Group Farming Societies Nigeria Agricultural and Co-Operative Bank Agricultural Land Development

NALDA: National Authority

NACRDB: National Agricultural Co-Operative And Rural Development Bank

CHAPTER TWO

2.0

LITERATURE REVIEW Finance is the lifeblood of any business organization, be

it in agricultural, manufacturing, commerce or services sector. In fact business or organizations cannot perform very well without adequate funding. This unique role of finance makes it to be very important. In all human endeavors it needs adequate funding for its goal to be achieved. In this literature, the author looked under these subheadings:1. 2. 3.
4.

Importance of agriculture Role of credit in agricultural development Sources of credit to farmers Roles of financial institutions in agricultural finance in Nigeria.

2.1 THE NATURE OF AGRICULTURAL CREDIT COOPERATIVES There has been a great concern on the inability of the agricultural sector in Nigeria to adequately fulfill its expected role which includes ensuring food security for a rising population, providing raw materials for the industrial sector, generating employment and income at the micro-macro levels, earning foreign exchange and contributing to a healthy balance of trade. Nigerian government in the past enacted different but related programms like the accelerated food production programmed (1972). Operation Feed the Nation ( OFN) 1976 and the Green Revolution, (1979) there was also such programmed, such as the Better Life programmed aimed at using rural women to boast agriculture, and their family support programme. Almost all the programme incorporated the provision of credit to agriculture. Others such as the rural banking scheme, agricultural credit guarantee scheme fund (ACGSF).

10

Concessionary interest rates as well as the establishment of the Nigeria Agricultural co-operative and rural development bank (NACRDB) were expected to boast rural and

agricultural credit supply. The basic agriculture finance problem is poverty among peasant small holders. Even if farmers have the inclination to increase their level of production, poverty entrap them at a low equilibrium level with factors and inputs beyond their purchasing power, while they are compelled to sell in times of surplus but low prices to meet urgent family needs or due to the lack of storage, transport and processing facilities.

2.2 AGRICULTURAL CREDIT Credit is obtaining resources with a promise to pay in the future. It is granted in exchange for goods, services, money or another department given in the present. Credit therefore supplement money in the economy makes possible the sale of goods and services with immediate payment by the buyer. Time factor is another essential part of every

11

credit transaction. Credit must be based on the borrowers character, capital, collateral capacity and condition. Agricultural credit is extended to farmers to cover expenses before crops and livestocks are ready for sale and to cover crop storage.

TYPES OF AGRICULTURAL CREDIT There are two types of agricultural credit distinguished on the basic of source. It includes formal and informal credit. Formal Credit: Formal sources of credit are institutionalized and within the control of government monetary authorities and policies, Examples are banks and government agencies. The liberalization of the financial market under the SAP since 1986 meant that most of the compulsion on banks to lend to agricultural (Or any other sector) was abolished (Nwajiuba 2000). The agricultural credit guarantee scheme is still however exists.

12

Liberalized financial market include deregulation of interest rate by which market forces determine the cost of credit central bank institute this scheme. Informal Credit: These are non-institutional credit. The sources of informal credit includes: money lenders, Esusu and other credit clubs. The strength and resilience of informal credit lies in the lack of bureaucracy, timelines, flexibility, in credit conditions and a general personal inform touch. Defaults rate is low due to the social sanction. Driving form the bounds between lenders and borrowers. Real interest rate may however be higher than formal credit. Unconditional security may be accepted.

13

2.3 THE NATURE OF SMALL SCALE FARMING Small-scale farming may be defined as an enterprise employing between 5 and one hundred (100) farmers with an annual turnover of about 400,000.00 small scale farming employs many Nigerian particularly those dwelling in the

rural areas. This considered to be involved in small scale farming business includes those who farm for commercial purpose and not necessary, those engage in subsistence farming. Farming in Nigeria technology is not advancing. This is as a result of lack of adequate farm land, poor preservation of harvested crops and fertilizers and seeds. Though farming is lucrative, but the risk associated with it in Nigeria is as a result of inadequate support from government. The activity of government agencies created to reform the sector has always left much to desire. For now, it is one of the unattractive investment. Lack of capital: Most agricultural co-operative farmers require a large amount of capital to establish and to operate sectors to private sectors

14

the

business.

In

agricultural

production.

