IMPACT OF THE COMMERCIAL AGRICULTURE CREDIT SCHEME ON THE PERFORMANCE OF BENEFICIARIES IN ANAMBRA STATE NIGERIA

ABSTRACT

The study examined the impact of Commercial Agriculture credit scheme on the performance of beneficiaries in Anambra State, Nigeria. Simple random sampling technique was applied in selection of respondents for the study. The sample was drawn from members of All Farmers Association of Nigeria (AFAN). AFAN has a total of 548 members, out of this member 200 of them have so far benefited from the scheme while 348 are yet to benefit. Thus from 200 beneficiaries, 150 were randomly selected. 150 farmers were also selected from those that have not benefited and this gave a total of 300 farmers for the study. The data were analyzed using descriptive statistics, propensity score matching and probit model. Results of the data analysis showed that the average age of farmers was 47 years, majority (67.2%) were male while 32.8% were females. Majority (66.8%) of the farmers were married. The farmers spent 11 years in school on the average. Average household size was 5 persons while 10 years was their average farming experience. The farmers have average farm size of 525.03 ha. 99.2% of them own bank account and majority of them agreed they needed credit in their farming business. The result further showed that personal saving and cooperatives were their major source of credit. The mean capital base of the farmers was N 1,500,000. 66% of the farmers that accessed the loan engaged in crop production while 30% and 4% of the farmers that accessed the loan engaged in livestock and agro-marketing respectively. The t-cal (2.19) was greater than the t-tab (1.96). This result implies that the Commercial Agriculture Credit Scheme (CACS) has had a significant positive impact on the output of the beneficiaries. For the regression result, increase in the profit of the farmers after accessing the CACS, amount received from CACS, capital base of the farmers , farm size of their farms, years of experience, education level of the farmers and output of the farmers increased farmers ability to repay the loan borrowed. The result of the analysis further shows that the farmers accepted the lack of awareness and access to the scheme due to delays as well as stringent measures by participating banks, collateral requirements and farmers education levels were the major problems encountered by the farmers but agreed weakly to lack of awareness as a problem encountered by farmers in accessing the scheme.

CHAPTER ONE
INTRODUCTION
1.1      Background Information
Agriculture contributes immensely to the Nigerian economy in many ways, namely; in the provision of food for the increasing population, supply of adequate raw materials to growing industries, a major source of employment generation, foreign exchange earning; and provision of market for the products of industrial sector (FAO, 2006). Over the years, the inability of this sector to expand and as well contribute meaningfully to the growth of the Nigerian economy may be due to inadequate financing. Also the problem of rapid agricultural development in Nigeria indicates that efforts directed at achieving expanded economic base for farmers were frustrated by scarcity of and restrictive access to loanable fund (Nwankwor, 2013). One of the reasons for the decline in the contribution of agriculture to the economy is formal national credit policy that can assist farmers (CBN, 2010).
Agriculture, as a sector, depends more on credit than any other sector of the economy because of the seasonal variations in the farmer`s returns and a changing trend from subsistence to commercial farming (Mahmood, Khalid & kouser, 2009). This is in view of the fact that credit plays an important role in enhancing agricultural productivity, especially in developing countries (Iqbal, Munir & Abbas, 2003). The unpredictable and risky nature of agricultural production, the importance of agriculture to the national economy, the urge to provide additional incentives to further enhance the demand by lending institutions for appropriate risk aversion measures in agricultural lending provide justification for the establishment of the Commercial Agriculture Credit Scheme.

Consequently provision of appropriate financial policies and enabling institutional finance for commercial agriculture is capable of facilitating agricultural development with a view to enhancing the contribution of the sector in the generation of employment, income and foreign exchange (Olomola, 1997). Although some specialized development schemes and intervention programmes were initiated and implemented to boost agricultural development in the last decades, (both in the deregulated and regulated era), notably, National Accelerated Food Production Programme (NAFPP), River Basin and Rural Development Authorities, Green Revolution Programme, Agricultural Development Programme (ADP), and credit Guarantee scheme, the performance of the sector is still sub-optimal. Currently, agriculture is still dominated by small holder farmers with low production capacity and more than 90% of agricultural output is accounted for by households with less than two hectares under cropping (Federal Ministry of Agriculture and Natural Resources, 2008). At the current growth rate of the population of 3.0% per annum, the population is expected to double from 140 million to 240 million by 2030, farming can never meet the need for adequate quantities of food, for the teeming population.

Therefore in order to promote Commercial Agriculture in Nigeria, the Federal Ministry of Agriculture and Natural Resource, in collaboration with the Central Bank of Nigeria (CBN) introduced the Commercial Agricultural Credit Scheme (CACS) in 2009. The main aim of the fund is to complement other special initiatives of the Central Bank of Nigeria in providing concessionary funding for agriculture such as the Agricultural Credit Guarantee Scheme (ACGS) which is mostly for small scale farmers, Interest Draw Back Scheme, Agricultural Credit Support Scheme, etc.
The objectives of the scheme are:

a.                  To fast track development of the agricultural sector of the Nigerian economy by providing credit facilities to commercial agricultural enterprises at a single digit interest rate.

b.                  To enhance national food security by increasing food supply and effecting lower agricultural produce and product prices, thereby promoting low food inflation and to reduce.....

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Item Type: Postgraduate Material  |  Attribute: 76 pages  |  Chapters: 1-5
Format: MS Word  |  Price: N3,000  |  Delivery: Within 30Mins.
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