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07030248044CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
Finance in agriculture is as vital as development of technologies. Technical inputs are often purchased and employed by farmers on condition that decent cash (funds) is obtainable with farmers. Most of the days, farmers suffer from the matter of inadequate monetary state. This case ends up in borrowing from a simple and comfy supply. Skilled cash lenders were the sole supply of credit to agriculture until 1935. They accustomed charge unduly usurious rates of interest and follow serious practices whereas giving loans and sick them. As a result, farmers were heavily burdened with debts and plenty of of them square measure left with perpetuated debts. There have been widespread discontents among farmers against these practices and there have been instances of riots additionally. The role of agricultural credit as an element of production to facilitate economic process and development further because they ought to befittingly channel credit to rural areas for economic development of the poor rural farmers cannot be over stressed. Agriculture contributes immensely to the Nigerian economy in many ways, namely; within the provision of food for the increasing population; offer of adequate raw materials to a growing industrial sector; a serious supply of employment generation, interchange earnings; and, provision of a marketplace for the product of the commercial sector (Okumadawa, 2012; United Nations agency, 2011; Food Agricultural Organization, 2014). The agricultural sector features a robust rural base; therefore, generating concern for agriculture and rural development. Support for agriculture is wide driven by each Government and therefore the public sector, that has established institutional support in style of agricultural analysis, extension, trade goods selling, input offer, and land use legislation, to fast-track development of agriculture and rural economic management (CBN, 2010). The potential role for agriculture in development is to scale back poorness and drive growth for countries whose economies square measure agriculture-based. Growing population size needs agriculture growth compatible to fulfil needed level of food. The modification in consumption pattern with a modification in per capita financial gain level needs additional proteins containing diet. The transition of agriculture from ancient to trendy farming techniques relies on adequate handiness of inputs like certified seeds, balanced use of fertilizers, mechanization, and agricultural finance. Agricultural finance plays a crucial role in enhancing the agricultural productivity in developing countries like African nation. Finance is the back bone for any business, more so for agriculture which has traditionally been a nonmonetary activity for the rural population in Nigeria. Rural credit, though not a direct tool of production, can help break the vicious circle of ‘grow-eat-grow’ by removing financial constraints and accelerating the adoption of new technologies. Credit facilities are thus the integral part of the process of commercialization of the rural economy. The introduction of easy and cheap credit is the quickest way to give boost to the agricultural production. Therefore, it was the prime policy of all successive governments to meet the credit requirements of the farming community of Nigeria. (Saeeda Habib 2015) Credit is an important tool for getting the inputs in time increasing thereby the productivity of the farms particularly those of small ones. The current study was designed to investigate the problems faced by the farmers while getting the loan. It was found that the small farmers faced a lot of problems in getting and returning the loan which must be removed to get better results and hence improving the quality and quantity of the agricultural products (Muhammad Bashir and Muhammad Azeem 2008). The use of credit facilities would therefore translate to higher resource, employment and capacity utilization, increased output and income, and reduce poverty in the rural economy, especially among the farmers and be helpful to increase the food production which would lead to an improvement in the welfare of the farmers and consequently a reduction in their poverty and food insecurity levels (Olagunju, 2010).
1.2 STATEMENT OF PROBLEM
In Nigeria, agriculture remains the mainstay of the economy since it is the largest sector in terms of its share in employment (Philip, Nkonya, Pender and Oni 2009). In an effort to diversify her oil base economy, Nigeria is placing much emphasis on financing other sectors most especially agricultural sector, since agriculture has the potential to stimulate economic growth through provision of raw materials, food, jobs and increased financial stability. It follows that agriculture financing is one of the most important instruments of economic policy for Nigeria, in her effort to stimulate development in all directions. Finance is required by agricultural sector to purchase land, construct buildings, acquire machinery and equipment, hire labour, irrigation etc. In certain cases such loans may also be needed to purchase new and appropriate technologies. Not only can finance remove financial constraints, but it may also accelerate the adoption of new technologies.
1.3 AIMS OF THE STUDY
The major purpose of this study is to examine Agricultural financing in Okrika L.G.A, Rivers state. Other general objectives of the study are:
1.5 RESEARCH HYPOTHESES
1.6 SIGNIFICANCE OF THE STUDY
The study is aimed at evaluating the financing, policies and initiatives in the agricultural sector in Nigeria, for a sustainable development. The findings from this study will help various stages of Government in Nigeria, thereby helping in policy statement, especially now that the economy is begging for diversification. The Private sectors, Non-Governmental Organizations, farmers and potential farmers will find the findings of the study useful for their decision making process. Researchers and potential ones are likely to benefit from this study. In essence, the study will be beneficial and add knowledge to students so as to enlighten them more on Agricultural financing. The study shall therefore serve as a reference for further research.
1.7 SCOPE OF THE STUDY
The study is based on Agricultural financing in Okrika L.G.A, Rivers state: case study of First Bank Plc
1.8 LIMITATION OF STUDY
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
1.8 DEFINITION OF TERMS
Agricultural Finance: "Agricultural finance is the study of financing and liquidity services credit provides to farm borrowers. It is also considered as the study of those financial intermediaries who provide loan funds to agriculture and the financial markets in which these intermediaries obtain their loan able funds”
Rural Finance: Is a spatial concept, which encompasses the provision of different financial services to households and enterprises in rural areas for both productive and consumptive purposes. Rural financial services include loans, savings, payment and money transfer services, and risk management (e.g. insurance, hedging and guarantees).
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