Co-operative

require some things to boast their production and some of the requirements includes access to tractor either by purchasing or hiring, seeds/seedlings, fertilizers and other chemicals. There is therefore no doubt that substantial capital is require to organize such agricultural co-operative management of the farm which range from cultivating, planting, harvesting, storage and marketing. Although various source of finance are available cooperative society both internal and external, but these sources are grossly inadequate. The financial institutions have not given any assistance to agricultural co-operative or small-scale farmers because they have little confidence in the societies. Lack of patronage: Patronage is very important.

Component to successful small scale farmers more especially in agricultural co-operatives to the societies. Patronage is not only in the financial aspect, agricultural co-operative societies and small-scale farmers need enough time to be

15

devoted to the farm right from the preparation stage to the harvesting period. Inadequate marketing outlet: Many agricultural farmers who produce huge amount of product suffer from poor marketing. Inadequate marketing outlets results from poor infrastructural facilities, like roads, water, wages, substantial agricultural output by these societies cause more problems for the organization. These intend to discourage members in subsequent season. Attitudes of Banks towards Small-scale Farming: Banks on their own part have argued that they are discourage to lend to this small-scale farming draw up feasibility reports that are viable and they do not maintain adequate financial records about their business. The small scale can obtain loan form the bank on their own merit except the state government stands as guarantors. This bank attitude is partially as a result of careless manner in which some farmers handle bank loan. In the past where in most cases

16

government are made to repay such loans which they are guarantor.

2.4 ROLE OF CREDIT IN AGRICULTURAL DEVEOPMENT Though agriculture is an art and a way of life, it yet remain a business and like any other business cannot operate unless funds are available for maintenance,

replacement of its capital equipment and other expenses. Most authors on this issue are unisonous on the need for adequate funds. Authors believe that finance is the life blood of other business so also it is for agriculture, it must be noted that credit as one of the input of agriculture is very important though other factors like labour, land and entrepreneur are also important. It is credit that it is been used in buying them so funding is a basic necessity of agricultural

development.

17

According to Soyingbo,

agricultural credit can be

powerful especially if supplied in sufficient quantity and used efficiently.

TYPES AND FORMS OF CREDIT

1.

Short-Term Credit: This is the one which finance the current years crop operation, seeds, fertilizers and farm expenses until the crops is sold. This may not be large

2.

Medium-Term Credit: This is the one that is longer than one year but than three years. It is required for the acquisition of breeding stock with a short life.

3.

Long Term Credit: This is necessary to acquire major machines, carryout major improvement of farmland and buildings.

SOURCES OF CREDIT There are two main sources of credit to farmers via internal and external sources.

18

Internal sources: consist mainly of net cash flow operation in other words it is the profit generated by the farmers form the farm which is saved for future investment. In most cases this source of credit is very limited as farmers. In the country had in the past hardly make enough profit to sustain them very well not to talk of savings for future investment. This source however have in the past been the major source of credit to farmers but it is fast changing as farmers move external credit to expand their production with their aim of making much profit. External source: This includes net flow of loan funds, net sale of real estate and the modern times equity introduced by new properties. These external sources of credit can be divided into two major areas which include: 1. 2. Non- institutional source Institutional source

Non-Institutional source is the major source of external credit in the past. It includes credit from relatives,

merchants, and friends and money lenders.

19

Here before loans are out there must exist between the lenders and the borrower. Some elements of familiarity, confidence and trust. In some part of this source interest are not normally changed. Non-institutional has various

limitations because of lack of trust between friends and relatives. Institutional Source can be divided into two which include domestic and foreign sources. Domestic source includes the earliest loan from traditional thrift and savings. Institutions like Esusu or Isusu though some of them still exist while the modern financial institutions includes commercial banks, cooperative banks, agricultural credit guarantee scheme, the Nigeria agricultural and co-operative banks, co-operative financing institutions and other financing institution. Most of these financial institutions are however not been granting loans to farmers because the risk involve in agriculture and cost of financing the loan scheme to cover all the scattered small-scale farmers in the country.

