CHAPTER ONE
1.0 INTRODUCTION
1.1 Background Study
Agriculture plays a vital role in the
economic development of Nigeria. It provides food for the growing
population, employment for over 66% of the population, raw materials for
industries and foreign exchange earnings for the government.
Agriculture has the potential of
improving the country’s economy, if well managed. This will depend, to a
large extent, on the encouragement given to the agricultural sector.
Agriculture still remains the most important sector of the Nigerian
economy in terms of provision of employment in spite of its reduced
contribution to the nation’s foreign exchange earnings due to the over
dependence in the oil sector as the main stream or source of income for
the nation. About 64% of the country’s population depends on agriculture
for their livelihood, since 34.8% of the GDP and over 38% of the
non-oil foreign exchange earnings are contributed by the agricultural
sector.
Agriculture on its own extends to 5 special branches which includes: Agronomy ( this study deals with soil management and the growing of crops), Horticulture ( this deals with the cultivation of fruits, vegetables and ornamental crops i.e. flowers ),Agricultural Engineering
( involving the knowledge of farm machines and equipment, and the
development of new systems and practices to address problems facing
agriculture),Agricultural Economics ( this deals with the business end of farming) and Animal Science ( the breeding and caring of animals for specific purposes, such as for their meat, milk and/or fur).
The word “poultry” refers to
domesticated birds kept for meat, egg, and feather production. Poultry
in Nigeria is undertaken in diverse ways, utilizing different types of
resources, in a wide spectrum of socio-cultural and economic conditions.
Major poultry species kept include chicken, ducks, guinea fowls,
turkey, pigeons, quails, and ostrich of which chicken dominates the
industry.
The poultry industry plays important
roles in the development of Nigerian economy. It is a major source of
eggs and meat which have a high nutritional value particularly in the
supply of protein. Eggs are also important in the preparation of
confectionary and vaccines. The poultry industry also provides
employment opportunities for the populace, thereby serving as a source
of income to the people. However, the poultry industry in Nigeria, as
well as other developing countries of Africa, is continually
characterized by low production levels (Okoli, 1991).
It has been argued that if only
sufficient agricultural finance was made available, the decline in the
production and supply of agricultural products in Nigeria, would improve
(Oludimu and Fabiyi, 1983). An increase in the level of finance of the
poultry industry, better management practices, leading to good
nutritional egg and meat production, are required to supply the
essential protein for the population (Oboth, 2003). Again, poultry
production is considered a high risk investment by most financial
institutions due to high rate of poultry mortality, low productivity in
many cases and low levels of loan repayments. This situation has led to
scepticism on the part of financiers when considering financial requests
for poultry production. At present a large proportion of the operators
in small scale poultry industry in Southern Nigeria are in poverty due
to poor financial standing and high business risk which reduces the
level of accruable profit (Oludimuet al. 2004). There is thus a
growing concern for lack of credit to the poultry farmers even though
there are credit policies on the ground.
1.2 The significance of cooperative in poultry farming
Poor farmers tend to resign to
subsistence farming because of their inability to acquire required
credit support to keep in business (Ammani, 2012). Financing agriculture
involves lending money to farmers to stimulate the productivity of the
limited farm resources (Muniraj, 1987; Adegeye and Dittoh, 1985;
Osuntokun, 1992). Eswaram and Kotwal (1990) suggested that the provision
of agricultural credit makes available additional capital that can be
used to enhance the level of household’s productive and physical
capital. Access to credit is expected to enhance farming households’
ability to acquire capital intensive technology and assets to facilitate
and improve farming activities resulting in greater capacity to invest
in cultivation of high yielding crops and larger farm holdings (Nwankwo,
1983; Palmer and Ojo, 1983; Feder et al., 1985; Emereole, 1995; Nwaru,
2004; Nwaru and Onuoha, 2010; Ammani, 2012). This may in turn lead to
efficient resource allocation, increase farmers’ technical efficiency
and, by implication, increase farmers’ profitability. Similarly, Qureshi
et al. (1996) observed that an increase in credit to agriculture will
lead to increase food production and farmers’ income because as the
demand for credit increases, farmers output also increases, resulting in
improvement in their well-being.Nwaru and Onuoha (2010) further
observed that when agricultural credit is properly extended and
utilized, it encourages diversification which stabilizes and often
increases resource productivity, agricultural production, value added
and net incomes of farmers.
