THE IMPORTANCE OF IMPROVING AGRICULTURAL PRODUCTION THROUGH THE ACTIVITIES OF AGRICULTURAL COOPERATIVES IN NIGERIA

THE IMPORTANCE OF IMPROVING AGRICULTURAL PRODUCTION THROUGH THE ACTIVITIES OF AGRICULTURAL COOPERATIVES IN NIGERIA

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BACKGROUND TO THE STUDY

Agriculture accounts for about 20 percent of GDP in the West African sub-region  (World Bank, 2005); two thirds of the people derive livelihoods and 40 per cent of  exports commodities come from this sector (World Bank, 2000). Despite the importance of the agricultural sector, its performance over the last 30 years has been disappointing: agricultural and food production per capita in West Africa has stagnated in  the  last  ten  years  (FAO, 2005), yield of grain crops are less than half those of other developing regions in Asia and South America. If Africa is to feed itself, lift its people out of poverty and attain a satisfactory level of sustainable growth, the poor performance of its agricultural sector must be addressed.  It is the dominant sector in the rural areas of Nigeria as it provides employment for about 60 percent of the work force (Manyong, et al 2005). For instance, less than 50% of the country’s cultivable agricultural land is under cultivation particularly because smallholder and farmers who use rudimentary production techniques cultivate most of this land with resultant  low yields. The smallholder farmers are constrained by many problems including those of poor access to modern inputs and credit, poor infrastructure,  inadequate  access to  markets,  land and environmental degradation, and inadequate research and  extension  services  (Oluwatayo, et al 2008).

Today in an era where many people (especially small-holder farmers)  feel  powerless  to change their lives, cooperatives can serve as a strong, vibrant  and  viable  economic  alternative. They are based on the powerful idea that together, a group of people can achieve goals that none of them can achieve alone. It has being considered as a third force, an alternative and countervailing power to both big business and big government (ICA, 1995)

Agricultural cooperatives encourage members to engage in joint cultivation of food and cash crops among others. In view of the low financial capacity and  high  level  of underdevelopment, an individual farmer cannot achieve the  desires  for  large-scale  production. It is therefore; in the farmers’ interest that resources are pulled together so as to  gain a tremendous collective advantage and thus widening the industrial base of the economy and the management techniques of the farmers (Enikaselu et al, 2005).

 

The cooperative as a social organization began early in human development. Cheney (1999) opined that cooperatives were always inspired by the  ancient  doctrine of human  fellowship, by the new spirit of social service and by a firm faith that the time would come when people would work for the whole community, instead of their own gains.  Ghosh  and  Maharjan (2001), modern cooperatives started in 1904 in British India  when the cooperative  societies  act was enacted. The purpose of the cooperatives at inception was to provide cheap credit  to  the farmers. Cooperatives was introduced into Russia in mid-19th century from Germany (Lohlein and Wehrheim, 2003), but the exact year was not stated. However, Lohlein and Wehrheim (2003) reported that by 1883, there were about  981 cooperatives  in Russia.  Those in rural areas are called credit cooperatives while those in the urban centres are refer  to  as credit union.

Furthermore, before Rochdale, cooperative pioneer societies had practised most of the  Rochdale principles. Gates (1998) found profit sharing and surplus sharing cooperatives between workers and owners, as far back as 1795 and  (as  might  be  expected) the genius of  the Rochdale cooperative was that they actually developed principles, which they then practiced and popularised. Subsequently, following the guiding principles of cooperative promotions by the ICA, various cooperatives rapidly developed worldwide-both in developed and developing countries – and this made an immense contribution to social and economic development (ICA, 2008).

The evolution of cooperatives has shown that the cooperative movement has been influenced  by its social and economic conditions. Cooperatives were created by their members to  deal with their own difficulties, in relation to aspects of economic change (Fairbain, 2004a). Djik (1997) summarised the historical reasons to set up cooperative firms, which included the need for counterbalancing power; to gain access to industrially produced goods and services; efficiency by economies of scale; risk management; and the improvement of  members’  income and the rural economy.