20

According to Wrights J.A principal agricultural manager. IBWA LTD Hour opinion, there is no excuse for commercial bank risking depositors money or what is an excellent farm producing first class can be put in the stores and represent some sort of tangible assets. Generally speaking,

agricultural product is highly perishable and consequently the approach to agricultural financing is quite different. Also laying his quite support to the merchant and commercial in their attitude towards agricultural financing. According to Ibru M.O.C chairman and chief executive of Ibru organization Lagos, Nigeria. Financing of small scale farming is very expensive and many be

impossible to cover the ratio. Also one should sympathize with the banks because of low grants of such loans to farmers who are widely literate and lack understanding of how to get loans. He continued government should rather create a special financing assistance programmed that could recognize and neutralize their peculiar problem

21

Ashamu E. traced the problem of farmers getting loan on assistance of collateral. He went on to say that even the ACGS fund could not help unless the government should increase the guarantee to 100%, otherwise he

recommended that thought banks are supported to be than main suppliers of credit to farmers, this is limited and in

most cases, dont even get to trust farmers. Foreign institution source came mainly from world and its agencies life F.AA ands IDA. The first agricultural loan to Nigeria from World Bank in 1971 and the amount involve was $72million for cola rehabilitation in the western Nigeria. As at 1983 total World Bank agricultural loan to Nigeria shows at $763m, this is substantial and can be said to be one of the major source of credit to farmers but how far can the credit get to farmers is another matter. According to Soyingboi of ICON Merchant ltd, It is the relevant of regarded as non-chalance on the part of merchant banks, but could be born out of absence of an effective organization and or institutional structure for loan

22

administration, agricultural project appraisal and bank of sophistication on the part of small farmers to keep adequate records and financial statement.

2.5 PROBLEMS

OF

SMALL-SCALE

FARMERS

IN

AGRICULTURAL FINANCE In Nigeria most of these small-scale farmers live in the rural areas and they produce up to 80% of total agricultural output of the country. These small scale farmers who predominate in Nigeria agriculture, according to Okoronuem are characterized by the following illiteracy, ignorance, little capital, small size farm, lack of tangible assets, low productivity, low income, little or no savings and

constraining rural environment. According to Okoronuem, this characteristic conspire to make this services or formal source of finance inaccessible to the small-scale farmers. The consequence is that the small-scale farmers. The expose to informal source at exorbitant cost. Illiteracy and ignorance make it impossible

23

for the small-scale farmers to understand loan application forms or how to complete them. They find it difficult to make relevant inquiries without relying on third parties of doubtful influences. These farmers find it difficult to approach banks and other financial institutions. Small-scale farmers in

approaching financial institution because their needs for fixed and working capital are small and can be provided at high cost by financial institutions. By implacable, merchants and large-scale farmers generally have access to financial institutions but those categories of farmers are the minority in the Nigeria agricultural settings. Other problem that affects all farmers relates to delay in reaching and implementing decisions on loan application by banks, inadequacy of loan. Such loans since they are not granted at the specific time the funds are needed for clearing, planting and harvesting as the case may be. Lack of capital would mean that the small-scale farmers productivity is corresponding lower productivity

24

translates into low repayment capacity that will lead to high default rate in loan administration. Low capital combined with small-size of farm holding reduces potentials of profit for further investment inspector. If sizes are elastic to increase productivity through factors complimenting but form size do not always respond to increased finance, since traditional land tenure system reduces the size of farm holdings. Lack of clear title to land increases the risk of advances to farmers, where title to land increase serves as collateral security where land market operates and marketable value. Since farmers lack tangible security title deed,

substitutes and increase advance to agricultural sector. Low level of productivity and hence low income also militate against farmers in raising agricultural finance. Low

productivity is a function of paucity of the co-operative factor in production. These results are reduced. Output and income, since the income need of farmers are generalized. In consequences the small farm met a vicious cycle of

25

poverty, low capital and the cycle is complete. The small scale farmer is weighed down by these constraints which will tend to keep him permanently poor unless government intervenes and introduces a big way to punish him with a big push out of their constraining vicious cycle of poverty. Furthermore, the rural environment does not have the amenities that can help to induce productivity. Example water, electricity ad good roads. So the constraining vicious cycle tends to persist. A high default in agriculture tends to inhabit further advances in this sector. However to solve this problem weighing against small-scale farmers getting finance. Don Ike in his article titled finance agricultural

development in Nigeria introduced the following suggestions. Credit institution should be encouraged to give more assistance purchasing to agriculture, items adopting where hire or purchase other in

some

loans

uses.