Credit is therefore a necessary input
in the various aspects of farm operations. With poor socio-economic and
production characteristics of the farmers, inconsistent and unfocussed
government policies, poor infrastructural base, low level of
agricultural investment, poorly developed agricultural research system,
underdeveloped land property rights, low level of technology,
inefficient use of resources, natural disasters and lack or insufficient
access to credit and other production resources interacting in a
synergism to restrict the agricultural sector, the result is low
production, low farm income, high prices of food items, inflation,
underdevelopment and concomitant poverty(Okuneye, 2001). The Federal
Government has continued to broaden the economic base of the country
through revamping of the agriculture sector. It is anticipated that this
will alleviate poverty and generate employment within the nation. The
provision of adequate finance, therefore, becomes a necessity to
facilitate the extent to which planned projects and programs could be
executed in public finance (Adegbite et al., 2008).
A number of studies have been carried
out on the impact of cooperatives on agricultural development. In fact,
academic interest that shows the impact of cooperatives on agricultural
development is evidenced by the fact that some academic journals have
devoted special issues to research establishing this linkage. Some
scholars focused on the mechanism by which poverty is reduced. Amin et al. (2003)
focused their article on the ability of cooperatives to reach the poor
and vulnerable farmers. They focused their article in such a manner
because of concerns that cooperatives is only serving people slightly
below or above the line of poverty, however the really poor and
small-scale farmers are being systematically excluded. By contrast,
Copestakeet al. (2001) analyzed the impact of cooperatives on
firms and individual wellbeing. They focused on business performance and
household income to establish a link between the availability of
cooperatives and overall wellbeing of the poor. Evans and Adams (2009)
approached the cooperatives question at a slightly different angle.
However, Evans and Adams (2009) seek to
explain non-participation in the cooperatives evolution, stating that
while cooperatives is used as a viable tool in fighting poverty, more
than 75% of the poor individuals choose not to participate for various
reasons. Ryne and Holt (2004) provided a meta-analysis of cooperatives
and focuses on women empowerment, intending to show why various studies
conflict in their conclusions as to the impact of cooperatives on women
empowerment. Parker (2001) evaluated the actual cooperatives programmes
in China using three key measures (targeting, sustainability and overall
impact).
Thus, both research and practice have
seen an increasing concern about the impact of cooperatives on
development. In spite of this emphasis, none of these researches
provided sufficient justification for the link between cooperatives and
small-scale poultry business in developing countries. Besides, the
empirical evidences emerging from few studies on the effect of
cooperatives on small-scale poultry production have so far yielded mixed
results that are inconclusive and contradictory. Thus, the question of
whether cooperatives improves or worsens poultry production is still
worthy of further research such as the one being undertaken in this
study. Also, empirical evidence remains largely scanty, isolated and
devoid of in depth analysis of the combined effects of socioeconomic
factors and microcredit on poultry production in the context of their
sign and size in Nigeria.
1.3 Problem statement
In recent times the experiences of
farmers have shown that poultry production has been suffering some
setbacks caused by increasing cost of feeds amongst others. This reduces
the net return from the business significance (Aihonsu, 1999). Also
many of the existing poultry farms are folding up and prospective
investors are becoming increasingly reluctant to invest (Aihonsu, 1999).
This situation threatens the survival of poultry industries and this
call for concerted efforts to save the industry from total collapse.
However, the poultry industry in
Nigeria, as well as other developing countries of Africa, is continually
characterized by low production level (Okoli, 1991). This is largely
associated with lack or limited credit finance for the procurement of
basic poultry equipment and materials. This makes it difficult for the
farmers to produce and supply sufficient and good quality feeds to the
poultry birds (Oyenuga et al., 1977; Ogunfowora et al., 1975).
This is largely associated with lack or
limited finance (credit facilities) for the procurement of basic poultry
equipment and materials. Feed ingredients are also expensive. This
makes it difficult for the farmers to produce and supply sufficient and
good quality feeds to the poultry birds (Oyenugaet al., 1977; Ogunfoworaet al., 1975).
Oboth (2003) observed that about 88.9
percent of the poultry farms were funded to the tune of N2.5 million per
annum while the average annual funding rate was N1.701 million. This
thus indicated the poor funding status of the small scale poultry farms
in Southern Nigeria. Oboth (2003) also reported that only 4.21% of the
poultry farms had between N3.1 –N3.5 million funding rate per year. As
the majority of these farms operated below fund secure level, there were
limited credit facilities to procure necessary items such as high
quality and abundant feeds, drugs and vaccines, cages and feeding
troughs, hybrid chicks and so on. Funds were also required for settling
workers? salaries, constructing feed mills and rendering various
marketing services.