Illiopulous and Cook (2004) over-viewed the historical development of farmers’ cooperatives  in America, and divided them into two main types which included ‘traditional’ cooperatives  and ‘new generation’ cooperatives. Traditional cooperatives often refer to producer-owned, controlled with open membership, and risk capital generated primarily by means of retained earnings from member patronage and illiquid equity ownership rights. New generation cooperatives (NGCs) often adopt “a property rights structure that enables them to partially ameliorate the aforementioned constraints” (lliopoulous & Cook, 2004). Cook and Burress (2009) further research also proposed a dynamic  life cycle  framework to show the evolution  of agricultural cooperatives. This life cycle framework includes five phases of economic justification: organisational design; growth; glory and heterogeneity; recognition and introspection; and choice (Cook & Burress, 2009).

The early cooperative societies in Nigeria were established to facilitate cocoa farming which led to the establishment of the Cooperative Registrar of the Colonial Government in 1935.

Later, these cooperative societies began providing financial  intermediation  to  members (World Bank, 2000). Eventually, multi-purpose cooperative societies were designed to simultaneously solve several problems facing members, such as input supply, farming and marketing of farm produce. Consequently one could arguably state that the need to reduce shortage of loans to the low income farmers among the members thus promoting agricultural development brought about cooperative societies in Nigeria  (Oluyombo,  2010).  The  operation of cooperative within and outside Africa varies from one nation to another. In some countries, there are rules and regulations guiding the operation of cooperatives which they are expected to comply with. The regulation may require the cooperative to be under the direct control of the central bank of such nation or a separate agency may be created to monitor and control the affairs of cooperative depending on what the country deems acceptable to  do (Henry and Schimmel, 2011).

The survival of cooperative societies in any country depends  largely on the  overall political and economic environment of such nation because cooperatives exist within  the  wider economy of the particular country where it operates (Calkins and Ngo, 2005). The practice of cooperative has grown over the years across the globe either as  formal  or  informal  institutions. The regulation of farmers’ cooperatives is a function of the roles  they  are  expected to perform in such economy vis-a-vis the level of economic  development  and  poverty in such a nation (Oluyombo, 2010). Cooperatives with track records of prudent management and cohesive membership stand to play a major role in agricultural and rural development in Nigeria.

International organizations such as the United Nations (UN), the World Bank and the International Labour Organization (ILO) are convinced  that  agricultural  cooperatives  can play a vital role in achieving sustainable rural development. UN (2008) noted that cooperatives are by nature concerned with democratic and  human  values,  as well as caring  for the environment.

Successive governments in Nigeria recognize that cooperative societies are essential for the development of the agricultural sector. This laudable goal was supported by the establishment of the Agricultural Development Programmes (ADPs) and the River Basin and Rural Development Authorities (RBRDAs). Both ADPs and RBRDAs always organize  farmers  under their programmes into cooperative groups for better co-ordination of the farmer’s activities. The cooperatives approach to group action has  been effectively  utilised  by these two programmes. Although, the primary objective of forming group farming cooperatives in ADPs and RBRDAs is to increase agricultural outputs, it has been possible to  get  them involved in marketing of their produce as well.

Farmers are the single largest group of users and managers of land,  water,  and  other ecological resources throughout the world. Most small holder farmers regardless of gender require services and information obtainable through membership of agricultural cooperative. Such information includes appropriate technology and sound technical advice not only to increase their agricultural productivity and incomes but also to make farming and rural life richer and more sustainable.  Herein lies the rationale  why farmer’s cooperative  is  deserving of research attention particularly in Mbaise local government area, Imo state.

 

1.2 STATEMENT OF RESEARCH PROBLEM

Small-holder farmers remain the bedrock of agricultural production especially in  the developing countries including Nigeria. It accounted for over 90% of all agricultural output in Nigeria (World Fact Book, 2011). The farmers are burdened with high cost of farm inputs, inefficient farming techniques, inadequate infrastructure, poor producers’ prices and heavy constraints in obtaining credits and insurance. Benson (2004) remarked that the situation is further compounded by the general economic downturn and governments drive to remove all subsidies on inputs such as fertilizers, vaccines and foundation stock. Consequently, the cooperative option comes into focus as a viable way to effectively mobilize farmers to form groups and pool resources so as to become more effective in agricultural production.

