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Impact Of Loan Acquisition On Agriculture
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The problem of low impact of loan acquisition in agriculture seem to be a
common feature of the public credit scheme to finance agricultural
sector because of the problem of low productivity associated with low
impact of loan acquisition and situations where individuals engage in
business other than farming because of quick return and relative high
degree of certainty (Okon and Nyienakuna, 2002).
The impact of loan
acquisition and other problems associated with agricultural financing
reduce the funds available and requires disproportionate amount of
administrative cost and time to recover the loan, thus profitability is
reduced. These problems have persistently plagued the agricultural
sector of loan and credit to the agricultural sector all to improve
agricultural productivity.
The shortages in the supply of loans and
farm credit in Nigeria are caused by the inability of farmers to produce
collateral to enable them collect loans for enhancement of their
agricultural production and the relevance of commercial banks to release
loans to farmers. Therefore farmers now depend on informal sources to
agricultural financing which result in the ability of the farmers to
accumulate enough capital. So it is argued that, if loans were made
available to these farmers, the agricultural sector would develop more
rapidly (Nwagbo 1981).
Therefore, federal government of Nigeria
initiated programs and established institution to serve as a strategy to
increasing productivity as well as raising the income of farmers
through:
The Nigerian agriculture and co-operative bank (NACB 1973)
now named Nigerian agricultural and co-operative rural development bank
(NACRDB) through merger of defunct Nigerian agriculture and co-operative
bank and defunct people bank of Nigeria by the decree 22 of 1990.
Agricultural
credit guarantee scheme (ACGS, 1978), operation feed the nation (OFN,
1976) and non-governmental organization (NGO). To make loans and credit
available to farmers at a cheaper rate in all aspect of agricultural
production, processing and marketing.
1.2 STATEMENT OF THE PROBLEM
Farmers
in Khana L.G.A are operating in the subsistent level due to lack of
application of modern /heavy farm machineries and small sizes of farm
holding. Also farmers are faced with problem of inadequate finance and
restriction on formal source of finance.
Over the years, advocacies
have been made in increasing the access of farmers to agricultural
productivity of rural farmers. They are believed to be indigenously
efficient in their crop/soil management practices (Mathew 2002 and Ajayi
20005). Thus access to loans would ensure high productivity. In the
study area, agriculture is still subsistent, it is perceived to be
generally characterized by low productivity which is due to low impact
of loan acquisition towards agriculture. Could it be true that if
farmers have access to loans and credits their level of productivity
would guarantee the repayment of such loans. Therefore, this study
sought to ascertain the relationship between the impact of loan
acquisition on agriculture and the level of agricultural productivity of
the beneficiaries among other factors that could affect agriculture
loan.
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