INVESTIGATING THE PROBLEMS OF AGRICULTURAL CREDIT IN ADAMAWA STATE (CASE STUDY; YOLA SOUTH)

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    Introduction

For many years, different studies have been conducted on the problems of agricultural credit in Nigeria. The studies were conducted both in the Northern and Southern parts of the country and the results were almost similar to one another.

From the results, it is observed that most farmers who apply for credit to finance their agriculture experience problems such as lack of collateral, high interest rate, lack of awareness by extension farmers, long procedures and insufficient funds to give all farmers that requested loans; Are the main factors that lead to having problems with agricultural credit (N. 2012). Other studies conducted have also shown that educational level and locations of banks where the loans are applied for are also among the factors that contribute to farmers not having accesses to loans in the rural areas of Nigeria (Foin 2007).

             Definition of terms

Agriculture can be defined as the science, art and occupation of cultivating soil, rearing animals and producing crops. It is also known that agriculture is the basis of civilization; it is through agriculture that human population settled and increased in number, instead of moving from one place to another. There are different types of agriculture which includes the subsistence and industrial agriculture. The subsistence agriculture is a type of agriculture which is practiced by farmers for the survival of their families. In this type of agriculture, farmers cultivate small agricultural produce in small land that is just enough for the families to eat and small cash crops. This type of agriculture is practiced by families and all the labors are done using human and animal power with hand and simple machine. Most of the farmers practicing this type of agriculture have livestock such as cattle and goats.

The residue of the crops is used in feed the animals. The waste generated by the animals is also used as fertilizers in the farms. Industrial agriculture is another type of agriculture in which very large quantities of crops and livestock are produce for commercial purposes. In this type of agriculture large machines and chemicals are used in order to produce higher crop yield to sale.

Credit can be defined as the ability for an individual or group of people to obtain or receive goods or money for present use and repay back (Foin 2007).

Credit can be obtained from different sources and when paying back there is certain amount that most be added as interest to the money depending on the amount of money obtained. The interest amount can also varies depending on the time given to pay back the money; failure to do that can also lead to increase in the percentage of the interest rate of the loan obtained.

Agricultural financing can be defined as the use of money or goods obtained for financing agriculture (Foin 2007). Using the money one has or the credit obtained, there are many factors of production that a farmer needs to purchase; these include lands, machines, fertilizer and chemicals. The use of money to purchase these factors will help in increasing the production of the farmer and making work easier for him with the help of the machines he purchased in the farm.

Credit constraint – This can be defined as a situation where by a credit lender is unsatisfied with the credit he/ she demanded.

            Agriculture and Nigerian Economy.

Before the discovery of petroleum in the Niger delta region of Nigeria, Agriculture sectors are one of the sectors that are contributing most to the development of Nigerian economy (Zivkovic, Omorogiuwa and Ademoh 2014). Nigeria is divided into south and north, the northern part of the country is the region where about 70% of the populations are farmers. The country is also known for its abundance of fertile soil and climate for agriculture, which when used properly can place the country among the league of high economically developed nations in the world (Zivkovic, Omorogiuwa and Ademoh 2014). With the availability of both the lands and fertile soil in the country, Nigeria’s government has failed to use all the natural resources they have in abundance on the agricultural sector but focused more on the petroleum in the southern parts of the country. It is estimated that the population of Nigeria is about 100 million; over 61.2 percent of this population is living in poverty with less than one dollar per day (Opinion Polls Socio-economic Polls, 2013). Nigerian economy could have been better than what is today if the agricultural sector had been given more attention by the government. This is because the agricultural sector is the only solution to the situation Nigerian are today, it is the only sector that can provide for all the unemployed and the poor citizens living in the rural areas with a less than dollar per day (Zivkovic, Omorogiuwa and Ademoh 2014). Most of the problems faced by Nigerians in agricultural sector are the lack of machines, good roads, and credits to increase productivity.

Before, when Agriculture was the sector that contributed more to the Nigerian economy and the government has given more attention to the sector, the country are known as the exporter of crops such as groundnut, cocoa, seed cotton and

palm oil (Zivkovic, Omorogiuwa and Ademoh 2014)l. The country exported all the cash crops globally through market boards that are in charge of all the exports and selling domestically which the money and revenue are then is used in funding the needs of the states. The market boards were restructure in 1954 when the country assume federal status, three boards were setup with each one responsible for handling and exporting one type of crop in the three regional part of the country. The three regional parts of the country are Northern, western and eastern. Under the supervision of Nigerian produce marketing company the boards continued to operate in different part of Nigeria. Agriculture continued to provide the country with foreign earnings and employment until in 1970’s when it was overrun by the oil boom (Zivkovic, Omorogiuwa and Ademoh 2014).

The 1970’s oil boom and creation of more state in Nigeria led to making the Nigerian produce Market Company the nationwide commodity boards. In 1977 the price of crude oil fell by four percent leading to economic decline and decrease in both the state and federal revenue (Zivkovic, Omorogiuwa and Ademoh 2014).

The boards became financially inactive and farmers were unable to get investment funds for their farms to produced crops that will be exported by the boards. With other problems such as the replacement of the boards responsible for exporting cash crops with the Nigerian exports promotion which has no connection with council of Nigerian farmers, agricultural sectors in Nigeria continue to struggling. The movement of farmers from rural areas where much of the agricultural products are produce in search a work led to a decrease in the quantity of products exported in the country. In The 1960s the agricultural contribution to gross national income was 60 percent, which declines to 49 percent in 1970s and 1980’s 22.2

percent (Agriculture, 2014). This continues to decline till now and the only way to make agriculture the way its contributes to our economy as in the 1960’s is giving much attention to the sector and by giving farmers in both the rural and urban areas the funds and machines they needed for production (Zivkovic, Omorogiuwa and Ademoh 2014).