Encouraging banking habit among the rural farmers so that the bank mop up excess liquidity and grant it to the needed

26

farmers. Opening more rural bank branches so that farmers should have access to these enlightenment should be set banks, education and public to wipe out illiteracy and

ignorance amongst the farmers, so that they can at ;least differentiate between agricultural loan and a granted project that such project has been carefully selected and has

potential of repaying the loan. In the course of implementing of the projects it should be properly supervised and evaluated and also appraised form time to time to ensure compliance. Also before approval of the loan, care must be taken to ensure that is efficient management to manager the loan efficiently.

2.6 ROLE

OF

CO-OPERATIVE

IN

FINANCING

AGRICULTURAL FARMING IN NIGERIA Contribution of c-operative organization in financing agriculture in Nigeria especially small-scale faming has been very important and cannot be overlooked. As earlier stated no business can survive without adequate flow of finance.

27

The

co-operative

help

in

several

ways

in

financing

agricultural farming in Nigeria. Co-operative organization helps through their banks lending to agricultural farmers in Nigeria. The co-operative banks gives loans to agricultural farmers with little or no interest charged. Co-operative financing of agricultural dates. Back to the early dates of quasi-co-operative like the Esusu clubs, later come to the modern co-operatives which started first in the western. Nigeria in the 1930s it can then concentrated in financing of cocoa farming, processing and marketing for its members. The societies then succeeded inside trucking the activities of the profit of their sweat. It was hitherto about 1935 that the government started to recognize the

importance of co-operative, this leading to the recognition of co-operatives. Among the earliest co-operative society to be

established in the country was the ogba coca co-operative society. This co-operative society engages in marketing. The

28

1950s and 1960s saw the establishment of state apexes of this co-operative organization. It also brings the government involvements in co-operative organizations. This leads to formation of such co-operative societies like eastern Nigeria cooperative palm produce exporters limited, association of thrift and loan co-operative of eastern Nigeria limited, association of farmers co-operative, association of farmers co-operative societies of eastern Nigeria The 1970s witnessed the registration of many multipurpose farmers co-operative societies. As at present, at least one of such farmers multi-purpose farmers cooperative societies (FMCS) can be in every community in former eastern Nigeria and they engage mainly in

agricultural financing which is the main occupation of members. Infact these FMCS have been found to be channeling funds to those small-scale farming to emphasize the role of c-operative in financing agriculture in Nigeria. Odugbanjo Kola, chief inspector of co-operative bank limited Ibadan said there is no gain saying the fact that the

29

hope of the co-operative movement is seen as a means of general economics development in agricultural productivity. It can be increased through the co-operative societies. This therefore is an opportune time to drive the point home to us. That there is no organization today in Nigeria that has as many facilities as co-operative movement to operate at the village level for equitable distribution of government

amenities particularly as regards the achievement plans. He continued experience has shown that agricultural ventures undertaken by individual have continuously been

unprofitable and discouraged. The answer to agricultural development is co-operative by this, it does not mean co-operative among peasant farmers only but a coming together of our seasonal agriculturist as co-operative societies in Nigeria. Professional and businessmen have realized the need that joint efforts with a view to meet competition. The farmers are yet to realize the importance of co-operative effort. There is also a conspicuous absence of local representatives from the

30

board.

The

envisaged

institution

for

implementing

agricultural credit to small farmers would be in the form of multipurpose co-operative societies as opposed to exciting single purpose agricultural credit co-operatives. From the foregoing, one can see that the contribution of co-operative has been on the increase and mostly smallscale farmers in the rural areas have felt its effect.

31

REFERENCES OKWONKWO, M (2005): Agricultural Co-operative

Extension. Publisher in Nigeria. By dab2s Enterprises Hi kagha st Owerri imo state.

WRIGHT J. A (1981): Problems of Agricultural Financing. Bullion Delhi Vards publications Ltd U.S.A.

IKE D. O (2003): Rural Banking Programme in Nigeria. Lagos king and George printing press Ltd.

Ike D. O (2001): Appraisal of agricultural credit guarantee scheme fund in Nigeria; Nigerian journal of financial management.

