ABSTRACT
The low scale of production resulting to low output performance of cassava has been related to credit provision, suggesting that cassava farmers do not fully access credit and enjoy the benefit of credit. Hence, the study focused on the Analysis of cassava production among credit and non-credit users in Abia State, Nigeria. The study examined the socio-economic characteristics of cassava farmers, ascertained the amount of credit accessed by credit users, estimated and compared the cost and returns of cassava production among credit and non-credit users, estimate the significant differences among credit and non-credit user, analyse the determinants of cassava production among credit and non-credit user, and estimated the effect of credit on the productivity of cassava among credit and non-credit users in the study area. A combination of multi-stage, purposive and random sampling procedures was used to select 120 respondents with a well-structured questionnaire. Data collected were analysed with descriptive statistics, cost and return model, z-test model, ordinary least square (OLS) regression model, and chow test model. The result shows a mean age of 46 and 45years for credit and non-credit users respectively.The respondents had farming experience of 19 and 18 years credit and non-credit users respectively, with a mean household size of 6 and 10 persons respectively.The study further revealed that majority 90.00% and 78.33% of credit and non-credit users belonged to cooperative association and about 80% and 69% were married. Analysis of the amount of credit accessed by the credit users cassava farmer shows that microfinance bank had the highest (N510, 95238) credit requested while commercial bank had the highest (N500,000) credit accessed in the study area. The cost and return analysis results indicates that cassava production is a profitable business. The z-test statistic of showed that the mean value of 2.214 of credit users was significantly different from that of the non-credit users. The regression result shows that age, education, farm size, farm asset, membership of association, transportation cost were significant and positively influenced the performance of the farmers. The chow test result shows that credit had a significant positive and direct effect on the performance of both farmers. The study recommends farmers to form more cooperatives in their farming business in order to enjoy credit facilities and the benefits of large scale production.Policy and programmes on technological, organizational and institutional interventions aimed at promoting cassava production performance in Abia State, should be put in place to improve the performance of cassava production level and the facilitation of credit access to cassava farmers in order to ensure greater output performance at all levels in the study area
TABLE OF CONTENTS
Title Page i
Declaration ii
Dedication iii
Certification iv
Acknowledgement v
Table of
Contents vi
List of
Tables vii
List of
Figure viii
Abstract ix
CHAPTER 1: INTRODUCTION
1.1 Background Information 1
1.2 Problem
Statement 4
1.3 Research Questions 8
1.4 Objective of the Study 8
1.5 Research Hypotheses 8
1.6 Justification of the Study 9
1.7 Scope of the Study 10
CHAPTER 2: LITERATURE REVIEW
2.1 Conceptual
Review 11
2.1.1 The concept of
credit and agricultural credit 14
2.1.2 Origin of credit 17
2.1.3 History of credit 17
2.1.4 Classification
of agricultural credit 18
2.2 Concept of Performance 21
2.2.1 Review
of performance measures and indicators 21
2.2.2 Determinants
of output performance 22
2.2.3 Concept
of profitability 22
2.4 Theoretical
Framework 23
2.4.1 Theories
of agricultural credit 23
2.4.2 Sources
of credit for farmers 26
2.4.3 Access
to credit by cassava farmers 27
2.4.4 Effect
of credit on the income of cassava farmers 30
2.4.5 Design
and implementation of agricultural credit schemes 31
2.4.6. Theory of
agricultural production and productivity 34
2.5 Empirical Literature 37
2.5.1 Socio-economic
characteristics of cassava farmers 38
2.5.2 Empirical
studies on determinants of credit performance 40
2.5.3 Determinant of production
performance 41
2.5.4 Performance
of agricultural programmes in credit accessibility 44
2.6 Reviews of Analytical Techniques 45
2.6.1 Regression model 47
2.6.2 Assumption of regression
model 48
2.6.3
Estimation of method of regression
analysis 49
2.6.4
Statistical test of goodness of fit 49
2.7 Cassava Production in Nigeria 50
2.7.1 Cassava producing states in Nigeria 52
2.7.2
Cassava marketing systems 53
2.8
Cassava Production Process and Materials 54
2.8.1 Production Inputs 54
CHAPTER 3: RESEARCH
METHODOLOGY
3.1 Research Design
3.2 The Study Area
3.2: Sampling
Area
3.3 Sampling
Procedure
3.4 Data
Collection Technique
3.4 Techniques
of Data Analysis
3.5 Model Specification
3.5.3 Budgetary
analysis
3.5.4
Z-test model
3.5.5 Ordinary least square (OLS) regression
model
3.5.6 Chows’
test of hypothesis
CHAPTER
4: RESULTS AND DISCUSSION
4.1
Socio-Economic Characteristics
of Cassava Farmers
4.
