THE IMPACT OF FINANCIAL INSTITUTION ON AGRICULTURAL PRODUCTION IN ONDO STATE.
TABLE OF CONTENT
TABLE OF CONTENTS
Background of the Study
Statement of the Problem
Purpose and objective of the study
Scope or limitation of the study
Significance of the study
Definition of basic terms
Review of literature
Concept of credit
Role of credit in small scale farming
The demand for and supply of credit in the agricultural sector
The role of commercial bank in agricultural financing
The impact of the merchant bank on agriculture
The role of Nigerian agricultural and co - operative bank limited (NACRBD) on agricultural production
Agricultural credit guarantee scheme fund (ACGSF)
Nigeria agricultural insurance company (NAIC) and its role on agriculture
Role of other Non -formal financial institution like friends, relative, private money lender on agricultural financing
Samples and sampling procedure
Instrument for data collection
Method of data collection
Method of data analysis
Result and discussion
Social Economic profile of the farmers
Analysis of demand for credit
Problems of respondents in obtaining credits
Suggested solution for problem of credit utilization
Summary, conclusion and recommendation
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The vicious circle of poverty starts from the premise that in less developed countries outputs are low due to deficiency of capital, market imperfection, and economic backwardness and under development. The aim of this study is to break the vicious circle of poverty and ensure that farmers in Okitipupa -local government have access in obtaining loan from financial institutions. The methodology used in this study was primary data and the primary data was collected using well structure questionnaire. The local Government Area has a large population most of which are predominantly engage in agriculture. Some farmers operate based on the Surge scale but majority are small scales. From this research work, one can say that the major problems facing the farmer is the utilization of credit to increase their production is high interest rate, inadequate loan provided, lack of collateral required etc. it is therefore evident that the reduction in the interest rate, timely provision of credit, subsidization of farms inputs, provision of more formal financial institution in rural area will go a long way in solving the problem of vicious circle of poverty among traditional farmers in Okitipupa local Government Area of Ondo State.
1.1 BACKGROUND OF THE STUDY
The vicious circle of poverty start from the premise that in the less-developed countries’ out are low due to deficiency of capital, market, imperfection, economic back and under development .low output we need to low real income. If income is low, consumption and saving will be low. Low saving means low capital formation and low investment. Poverty and under development of the economy are synonymous.
A country is poor because it is under –developed but at the same times a country is under developed and poor because it is does not have resources for promoting development. (Fapophinda Olarewaju, 2001)
To achieve the above fact, government of Nigeria and many under countries of west Africa must recognized the roles which credit can play in agricultural production and ton establish a number of financial institutions and special agencies to provide agricultural credit to farmers. a part from formal financial institution such as merchant,
traders, friend and relatives have help in no small measure to finance have helped agricultural production farmer are poor because they cultivate on very small area of land from which their output is very low and hence sell only a very small amount which is ture helps in expanding the farm or acquiring new technology . Agricultural cerdit to small production farmers can help in breaking the vicious circle of poultry.
It must be noted that agricultural credit is very is short supply despite the various government measures to get more credit directed to the sector. Farmers in general and small holder in particular are not in favourable position to obtain loans from credit institution is reluctant to advance credit to farmers because of the fear of indebtedness, especially since farmer cannot always prove acceptable collateral security.
1.2 STATEMENT OF THE PROBLEM
Nigeria is a nation of small scale farmers This because when it is realized that small production farmers accounted for about 95% of the countries population earn their living from this farming system (olayemi,1980).he also classified small production farmers as those having the size of farm ringing from 0.10-5.99 heatres.
It could be noted that small-scale farmers are efficient in the allocation of resources within their disposal but lack proper purchasing power .Therefore, increase in credit available to agricultural production in a condition for enhancing greater productivity of both small-scale and large scale farmers.
As part of government policies, the CBN sometimes mandated the other banks to give substantial percentage of their loans to the farmers likewise, the informal financial institutions also give loans to the needy farmers to boot their productions both formal and informal as channel of funds from lenders to borrowers on the productivity of farmers in Okitipupa local Government Area of Ondo state.
1.3 OBJECTIVES OF THE STUDY
The general objective of the study is to examine the impact of financial institution on agricultural production in Okitipupa local government area. Of Ondo state .while the specific objectives include the following:
1. To indentify the major sources of credits to the farmers in the study area;
2. To indentify the credit demand by farmers in the study area
3. To determine the influences of credit on productivity of farmers
4.To determine the effect of credit utilization on the farmers output .
5. To give recommendations on ways of increasing the farmers productivity.
1.4 RESEARCH QUESTIONS
The research questions seek to ask the following question:
a. What is the level of education of farmers?
b. What is the minimum amount of loan that that can be granted by financial institution?
c. What are the experiences of the farmer?
d. Do all farmer access to federal government yearly agricultural loans?
e. How big as the size of the farm land?
f. Are you a full time farmer or part .time farmers
1.5 RESEACRH HYPOTHESIS
In the process of carrying out this research, three null hypothesis are to be tested at p=0.05 level of significant.
Hi. l There is a significant relationship between the level of productivity of the farmers and availability of the credit facilities to the farmers in Okitipupa local government areas of Ondo state
Hi. 2 The informal financial institution has significant Impact on the productivity of the farmers in Okitipupa local government area in Ondo state
1.6 SIGNIFICANCE OF THE STUDY
The study is of great importance ,considering the place of agriculture in an agrarian country like Nigeria. It was discovered that very many of farmers in Okitipupa local government area practicing subsistence agriculture. The level of poverty in the area prompts this.
It is strongly believed that this research work will bring solutions to the problem of agricultural production in Okitipupa local government. The most significant of this study is that, it will make more credit to be available to small scale farmers, thereby bring an end to inadequate credit facilities the available credit facilities will bring about increased income so generated would provide means for them to other necessities of life, which they cannot produce for themselves by the method, the standard of living of the peasants, will also increase.
The economic aspect of importance of the study can be looked at in capacity to reduce unemployment and other unemployment. Also will be an increase in gross domestic production (GDP) since a large proportion on the population depends on agriculture. Also, the study can bring increase in the production of export crops. Capable for ensuring enough foreign exchange indeed, this research work is of great value because of it numerous usefulness to the farmers in Okitipupa local government area of Ondo state.
1.7 DEFINATION OF BASIC TERMS
Financial institution: This is institution which serves the purpose of channeling fund from deposits to borrowers
They hold money balance of or borrow from individuals and other institution in order to make loan or investment.
Agricultural credit: the refer to the process of obtaining controls over the use of money, good and services in the present by farmers, in exchange for a promise to payback at future time.
Agricultural productivity: it refer to the rate at which the farmer produce farm product and the amount produced compare with how much time, work, inputs, and money that is needed to produce them.
Demand for agricultural credit: this implies the rate at which farmer seek to obtain loan or acquire credit. It could be potential or effective demand for credit potential means those that need credits while effective demand refers to the actual people that really obtained credit.
Supply of agricultural credit: This implies the various sources from which credit could be obtained, it could be organized sectors.
SOURCES: Field survey, 2016.