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CHAPTER THREE

3.0 RESEARCH METHODOLOGY Research methodology as the name implies means the way the work was carried out. It presents in sequential order how the investigation was done or executed. Broadly defined research as the process of finding out or searching for the solution to a problem. According, a problem in research is any question that needs to be solved. In research methodology of this study, the central problem is to find out how agricultural credit co-operatives will act as viable supplements for financing small-scale farming in Nigeria. In view of this research have adopted some special statement method aimed at arriving at a purposeful research finding while elate to the unique nature of the subject matter. It also used survey approach which is a type of discipline research in which data are typically collected through questionnaire, interview and observation. It is

33

popularly used to asses the ideas or opinion towards individual events, organization.

3.1 RESEARCH DESIGN With the research problems stated and the hypothesis formulated, the research had to design the method of data collection which involves primary and secondary Data were in form of oral interview and questionnaire administered to the staff of the financial institutions like ACGSF, NACRDB and commercial banks while the secondary data were gathered from articles journals and books, published and unpunished. The researcher also collected data from

seminars and symposiums in the state library, Enugu state university of science and technology library, institution of management and technology library, university of Nigeria Enugu campus library were also visited to source relevant facts.

34

3.2 SAMLPING DESDIGN Sampling design is the process of not undertaken complete enumeration due to limitation in resources. The option is to limit our study to some of the objects selected from some states in Nigeria with a view to extending our findings to entire population. The aim of sampling is that of making influence about the whole in sampling design of this study, that his research Umudike Ikwuano L.G.A IN Abia state was taken for sampling design in essence of small-scale farming while was been used by agricultural credit co-operatives as viable supplements for financing them. The reason is based on a carefully guideline at cost that is affordable.

3.3 METHOD OF DATA COLLECTION In selecting this research, the information was collected from the research administered, questionnaires was

administered on the members of the agricultural credit cooperatives Umudike Umuahia for the purpose of this

35

research. Data were collected from two main sources, the primary and secondary sources. The generated specifically for the research work and which because necessary in order to gain insight into the research topics and to prove as much as possible the authentically of the study primary were collected members Umuahia. Secondary data on the other hand consists of through of questionnaire credit administered co-operatives on the

agricultural

Umudike

information that is related to the research which were already in existence, they serve as a stepping stone because the knowledge gathered by others on related topics quips a researcher in his efforts to generate primary, data secondary data were usually collected from textbooks, journals and unpublished works.

3.4 METHOD OF DATA ANALYSIS The researcher will administer questions to co-

operators both in government work and the officer of co-

36

operative

societies.

From

the

questions

administered,

informations gathered will be analyzed through the usage of percentage as required informal guide. For example of 100 questions are to be administered, the Reponses from the respondent will be apportion from the percentage. For example 25 83% 5 16.9% Total percentage 100%

37

CHAPTER FOUR

4.0 PRESENTATION AND ANALYSIS OF DATA 4.1 PRESENTATION OF DATA IN TABLE From the farmers questionnaire carried out, the

number of respondents and the statistical data collection are represented table below. Question No 5: What area of farming do you operate on? Table 1.1 OPTION Crop Cattle rearing Poultry Total Analysis of response to question No 5 RESPONDENT 15 10 5 30 PERCENTAGE 60 30 10 100

From the table, it can be seen that the area of farming operate are crops that is the crop that can be produce is 60% while the cattle rearing is 30% and poultry is 10%.

Question No 6: Which financial institution do you work with?

38

OPTION NACRDB NCCUN Commercial bank Total

RESPONSES 10 10 10 30

PERCENTAGE 33.3 33.3 33.4 100

From the table, it can be seen that the researcher has equal number of respondent from the three (3) financial

institutions.

Question No 7: What level of production do you belong? OPTION Cash crop Food crop Total RESPONSES 10 15 25 PERCENTAGE 40 60 100

From the table, it can be seen that the level of production that the farmers operate are food crops that is the crop that can be produced and also be sold utilize in the country and about 40% produced cash crop which can be sold to another country. Question No 8: Do you operate small scale farming? TABLE 1.2 ANALYSES OF RESPONSES TO QUESTION

39

OPTION Yes No Total

RESPONSES 22 3 25

PERCENTAGE 88 12 100

From the table, it can be seen that 88% of people operate small scale firming while 12% did not.

Question No 9: Have you received credit before from your agricultural credit co-operative for your production.

OPTION Yes No Total

RESPONSES 15 10 25

PERCENTAGES 70 30 100

From the table, it can be seen that 70% of people received credit and 30% of people did not. Question No 10: If yes, what did you use the credit for? OPTION RESPONSES Solving Household 10 problem Financing small 10 PERCENTAGE 33.4 33.3

40

scale farming Others Total

10 30

33.3 100

From the table, it can be seen that the researcher has equal number of respondent from the three (3).

