ABSTRACT
This research was designed to
study the effect of credit acquisition and repayment on Agricultural production
in Cross River State. The major objective is to study the effect of credit
acquisition and repayment on agricultural production in the state. Specific
objectives included: determination of credit disbursement and recovery
strategies of agricultural credit institutions, determining and comparing
agricultural production among beneficiaries and non-beneficiaries of credit
schemes, identifying factors that affect credit acquisition and repayment and
to compare agricultural production among credit defaulters and non-defaulters.
The analysis was done with
sample drawn from 120 farmers, 60 beneficiaries and 60 non-beneficiaries and
credit officers in Cross River State, by the use of a multistage sampling
technique and structured questionnaire, which felicitated information on farmers
credit use, repayment rate, agricultural production of credit beneficiaries and
non-beneficiaries, credits administration etc. Analytical tools used were
descriptive statistics such as percentages, mean, frequencies, etc. to show the
socio economic factors influencing credit acquisition and repayment in the
state, multiple regression analysis was used to estimate the production
function of both credit beneficiaries and non-beneficiaries and the chow test
to determine the magnitude of the coefficient obtained from the two samples.
Cassava was used for the
analysis of the production output of beneficiaries and non beneficiaries of
credit because it is cultivated in the 3 agricultural zones and a staple food
of the people. The mean output of the crop for both farmers taken from 3ha of
land is 1520kg and 967.50kg respectively. The chow test
result was 8.920 showing that the marginal effects of the regressors on the
regressants vary. Findings showed that agricultural production is still of
minimal output. Among other factors, the socio-economic characteristics of
credit beneficiaries influence rate of repayment and for non-beneficiaries
influence the acquisition of credit.
The study recommended among
others that credit should be released to farmers during planting or stocking,
Credit officers should reduce bureaucratic processes to encourage farmers to
borrow credit and my key recommendations based on the study were:
-
Reduction of interest rate to at
most 5 percent to get more farmers to borrow.
-
Long gestation periods of up to two
years should be given to allow the farmers prepare for repayment.
-
Increase in the credit amount
because of the inflationary era we are into.
CHAPTER
ONE
INTRODUCTION
1.1
Background Information
In spite of
the fact that oil still accounts for our major revenue (gearing toward
80percent) and almost 100percent of our export earnings (C.B.N,2003),
agriculture especially farming, forestry, livestock and fishing is shown to be
the major activity of Nigerians (Chigbu, 2004). Regrettably, the trend
performance has declined over the years. The sector growth remained at
5.8percent between 1990-1993, falling to 3.5percent between1997-1998 and worse
still declining to an abysmal 1.8percent during the 1999-2001 periods (C.B.N,
2003). The agricultural sector is expected to have a growth rate of between
7percnt to 10percent, in order to have any meaningful effect on poverty
reduction (Ekpo, 2004).
This ugly
situation is attributed to poor and less resources utilization, as a result of lack
of financial supportive measures like loans, subsidies, grants, etc toward
agriculture (Chigbu, 2004). The contribution of agriculture to the gross
domestic product (G.D.P.) shows an average growth rate of 2.6percent (C.B.N,
2003), a development not good enough for a sector employing about 70percent to
80percnt of Nigerians. Food supply situation is not favorable equally; it has
been reported by the food and agricultural organization (FAO, 1994), that there
is an average food deficit of 1.2percent, while the demand and supply of food
stand at 3.7percent and 5percent respectively. This is why the World Bank
(2003) data showed that more than 70percent of Nigerians live below poverty
line, a situation that can be reversed through agricultural development.
The World Bank’s
statement about Nigeria’s poverty level has not gone down well for a nation
with abundant agricultural resources: different varieties of livestock and
wildlife, an agricultural friendly climate, coastal and marine resources of
over 960m shoreline and a large consumer market.
In Nigeria, agriculture is not
practiced in a purposeful and enterprising manner. It is practiced more as a
survival strategy, rather than as a business venture. This is attributed to
low-income
Availability of
credit to farmers has been observed as one sure way of increasing agricultural
output, through the improvement of efficiency and the expansion of production.
Credit to farmers according to Olatumbode (1990) would assist in the following
ways:
Procure new improved technology
in agriculture, purchase high yielding and disease resistant crops, put more
land into cultivation and organize the farm better and more purposeful.
Insufficient
extension of production credit to farmers according to Meyer (1986), is the
more critical factor responsible for the declining agricultural production.
There is a big gap between the demand for and supply of credit to farmers for
agricultural activities. Problems faced by farmers in raising money for
agricultural production is colossal, because according to Chidebelu (1983), commercial
and merchant banks are reluctant to give money for agricultural production. The
reluctance is due largely to the fact that agriculture is biological in nature,
hence prone to risk.
The establishment
of several credit schemes in Nigeria is intended to solve the problem of lack
of credit to the agricultural sector. Efforts to encourage farmers in Nigeria
with credit and other agricultural incentives have only given individuals with
political loyalty to the reigning government access to exploiting the ordinary
farmers. Such incentives usually get to the false farmers who use it for other
non-agricultural activities.
Repayment of credit
by farmers is a pathetic story; there is a general tendency of farmers not to
repay credit. F.A.O (1994) asserted that the inability of small-scale farmers
in developing countries to repay credit could be traced to imperfection of the
delivery system, a host of institutional factors and to the farmers themselves.
Some of these factors include: inadequate supervision and quality of
supervisory staff, poor market outlets, poor management ability of the
borrowers, poor selling prices, unsuitable disbursement procedures, wrong
attitude of farmers towards credit (regarded as gift from government), natural
disasters, etc. Problems of repayment also stifle further credit to farmers,
since most agricultural credit recycles.
Small-scale farmers are supposedly potential
beneficiaries of agricultural credit in Nigeria, but are hampered by their
small peasant holdings found over wide remote areas which makes supervision by
credit officers difficult (Eze, 1997). To reap the benefits of credit....
================================================================
Item Type: Project Material | Attribute: 69 pages | Chapters: 1-5
Format: MS Word | Price: N3,000 | Delivery: Within 30Mins.
================================================================
No comments:
Post a Comment