2 Level of credit accessed among cassava
credit users
4.3 Cost and return analysis of cassava
production among credit
and non-credit users in Abia state.
4.4 Estimation of difference between the
performance of credit and
non-credit user cassava farmers
in Abia state, Nigeria
4.5 Determinants
of cassava productivity among credit and non-credit users
4.5.2 Determinants of cassava productivity among
non-credit users in
Abia State, Nigeria.
4.5:3 Determinants of cassava productivity among
credit and non- credit
users farmers (Pooled without Dummy)
4.6
Estimation of effect of credit on
productivity of cassava among
credit and non-credit users in Abia State.
CHAPTER 5: SUMMARY, RECOMMENDATIONS AND CONCLUSION
5.1 Summary of Findings 105
5.2 Conclusion 106
5.2 Recommendations 107
References 109
Appendices 129
LIST OF TABLES
Page
1.1 Cassava production trends
in Nigeria from 1975-2015 4
1.2 Major cassava
producing States in Nigeria 51
2.1 New Cassava improved Varieties 64
3.1 Sampling
Area
68
4.1 Average socio-economic characteristics of
respondents in the study area
74
4.2
Level of Credit Accessed Among
Credit Users in the Study Area
88
4.3 Cost and return
analysis of cassava production / Ha. 86
4.4 Test for differences between output and
productivity of Credit and
Non-Credit User Cassava Farmers in
the Study Area 88
4.5:1 Determinants
of Cassava Productivity among Credit users in the study area 89
4.5.2: Determinants
of cassava productivity among non-credit users in Abia
State,
Nigeria.
93
4.5.3 Determinants of cassava productivity
among credit and non-credit
users farmers (pooled without
dummy)
96
4.5:4 Determinants of cassava productivity among
credit and non-credit
users farmers (pooled with
dummy)
98
4.6
Tests for difference in
productivity among credit and non-credit users 102
LIST OF FIGURES
1 The vicious circle of low capital
formation 11
2 The production process 3 4
3 Effect of increase and decrease in
credit on the production possibility frontier or curve 36 4 Marketing channels for cassava in Nigeria 53
5 Map of Abia State 67
6 Sampling Procedure 69
7 Average amount requested and accessed
in Naira by the credit users
in cassava production 83
8 Percentage of credit accessed by
farmers in Abia State 85
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Cassava (manihot
esculenta crantz) is a perennial vegetatively propagated shrub grown
throughout the low land tropics for its starchy, thickened roots. Cassava is
highly nutritive source of carbonhydrate, calcium, vitamins B, C, A, and
essential minerals. However, nutrient composition differs according to
varieties, the time it is harvested, soil condition, climate and other
environmental factors during production (International Institute of Tropical
Agriculture IITA, 2014).Cassava is a root crop considered vital for food
security, consumed daily in different forms by over billions people in Nigeria
(Anyaegbulam,H.,Nwokocha,I.N.,Aliluyalatta E. and Ajuka P.U.,2017).Cassava has
high level of resistance to harsh weather and it grows with rain, survives with
dews (Nigeria Cassava Growers Association NCGA, 2016).
Global production of cassava amounted to about 278 million
metric tons in 2018 out of which Africa share was put at about 61% (Food and
Agricultural Organisation FAO Statistics FAOSTAT, 2020).Africa total production
was about 170 million tonnes (about 56% of world production), at the same time
Nigeria produced about 60 millons tonnes (FAOSTAT, 2019). Globally, the performance
rate of cassava production in Nigeria has not been steady since 2009, with an
additional push between the years 2010 to 2016 as a result of the release of
improved cassava varieties by International Institute of Tropical Agriculture
(IITA) and other related research institutes like N.R.C.R.I who choose cassava
as one of their mandate crops (FAO,
2009).
Agricultural credit is an assistance
extended to farmers to help them make fast repairs in farming and it is a
catalyst that activiates production (Afolabi, 2008).Credit creates opportunities and solutions
that can improve their output, farm income and create wealth (UNCDF, 2005). It
can be an agreement with the credit user and the lender whereby the lender gives
out specific amount of money or farm inputs on trust, to be paid back by the
credit user at a specific date with an interest from the user (Konu, 2013).
Credit is an important tool for enhancing the financial status of the
underdeveloped directly through production, which affects their chances to
short term income, Central Bank of Nigeria (CBN, 2016). Credit is a productive
resource that is vital for efficient and sustainable production. Credit plays a
very important role in production, as it brigdes the capital gap. Cassava
producers can secure farming facilities and technologies through credit example:
Equipments and hired labour and it is widely recognized as the most
intermediate factor through which farmers adopt new technologies and increase
their income (Akpan, 2013).Credit access would obviously come to bear in the output
performance of cassava farmers among credit users to make meaningful
contributions in the study area.