In addition to the values and principles of cooperatives, Veerakumaran (2005) explained that cooperatives serve as fundamental tool for achieving food security at household level. Cooperatives are the best institutional intervention for attaining food security in any country. The developed nations like United States of America, Canada, Australia, almost all European countries and Socialist country like China have attained food self-sufficiency through cooperatives (Chambo, 2009).

Gertler (2001), using the probit model studied the potential impact cooperatives have in sustaining regional economies in Canada. The results show that cooperatives are practical vehicles for cooperation, collective action and they build and reinforce community, stabilize regional economies and provide a favourable climate for further investment. Cooperatives reduce inequality and promote equitable sharing of the cost and benefits of development. Cooperatives can promote economic democracy and the empowerment  of  marginalized groups- a hallmark of sustainable development and a precondition for shared responsibility.

Adefila (2012) examined the factors influencing the performance of farmers’ cooperatives organization in Gurara Area of Niger state, Nigeria using multiple  regression.  The  results from the regression analysis revealed that famers’ cooperative organizations are variously involved in agricultural development and that factors’ influencing their role performance include annual income, experience in farming, leadership training and membership size. The author concluded that cooperatives in whatever form are seriously viewed as catalyst in the process of rural socio-economic development and the law should empower cooperatives to perform certain functions, such as strengthening their bargaining power as effective agents of socio-economic rural transformation.

Ojiako and Ogbukwa (2012) examined loan repayment capacity of small – holder cooperative farmers in Yewa North Area of Ogun State, Nigeria using regression technique. The results show that farm credits played vital roles in the socio-economic transformation of the rural economies. However, loan acquisition and repayment were characterized by numerous challenges including high levels of default among beneficiaries. The study concludes that promoting smallholder cooperative farmers’ loan  repayment  capacity  would  require conscious use of policies directed at increasing loan size and farmers’ farm holdings and/or reducing household size.

Similarly, Ofuoku and Urang (2009) assessed the effects of cohesion of farmers’ cooperatives societies on loan repayment among members in Delta State, Nigeria using Spearman’s rank order correlation analysis. The study observed that there was almost perfect positive relationship between rates of loan repayment perception and cohesion. Consequently, they recommended that extension agents should take advantage of the effect of cohesion on loan repayment to promote cohesion in upcoming cooperative societies.

In evaluating agricultural credit utilization by cooperative farmers in Benue State, Nigeria, Okwoche et al (2012), observed a significant difference between the agricultural output and income of farmers’ before and after the utilization of loan acquired. The t-test analysis shows that farmers joined the farmers’ cooperatives societies mainly to access credit. The study recommended that the farmers should be adequately motivated with needed credit facilities as this will further enhance agricultural production.

However, considering various studies (Gertler, 2001; Veerakumaran, 2005;  Ofuoku  and  Urang, 2011; Adefila, 2012; Ojiako and Ogbukwa, 2012; and Okwoche, 2012), this research will seek to assess the extent to which cooperative membership has transited farmers from subsistence to mechanized agriculture.

 

1.3 RESEARCH QUESTIONS

1. What  is the current social and economic status of farmers’ cooperatives in the area?

1. What are the reasons for joining famers’ cooperatives in the area?
2. What  is the importance of farmers’ cooperatives on agricultural development?
3. Are there constraints to agricultural productivity among cooperatives in the area?

 

1.4 AIM AND OBJECTIVES OF THE STUDY

The aim of the study is to assess the importance of farmers’ cooperatives on agricultural development in Mbaise local government area, Imo,state, Nigeria. However, the specific objectives are to:-

examine the socio-economic status of the farmers’ cooperatives in the study area

1. Identify the reasons for joining farmers’ cooperatives
2. Assess the benefits members derive from their cooperatives
3. Assess the attitudes of members to farmers’ cooperatives in the study area
4. assess the constraints of the farmers’ cooperative organization to agricultural development.

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