Question No 11: Have you encountered problem of not getting enough fund from the co-operative? TABLE 1.3 11 OPTION Yes No Total RESPONSES 6 19 25 PERCENTAGE 76 24 100 ANALYSES OF RESPONSES TO QUESTION

From the above it can be seen that most farmers does not encounter problem of getting fund from the co-operative. This can be because the farmers are member of the cooperative society so they dont find it difficult to obtain enough funds from the society.

41

Question No 12: As a member of the agricultural credit cooperative, do you normally go through a long process before getting loan from co-operative? OPTIONS Yes No Total RESPONSES 25 25 PERCENTAGE 100 100

From the table, it can be seen that the farmers being members of the agricultural credit co-operative does not go through a long process before loan can be distributed to them. Question No 13: As a small scale farmer is the condition of the loan favorable to you? TABLE 1.4 ANALYSES OF RESPONSES TO QUESTION 13 OPTIONS RESPONSES Yes 22 No 3 Total 25 From the table above, it shows that the PERCENTAGE 88 12 100 condition of the loan

is favorable to about 88% of the farmers. This can be because the farmers are already members of the agricultural credit co-operative. As a member, he or she should know

42

the condition of the loan of his co-operative society and also has seen it favourable. Question No 14: Have you ever made an attempt as an individual production. TABLE 1.5 ANALYSES OF RESPONSES TO QUESTION 14 OPTIONS Yes No Total RESPONSES 26 4 30 PERCENTAGE 86.7 13.3 100 to get credit from financial institution for

Question No 15: If yes, how successful has your attempt been? TABLE 1.6 ANALYSIS OF RESPONSE TO QUESTION 15 OPTIONS Very successful Partly successful Unsuccessful Total RESPONSES 30 30 PERCENTAGE 100 100

From the table above, it shows how successful your attempt is, it shows that is very successful.

43

Question No 16: Are the financial institutes involved in Agricultural financing actually interested in financing small scale farmers. TABLE 1.6 ANALYSES OF RESPONSES TO QUESTION 16 OPTIONS Yes No Total RESPONSES 2 23 25 PERCENTAGE 8 92 100

From the table it can be seen that financial institutions involve in agricultural financing are not interested in

financing small scale farmers. This response is from the experience of small scale farmers that had gone the financial institutions for loan they have gotten response that are not favorable for them. Question No 17: Do the society help members to make sure that the credit is been utilized properly? TABLE 1.7 ANALYSIS OF RESPONSE TO QUESTION 17 OPTIONS Yes No Total RESPONSES 25 25 PERCENTAGE 100 100

44

From the table, it can be seen that the small scale farmers pay interest on loan in their agricultural credit co-operative. Despite the fact that they are members they also pay interest on loan.

Question No 18: Do the small scale farmers able to provide the collateral needed for the loan?

TABLE 1.8 ANALYSIS OF RESPONSE TO QUESTION 18 OPTIONS Yes No Total RESPONSES 25 5 25 PERCENTAGE 83.3 16.7 100

From the table, it can be seen that the small scale farmers are not able to provide collateral on the loan to these financial institution. This situation can bring about difficulty of these small scale farmers to obtain loan form the financial institution.

45

CHAPTER FIVE

5.0 SUMMARY, RECOMMENDATIONS In this chapter,

CONCLUSION

AND

findings

from

the

analysis

data

conducted interview and reviewed literature shall be stated by the researcher, conclusion and recommendations shall be dearly enumerated.

5.1 SUMMARY OF FINDINGS Agricultural credit co-operative is a co-operative society that advances credit to small scale farmers for their

46

agricultural production. Ordinarily, it is noted to be of paramount production important of the to the survival and increase in its

small

scale farmers

considering

objectives. More as the researcher was able to find out the following in the course of study. 1. The credit which the farmers that are members to an agricultural credit co-operatives receive form the cooperative are very effective to their production. This shows that the small scale farmers enjoys and also benefit form the agricultural credit co-operative from their production.
2.

The small scale farmer do mot encounter problems of not getting enough funds they need for their production form the agricultural credit co-operatives.

3.

The conditions of the credit are favourable to the small scale farmers

4.