Production is the
act of creating an output, goods or service and also contributes to the utility
of individuals. The most important forms of production are:
Market
production
Public
Production
Household
production
Land,
Labour and Capital are the factors of production which works in various ways,
by firms or enterprises, to produce an annual flow of goods and services. The
factors of production provide inputs to productive enterprises which organise
them to produce output for the market this is called organisation of production.
Cassava has the ability to transform
a country from poverty state to self-enrichment through employment and income
generation, especially at the stages of production, processing and industrial
utilization.
Acording to
Eke-Okoro,(2014) the annual output rate of cassava production showed some
upwards movement with about 1766 mmt
from 1975-1979; from 1980-1984 Cassava production stood at 2724 mmt;
between 1985-1989 it was at 14542 mmt; 1990-1996 it became 20784 mmt which
indicated some upward movement. Between 1997 to 2001, the country produced
about 34092 metric tons of cassava with growth rate of 2.4%, between 2009 to
2011 it was reduced to 45000 metric tons with zero growth rate. Within the
intervals of 2012 to 2013, the trend of cassava production became stagnant and
later started increasing with 3.2% growth rate.
Table 1.1: Cassava Production Trends in
Nigeria from 1975-2015.
YearCassava Annual Output (mmt) Growth Rate (%)
1975-1979 1766
10.8
1980-1984 2724
10.8
1985-1989 14542
80.8
1990-1996 20784 6.1
1997- 2001 34092 2.4
2009-2011 45000
2012-2013 20395 3.2
2014-2015 23590 60.3
Source: FAO, (2010) and FAOSTAT (2016).
In the light of these factors above, the study aimed at examining
the analysis of cassava productionamong credit and non-credit users in Abia
State.
1.2 STATEMENT OF PROBLEM
Abia State cassava farmers in
Nigeria have been finding it difficult in accessing credit and is believed to
have significant negative consequences for aggregate outcome, including
technology adoption, agricultural productivity, efficiency, food security,
nutrition, health and overall household welfare (Obike,2007).The expanding rate
of cassava production in Nigeria has been on the high side for the past two and
half decades, but such increase has not been meeting with the rising food
demand as a result of credit unavalibility high population pressure, and poor
infrastructural facilities to increase its
productivity Eke-Okoro, Njoku, Mbe, Awa, Amanze and O.C. Eke-Okoro (2010).
Breaking the jinx of perpetual low out put
of cassava production remains a challenge.The provision of credit has
increasingly beenregarded as an important tool for raising production level of
the farmers (Emerole,2015).Themajorinputs necessary for for the sustainable
application of superior technology that would transform traditional
agricultural production system by resource poor household farmers in a
developing economy is credit Nwaru, (2004). Lack of access to credit is one of
the major factors responsible for the low productivity of cassava farmers in Abia
State (Abia statistical service, 2014).One problem that arises is the extent to
which credit can be offered to smallholder cassava farmers at lower interest
rate, at the right time and amount without any pre-condition, to facilitate
agricultural production in Abia State. Extending financial services to cassava
farmers will go a long way to increase productivity and consequently reduce
poverty. Astudy conducted by diagne (2002) to analyse the impact of credit on
cassava farmers output and yield revealed that agricultural credit has a
significant positive impact on agricultural productivity.This stems from the
fact that access to credit may enable farmers to acquire the necessary inputs
such as improved seeds, fertilizer and labour in order to raise the productivity
of cassava farmers.
In adequate flow of funds
(credit) into agriculture has been identified as the most limiting problem to
increasing agricultural production in Nigeria; this has resulted in slow
development in the sector with little or no increase in the import of cassava
products (Okorie, 2008).Inadequacy in the flow of fund of agricultural projects
and programmes has been a problem, which has
deepened food insecurity, social inequality,rural poverty and hunger all this
are as a result of lack of funding (Igwe, 2004). (Akiram,2008)
reveal problems with farmers’ decision in accessing credit to include high
interest rate, collateral requirement, time lag in the disbursement of loans,
long distance to banks difficult procedurals and bureaucratic lending
processing and high transaction cost.
Okorie, 2008 explain
the extent to which credit can be offered to cassava producers at low interest
rate at the right time and right amount helps facilitates cassava production.
Efficient and effective use of the
credit accessed are another important factors that need to be considered for
increased productivity (Nwaru,2004).Farmers depend hugely on subsidized farm
inputs like fertilizers, seeds, stems seedlings, etc from government as credits
on annual basis without adequate accountig for its efficient use. Credit can
best be seen as an instrument whose effectiveness depends on how well it is
used.
Inadequate credit availability or
poor response from government, is an important problem identified that reduce
the productivity. Avalibility of adequate credit to fianance agricultural
production is essential for and increased cassava productivity.
