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ABSTRACT

 

The study was conducted in the Owan East L.G.A of the Edo state. The main objective of the study was to find out about available credit packages for rice farmers at the Edo State, Owan East L.G.A, examine why rice farmers at Edo State, Owan East L.G.A access credit, determine the benefits rice farmers may derive from using credit, evaluate the problems (if any) that rice farmers encounter with the use of credit and also access how rice farmers manage the credit taken. It was hypothesized that Ho₁ There is no relationship between source of credit accessed and the use of credit. Ho2 There is no relationship between type of credit facility accessed andannual income. The snow ball sampling was used to select two hundred rice farmers for the study. Six key informants were also purposively selected. The respondents were interviewed using a structured interview guide. The data was analyzed using the Statistical Package for Social Sciences (SPSS) software to generate frequency and percentage distributions. The chi-square statistic was used to test the null hypotheses. The results revealed that majority of rice farmers were aware of two or more sources from which they could access credit. These sources include formal, semi-formal and informal sources. Respondents accessed loans to finance their farming activities in areas such as land preparation, purchasing farm inputs such as seed rice, agro chemicals as well as for harvesting and threshing. The results revealed that respondents derived benefits from the use of credit including purchasing inputs and use of machinery to ensure high yield, undertaking land preparation, attending to welfare needs of family members as well as marketing their produce from accessing credit. Challenges encountered include small loan sizes, delays in disbursements and high interest rates. The chi– square analyses revealed a significant difference between source of credit and use of credit so Ho1 was rejected. It was concluded that rice farmers had adequate knowledge about credit facilities and accessed credit from a variety of formal, semi-formal and informal sources to help in their farming activities. Farmers derived benefits from these loans in the short run. They faced certain challenges like late disbursement of loans. Due to training given to clients before and after disbursement of loan, rice farmers were able to use loans effectively for the intended purpose. It is recommended that credit providers repackage loans to make them more attractive,  and also intensify training programmes so that loans are used for the intended purposes and encourage more women to undertake rice farming so as to improve standard of living of families.

 

 

 

CHAPTER ONE INTRODUCTION

 

1.0 Introduction

This chapter deals with the introduction to the study. It gives a brief background to the study, statement of the problem, research questions, objectives of the study, significance of the study and definition of terms.

 

1.1 Background information

Rice (Oriza Sativa) is an integral part of human being, it is the world’s only crop that was planted by emperors and kings offered to the gods and eaten by both the wealthiest and the poor. Rice is an annual crop and the most important stable food crop in tropic countries; commercially it is the most important cereal after wheat. It is widely consumed and there is hardly any country in the world where it is not utilized in one form or the other.

In Nigeria rice is one of the few food items whose consumption has no cultural, religious ethnic or geographical boundary. It is available in five stars hotels in the big city and towns as well as the “most local” of the eating places in the remotest villages throughout the country. It is highly priced and widely accepted for festivity. In some rural areas, it is so adored that if is eaten only on Sundays and sometimes on market days.

But unfortunately, the cultivation and production of this highly priced and very important food crop is dwindling consequently, the price has gone beyond the reach of majority of Nigerian’s. In order to stem the decline in the number of farmers participating in rice farming and at the same time increase the production of all staple food crops, the Federal Government introduced a number of agricultural development programmes/project among wish are Operation Feed the Nation (OPN), Green, Revolution National Accelerated Food Production Programmes (NAFPP), Directorate of Food, Roads and Rural Infrastructures (DFRRT) and new Agricultural Development Programme (ADP), River in and Rural Development Authorities (RBRDA) and Nigeria Agricultural co-Operative and Rural Development Bank to mention but a few. Irrespective of these programmes/project and other schemes and improvement in infrastructural facilities, food crop (especially rice) productions have persistently remained below market demand.

In the light of the above, conscious and effective efforts will be made to thoroughly examine and study the production as well as the financing of this production processes of rice, the problems and the prospect of rice production in Nigeria a specified study of Owan East Local Government Area Gomezka (2001).

The access to agricultural financing is a factor which may determine the independence or otherwise of small farmers. Improper appraisal of loans, poorly prepared lending programs and access to agricutural financing, may all contribute to the loan not being utilized properly.  It is likely that whilst credit may be seen by the lending agency as a productive resource, the small holder farmers may take credit for other purposes. When this happens, the returns from such investments may not be able to support the repayment of the loan.  This could go a long way to affect the family finance. On the other hand if credit is utilized properly it can be a key to success, as well as independence from “shylock” moneylenders and help improve families‟ standard of living.

 

1.2 Statement of the problem

Farming generally requires some form of financial investment and rice farming is no exception. Rice farming requires quite a substantial financial investment to cover operations from land preparation to harvesting and processing of the rice grains.  Despite the provision of credit to farmers under the Edo State, Owan East L.G.A, anecdotal evidence suggests only a minority (600farmers) access credit from the Agricultural Development Bank (ADB).  What is preventing other farmers from accessing credit? It has also been observed that farmers who accessed credit do not show any observable improvement in their farm production, families’ standard of living or any benefits of the credit accessed. This is evident from their inability to pay back their loans as well as their dependence on further loans for farming, year in and year out. Thus their inability to provide basic needs for the family.  The study therefore hopes to find out how rice farmers access and manage credit to improve their families‟ standard of living.

 

1.3 Research Questions

• What credit packages are available and how accessible are these packages to rice farmers at Owan East L.G.A?
• How beneficial are credit facilities to improvement of family livelihood of rice farmers.
• What relationship exists between timely accessibility of credit and access to agricultural financing?

 

1.4 Objectives of the Study

1.4.1 Main Objective:

The main objective of the study is to find out how rice farmers access and manage credit so as to improve their rice production.

1.4.2 Specific Objective:

The specific objectives of the study were to:

1. Find out about available credit packages for rice farmers at Owan East L.G.A.
2. Examine reasons why rice farmers at Owan East L.G.A access credit.
3. Determine the benefits (if any) that rice farmers derive from using credit.
4. Evaluate the problems (if any) that rice farmers encounter with the use of credit
5. Asses how rice farmers manage the credit taken.

1.5 Hypotheses

HO₁There is no relationship between source of credit accessed and the use of credit.

HO₂There is no relationship between type of credit facilities accessed and income of farmers.

1.6 Significance of the study

The findings of the study would:

1. Add to existing literature on access and management of agricultural credit by farmers.
2. Provide information which would contribute to increased rice yields and therefore to food security, self-sufficiency and a better standard of living of families.
3. Help credit providers put in place a sustainable, efficient and effective credit scheme that would help improve the welfare of families.

 

1.6 Definition of terms

Credit –

In the context of the study credit is defined as the providing goods, services and cash and paying at a later date.