The small scale farmers do not go through a longer process before getting loan/credit from the

agricultural credit co-operatives. The agricultural

47

credit co-operatives are always ready financially to disburse finance to their members in each farming season.
5.

It was found out that small scale farmers have gone to the financial institution for agricultural credit but their attempt was ineffective due to some conditions that they were not able to comply with.

6.

It was found out that the small scale farmers that some agricultural financial institutions are not

interested in advancing credit to them because of their level of exposure, illiteracy and had not been able to provide the collateral needed by those financial institutions cannot easily reach them.
7.

The small scale farmers pay interest on loan in the agricultural credit co-operative but it is not

comparable to that of high rate in the financial institutions. 8. The agricultural credit co-operatives help the small scale farmers by making sure that credit advanced to

48

them are been utilized properly to increase their production.

9.

The illiteracy of these small scale farmers makes it difficult for the staff of the financial institutions to disburse loan efficiently to the small scale farmers.

10. The small scale farmers found it difficult to provide the collateral needed for the loan by the financial institutions 11. From the findings, it was seen that these financial institutions does not easily get access to the rural areas where most of these small scale farmers reside.

5.2 CONCLUSION Agricultural credit co-operatives is an agricultural

organization whereby two or more people with a purpose and a similar objective come together, to seek solution to achieve their objective by applying co-operative principles, rules and ideology.

49

It can be seen \from the finding that the small scale farmers due to their financial incapability they cant afford the collateral used, to obtain low credit of from financial and

institutions.

And

also,

level

exposure

enlightenment, illiteracy makes it difficult for them to interact with terms our procedures for obtaining loan from financial institutions. It was also observed that these small scale farmers were unable to obtain loan because of the risk involved in farming which were unable to control and which can bring default of repaying the loan, it was also found out that the financial institutions staff are always reluctant to travel to the rural areas where the small scale farmers in disbursing loans and also to supervise them on the project to avoid default of loan. It can be clearly seen that the able supplements for financing small scale farmers was the agricultural credit co-operatives. This co-operative admit the small scale farmers as members of the cop-operative and help them by educating them on modernized methods of farming and the best way to utilize credit also to make sure

50

that the credit given to them was utilized for the purpose it was given and the co-operative will closely supervise them to ensure effectiveness and increased production.

5.3 RECOMMENDATIONS The researcher recommends the following remedies from the findings carries out in the work
1.

That there is need to establish more agricultural credit co-operatives in different areas especially in rural areas to be able to advance credit to their small scale farmers.

2.

That there is need to create awareness of this agricultural credit co-operatives to small scale farmers to make them able to know the importance and what they can benefit from the co-operative.

3.

That the government should always give fund for agricultural development through the

51

various agricultural credit co-operatives in the country.

4.

That this agriculture credit co-operative will be able to really analyze the project, the small scale farmers want to embark on and also educate them on modernized methods for easy increase in production.

5.

That the government needs to provide subsidies for small scale farmers through agricultural credit co-operatives because through these

cooperative they will be able to obtain the subsidies quicker and easier for production.
6.

The agricultural credit co-operative must have grassroots support, it therefore should have at the lowest cadre the primary agricultural credit co-operatives society at the state level these primary societies would come together to form one single state apex like ACFC. At the national

52

level, the state apexes come together to form their national body of the organization. 7. That agricultural credit co-operative must avoid external influences and control, it must rely on outside assistance and support for better

efficiency. 8. That agricultural credit co-operatives must

organize as a matter of priority, workshop and seminars for leaders of the co-operative in the primary level to acquaint them with new

farming techniques and creditor control.

9.

Those agricultural credit co-operatives should operate on co-operatives principle and ideology to ensure maximum co-operation management.

10.

That agricultural credit co-operatives should also help the small scale farmers to see a better market to display and sell their product.

From the recommendations, it can be seen that agricultural credit co-operatives will raise small scale

53

farmers to be the nations cash crop exporters, and it can help in the development of the nation because when these remedies are carried out it will be truly a design strategy to meet the special need of small scale farmers. It will also free the small scale farmers of bureaucratic delays and neglect characteristics of farmers schemes, protect small scale farmers form unserious interest charge of money lenders, it would also give small scale farmers a sense of belonging because they would see themselves as part of the

organization since they are shareholders. This would also give the sense of pride and therefore they will feel committed to the ideal of the co-operation to see the progress always through this there will be increase in the production of food stuffs, which is highly needed to support the ever-increasing population of the country.