The word participation has been widely
used and promoted in development programmes. It could be defined as an
active process which people take initial lives and action that is
stipulated by their own thinking and deliberation and which they can
effectively influence (FAO, 2006). Participation with regard to
community based projects include peoples involvement in decision making
process, in implementing programmes, their sharing of benefits of
development programmes and their involvement in efforts to evaluate such
programmes (Oakely, 2002). Farmers’ participation is considered
necessary to get community support for agricultural development projects
(Cole, 2007).
Aref (2010) identified lack of effective
and strong government institutions as some barriers to participation by
farmers. Farmers’ participation is an important factor for sustainable
agriculture in rural areas. Farmers’ participation issues are the areas
of concern at national and local levels (Subedi, 2008). Without
participation, there are obviously no partnerships, no developments and
no programme (Arefet al., 2010). Therefore lack of
participation in the decision to implement an agricultural policy can
lead to failure in the agricultural development. Active participation is
often constrained by lack of information and knowledge. Knowledge of
the decision making process is important if farmers are to take active
part in agricultural planning (Cole, 2007). The World Bank recognized
lack of participation in donor sponsored programmes as a reason to the
failure of many development and poverty reduction strategies in
developing countries (World Bank, 2012). Most of these programmes centre
on community development approach rather than agricultural oriented
strategies which have marginalized resource poor farmers thus causing
them to be eluded from active participation in the programmes
(Nwaobiala, 2013). However, various agricultural development agencies
established in sub-Sahara Africa that were meant to reduce poverty has
failed to achieve its set goals because of lack of stakeholders
(farmers) involvement in the agricultural policy formulation. Such
issues will be incapable of being successfully resolved, unless all
parties are fully involved in working out solutions on their
implementation and monitoring of results (Oyedele, 2008, Dolan and
Opondo, 2005). Currently, the World Bank is promoting a new initiative
known as International Fund for Agricultural Development-Niger Delta
Development Commission/Community Based Natural Resource Management
Programme in conjunction with the Federal Republic of Nigeria which
started in 2005.
Again, poultry production is considered a
high risk investment by most financial institutions due to high rate of
poultry mortality, low productivity in many cases and low levels of
loan repayments. This situation has led to skepticism on the part of
financiers when considering financial requests for poultry production.
At present a large proportion of the operators in small scale poultry
industry in Southern Nigeria are in poverty due to poor financial
standing and high business risk which reduces the level of accruable
profit (Oludimuet al. 2004). There is thus a growing concern
for lack of credit to the poultry farmers even though there are credit
policies on the ground. For instance, in the year 2000, a total of N5
million was provided by the federal government through the Nigerian
Agricultural Cooperative and Rural Development Bank as an investment
revolving fund in each local government area in the country (FRN, 2000).
1.4 Research problems
I. What are the demands for cooperative loans by poultry farmers?
II. What are the determinants for the use of cooperatives by poultry farmers?
III.
What are the technical efficiency differential between the cooperative
and non-cooperative poultry farmers?
IV. What is the profitability of the cooperative and non-cooperative poultry farmers?
1.5 Research Objectives
The general objective is to examine the
return on cooperative participation among poultry farmers in Yewa North
L.G.A of Ogun State
The specific objectives are to;
I. Determine the socio-economic characteristics of the poultry farmers
II. know the demand for the cooperative loan by the poultry farmers
III.
determine the technical efficiency differentials between cooperative
and non-cooperative poultry farmers
IV. compare the profitability of the cooperative and non-cooperative poultry farmers
1.6 Justification of the Study
The poultry industry plays important
roles in the development of Nigerian economy. It is a major source of
eggs and meat which have a high nutritional value particularly in the
supply of protein. Eggs are also important in the preparation of
confectionary and vaccines. The poultry industry also provides
employment opportunities for the populace, thereby serving as a source
of income to the people (Akanni, 2007).
The significance of this study is to
determine the returns on cooperative participation among poultry farmers
in Yewa North Local Government Area of Ogun State.
This study will enable us to know the
socio-economic characteristics of the poultry farmers in the study area,
the rate or level of cost and returns, the productivity efficiency and
the problem encountered by the poultry farmers.
This study will also enlighten us on the
contribution of cooperative participation by poultry farmers on their
poultry business with respect to economic growth and development of
individuals as well as the Nation.
In addition, this study will also add to
the existing research work on the effect of cooperative participation
on agricultural poultry production as whole, thereby benefitting the
policy makers in the area of agricultural policy formation.
For this reason, it is therefore
expedient to carry out this research for the development of the poultry
farmers and the nation at large taking into consideration comparism
between cooperative poultry farmers and non-cooperative poultry farmers:
Returns structure of cooperative and non-cooperative poultry farmers in
Yewa North Local Government Area of Ogun State.