CHAPTER
ONE
INTRODUCTION
BACKGROUND
OF THE STUDY
Finance in
agriculture is as vital as development of technologies. Technical inputs
are purchased and employed by farmers on
condition that decent cash (funds) is obtainable with farmers. Most of the
days, farmers suer from the matter of inadequate monetary state. This case ends
up in borrowing from a simple and comfy
supply. Skilled cash lenders were the sole supply of credit to
agriculture until 1935. They accustomed charge unduly usurious rates of
interest and follow serious practices whereas giving loans and sick them. As a
result, farmers were heavily burdened with debts and plenty of of them square
measure lend with perpetuated debts. There have been widespread discontents
among farmers against these practices and there have been instances of riots additionally.
The role of agricultural credit as an element of production to facilitate
economic process and development further because they ought to befittingly
channel credit to rural areas for economic development of the poor rural
farmers cannot be over stressed. Agriculture contributes immensely to
the Nigerian economy
in many ways, namely; within the provision of food for the increasing
population; of adequate raw materials to a growing industrial sector; a serious
supply of employment generation, interchange earnings; and, provision of a
marketplace for the product of the commercial sector (Okumadawa, 2012; United
Nations agency, 2011; Food Agricultural Organization, 2014). The agricultural
sector features a robust rural base; therefore,generating concern for
agriculture and rural development. Support for agriculture is wide driven by
each Government and therefore the public sector, that has established
institutional support in style of agricultural analysis, extension, trade goods
selling, input, and land use legislation, to fast track development of
agriculture and rural economic management (CBN, 2010). The potential role for
agriculture in development is to scale back poorness and drive growth for
countries whose economies square measure agriculture-based. Growing population
size needs agriculture growth compatible to fulfil needed level of food. The
modification in consumption pattern with a modification in per capita financial
gain level needs additional proteins containing diet. The transition of agriculture
from ancient to trendy farming techniques relies on adequate handiness of
inputs like certified seeds,balanced use of fertilizers, mechanization, and
agricultural finance. Agricultural finance plays a crucial role in enhancing
the agricultural productivity in
developing countries
like African nation. Finance is the back bone for any business, more so for
agriculture which has traditionally been a non monetary
activity for the
rural population in Nigeria. Rural credit, though not a direct tool of production,
can help break the vicious circle of ‘grow-eat-grow’ by removing financial
constraints and accelerating the adoption of new technologies. Credit
facilities are thus the integral part of the process of commercialization of
the rural economy. The introduction of easy and cheap credit is the quickest
way to give boost to the agricultural production. Therefore, it was the prime
policy of all successive governments to meet the credit requirements of the
farming community of Nigeria. (Saeeda Habib 2015) Credit is an important tool
for getting the inputs in time increasing thereby the productivity of the farms
particularly those of small ones. The current study was designed to investigate
the problems faced by the farmers while getting the loan. It was found that the
small farmers faced a lot of problems in getting and returning the loan which
must be removed to get better results and hence improving the quality and
quantity of the agricultural products (Muhammad Bashir and Muhammad Azeem
2008). The use of credit facilities would therefore translate to higher
resource, employment and capacity utilization, increased output and
income, and reduce
poverty in the rural economy, especially among the farmers and be helpful to
increase the food production which would lead to an improvement in the welfare
of the farmers and consequently a reduction in their poverty and food
insecurity levels (Olagunju, 2010).
1.2
STATEMENT OF PROBLEM
In Nigeria,
agriculture remains the mainstay of the economy since it is the largest sector
in terms of its share in employment (Philip, Nkonya, Pender and Onieort
2009). In an to
diversify her oil base economy, Nigeria is placing much emphasis on financing
other sectors most especially agricultural sector, since agriculture has the potential
to stimulate economic growth through provision of raw materials, food, jobs and
increased financial stability. It follows that agriculture financing is one of
the most important instruments of economic policy for Nigeria, in her to stimulate development in all directions.
Finance is required by agricultural sector to purchase land, construct
buildings, acquire machinery and equipment, hire labour, irrigation etc. In
certain cases such loans may also be needed to purchase new and appropriate
technologies. Not only can finance remove financial constraints, but it may
also accelerate theadoption of new technologies.
1.3
AIMS OF THE STUDY
The major purpose of
this study is to examine Agricultural financing in Okrika L.G.A, Rivers state.
Other general objectives of the study are:
1. To examine the
structure and trends of Agricultural financing in Okrika.
2. To examine the
sources of credit available to farmers in the area.
3. To examine the
impact of Agricultural finance on agricultural productivity and rural
development in Okrika.
4. To examine the
problems related to agricultural finance and agricultural production.
5. To examine the
relationship between agricultural financing and sustainable development.
6. To suggest ways in
which better agricultural financing could guarantee a sustainable development
in Nigeria.
1.4
RESEARCH QUESTIONS
1. How is the
structure and trends of Agricultural financing in Okrika?
2. What are the
sources of credit available to farmers in the area?
3. What are the
impact of Agricultural finance on agricultural productivity and rural
development in Okrika?
4. What are the
problems related to agricultural finance and agricultural production?
5. What is the
relationship between agricultural financing and sustainable development?
6. What are the ways
in which better agricultural financing could guarantee a sustainable
development in Nigeria?
1.5
RESEARCH HYPOTHESES
1. There is a
significant impact of Agricultural finance on agricultural productivity and
rural development in Okrika.
1. There is a
significant relationship between agricultural financing and sustainable
development.
1.6
SIGNIFICANCE OF THE STUDY
The study is aimed at
evaluating the financing, policies and initiatives in the agricultural sector
in Nigeria, for a sustainable development. The findings from
this study will help
various stages of Government in Nigeria, thereby helping in policy statement,
especially now that the economy is begging for diversification. The Private
sectors, Non-Governmental Organizations, farmers and potential farmers will
find the findings of the study useful for their decision making process.
Researchers and potential ones are likely to benefit from this study. In
essence, the study will be beneficial and add knowledge to students so as to
enlighten them more on Agricultural financing. The study shall therefore serve
as a reference for further research.
1.7
SCOPE OF THE STUDY
The study is based on
Agricultural financing in Okrika L.G.A, Rivers state: case study of First Bank
Plc
1.8
LIMITATION OF STUDY
Financial constraint-
Insuicient fund tends to impede the eiciency of the researcher in sourcing for
the relevant materials, literature or information and in the process of data
collection (internet, questionnaire and interview).
Time constraint- The
researcher will simultaneously engage in this study with other academic work.
This consequently will cut down on the time devoted for
the research work.
1.8
DEFINITION OF TERMS
Agricultural Finance:
“Agricultural finance is the study of financing and liquidity services credit
provides to farm borrowers. It is also considered as the study
of those financial
intermediaries who provide loan funds to agriculture and the financial markets
in which these intermediaries obtain their loan able funds”
Rural Finance: Is a
spatial concept, which encompasses the provision of dierent
financial services to
households and enterprises in rural areas for both
productive and
consumptive purposes. Rural financial services include loans, savings, payment
and money transfer services, and risk management (e.g.
insurance, hedging
and guarantees).