54

BIBLIOGRAPHY

AYODELE E.I.O

(2001)

Nigeria

Agriculture:

Problems and Prospects in M.O OJO et al (d) Ibid.

AWOYEMI O. (2003) Problems of Agriculture in Nigeria: In M.E.C. Edoru and Ayo Akiongbade. Lagos University Press, Nigeria.

EZEANOZIE A. N. (1989): Financing Co-operative Projects. Experience and Lessons. A paper Presented at the National Seminar on C-operative Development. Federal

Ministry of Information News watch Magazine.

IKE D.O (2003): Rural Banking Programme in Nigeria, Lagos King and George Printing press.

55

IKE D.O (2001) Appraisal of Agricultural Credit Guarantee Scheme Fund in Nigeria.

Nigeria Journal of Financial Management.

OKAFO OKOREAFFIA (2005): Co-operative Policy and Legislation. Publisher in

Nigeria by Dab2s Enterprise Owerri Imo State.

TONY

A.

(2006):

Introduction

and

Principles

of

C-

operation. Owerri Don Ell Printing and Publishers Co.

OGUJIOFOR

E.A

(2003):

C-operative

Practitioners

Fieldwork Administration Nkem Publisher Owerri

Imo State.

56

DICKSON I.O (2005): International C-operation and Co operative Development in Nigeria. Publish in cyprint, Aba Abia State

OBI-OKOGBO E.J (2006): Essentials of C-operative Field Work Administration. Publish in Advanced Graphic, Owerri, Imo State.

OKONKWO M. (2005) Agricultural C-operative Extension Publisher in Nigeria by Dab2s

Enterprises Owerri Imo State.

SEMOWD B.I (1978): Financing Agriculture Delivered at 13th Annual Seminar of NIB.

WRIGHT J.A (1981): Problem of Agricultural Financing Bullion Delhi Vands Publication Ltd U.S.A.

57

QUESTIONAIRE FORMAT

APPENDIX Your Department, Your school, P.M.B 1036 city. Your State. 4th August, 2010. Dear Sir/Madam, AGRICULTURAL CREDIT CO-OPERATIVES AS VIABLE SUPPLEMENTS FOR FINANCING SMALL SCALE FARMING IN NIGERIA. I am an HND final year student of of the above school, conducting a research on the agricultural credit co-

operatives as viable supplements for financing small scale farming in Nigeria with a case study of selected agricultural credit co-operatives in Umudike, Ikwuano L.G.A. The

research is in partial fulfillment of the requirements for the award of Higher National Diploma (HND) in your dept

58

Please answer the following questions as truthfully and correctly as possible and be assured that your answers will be used only for the purpose of the research. Thanks for your co-operation.

Yours Sincerely,

Your name

59

QUESTIONAIRE

SECTION A INSTRUCTIONS: Please tick where applicable SEX: AGE: MALE 20-3FEMALE 30-50 MARRIED 50 and above

STARUS: SINGLE

EDUCATIONAL QUALIFICATION:

FSLC

SSCE

5.

What area of farming do you operate on? a) (b) (c) Crop Cattle rearing Poultry

SECTION B 6. Which financial institution do you work with? a) b) c) NACRDB NCCUN Commercial Bank

60

7.

What level of production do you belong? a) b) Cash Crop Food Crop

8.

Do you operate small scale farming? Yes No

9.

Have you received credit before from your agricultural credit co-operative for your production? Yes No

10. If yes what did you use the credit for? a) b) c) Solving household problem Financing small scale farming Others

11. Have you encountered problem of not getting enough fund form the co-operative? Yes No

12. As a member of the agricultural credit co-operatives, do you normally go through a longer process before getting loan from co-operative? Yes No

61

13. As a small scale farmer is the conditions of the loan favorable to you? Yes No

14. Have you ever made an attempt as an individual to get credit from financial institution for production? Yes No

15. If yes, how successful has your attempt been? a) b) c) Very successful Partly successful Unsuccessful

16. Are the financial institution involved in agricultural financing actually interested in financing small scale farmers? Yes No

17. Do the society help members to make sure that the credit is been utilized properly Yes No

18. Do the small scale farmers able to provide the collateral needed for the loan? Yes No

62