In recognition of of the crucial role of
credit in farming, from 1964 till date, different governments in Nigeria had
implemented several agricultural credit programmes they include: Agricultural Credit Gurantee Fund Scheme
(ACGSF) in 1977, the Agricultural Credit Scheme (ACS) in 2006, Commercial
Agricultural Credit Scheme (CACS) in 2009 and Nigerian Incentive Risk Based
Sharing System For
Agricultural lending (NIRSAL) in 2012 Fakayode (2009). Central bank of Nigeria
(CBN) in the bid to promote lending the agricultural lending to the
agricultural sector has employed several policies ranging from tax waiver on
interest earned by Deposit Money Bank (DMBs) on agricultural credit to the
prescription of these banks’minimum loan portfolio to the agricultural sector.The
Agricultural Credit Guarantee Scheme Fund (ACGSF) to amelioratethe effects of
agricultural risks. Yet, the majority of credit users in Abia State do not have
access to these formal financial institutions.
Inspite of these programmes and
policies aimed at channeling credit user’s farmers, credit problems still
persist among credit users (FAO 2014). Investing more on inputs facilities and
resources (credit) of an enterprise depends on the producer’s financial
investment. The level of financial investment depends on the income of the
producer/entrprenenur (Osuala, 2015)
Onwudinjo (2012) identified
seasonality and time-tag in agricultural production, high rate of default, lack
of collateral, high cost of loan administration, ignorance of some farmers,
urban location of the lending to productive sector as some of the reason why
farmers found it difficult to access fund from formal financial institution in
Nigeria.
However, government reforming the agricultural sector considering the
recent financial restructuring policies has not yielded much perceivable
benefits (Onwumere, 2013).
1.3
RESEARCH QUESTIONS
From the problems highlighted above, the
study answered the following research questions such as;
1. What
are the socio-economic characteristics of the credit users and non-users?
2. To
what extent do the credit users had access to credit?
3. What
is the cost and returns of cassava production among credit and non-credit
users?
4. What
determines the performance of cassava farmers among credit and non-credit
users?
5. Is
there any significance in performance of cassava production among the credit
and non-credit users?
6. Is
there any effect on the output performance of cassava production among credit
and non-credit users?
1.4 OBJECTIVES OF THE STUDY
The broad aim of the study was to analyze
the output performance of cassava productionamong credit and non-credit users
in Abia state, Nigeria.
The specific objectives are to:
i.
examine the
socio-economic characteristics of cassava producers among credit and non-credit users in the study area;
ii.
ascertain the amount of
credits accessed by the credit users in the study area;
iii.
estimate and compare the
cost and returns of cassava production among credit and non-credit users in the
study area;
iv.
estimate the differences in output performance among
credit and non-credit users in the study area.
v.
analyze the determinants of
cassava production among credit and non-credit users;
vi.
estimate the effect of
credit on the productivity cassava among credit and non-credit users in the
study area.
1.5 HYPOTHESES OF THE STUDY
HO1: There no significant effect on the
socio-economic characteristics of cassava producers credit and non-credit.
HO2: There is no significant difference in the amount of
credit granted.
HO3: The variables employed have no
significant effect on the productivity of cassava producer.
1.6 JUSTIFICATION
The findings from this study will contribute to the global
debate on cassava production. The knowledge that the country’s high production of cassava, over the years will
provide hint to the policy makers and other shakeholders to put appropriate
strategies in place to intensely advocate to follow to sustainably produce
cassava which the country has comparative advantage. The finding of this study
will allow cassava farmers in Nigeria to compare their output performance to
others. The study will provide relevant information and recommendations in
formulating developmental and sustainable policies in cassava value chain, farmers’ access to a well functioning
and efficient credit services
This
study will also provide useful information pertaining to access to credit and
its effect on farm income, which reflect the influence of the credit facilities
and programmes on the Nigerian rural economy and social development. In
addition, the findings of this study will give direction to policy makers in
establishing supportive regulatory environments to sustain a viable credit institution.
It would be appropriate for the policy makers to liberalize regulations and
restrictions which have bottlenecked the development of Nigeria credit to a
large extent.
The findings will contribute to the
available literature for the future research work; it will also serve as a
guide to upcoming research field of study on credit and cassava production. This
study will provide the basis for an effective design and execution of further
studies as well as information for farmers, marketing of their produce and stimulate
the development of agricultural credit sector of the Nigeria economy.
1.7 SCOPE OF THE STUDY
In view of the need for an effective work,
this study was narrowed down to the output performance of cassava production among
the credit and non-credit users during the production season. For the purpose
of this study, only farmers who are currently engaged in cassava production on
commercial basis (market oriented) were selected. The selected area of study
was purposive; because the inhabitants in the study area are mostly cassava producers.
The study was also limited to production of cassava only.
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