ABSTRACT
The effect of Anchor Borrowers’ Programme (ABP) on the income and productive assets acquisition among rice farmers in Benue State, Nigeria was analysed. Data for the study were collected with the aid of structured questionnaire. 792 rice farmers consisting of 396 beneficiaries and 396 non-beneficiaries were selected using multi-stage sampling technique. 388 filled questionnaires from beneficiaries and 380 filled questionnaires from non-beneficiaries were returned and utilized for analysis. The collected data were analysed using descriptive statistics, stochastic frontier production function, independent t-test, endogenous switching regression model (ESRM), logit model, Foster-Greer Thorbecke (FGT) poverty model, multiple regression analysis, and factor analysis. The results indicate that there were positive significant difference at 1% level between the income and farm output of beneficiaries and non-beneficiaries. Analysis of the parameters of the endogenous switching regression model (ESRM) showed that beneficiary rice farmers acquired lesser productive assets than what a random rice farmer from the sample would have earned and were not better or worse than a random rice farmer from the sample in terms of farm income improvement. The returns to scale (RTS) revealed that rice production in the study area was at stage I of the production curve. The study revealed that beneficiary rice farmers achieved lower level of technical efficiency compared to the non-beneficiary rice farmers and also that beneficiary rice farmers used less of fertilizer and more of seeds and agrochemical compared to the non-beneficiary rice farmers. The FGT analysis showed that poverty was more severe among beneficiaries. Credit demand was found to be higher among beneficiary rice farmers compared to the non-beneficiary rice farmers while both beneficiary and non-beneficiary rice farmers achieved equal level of credit utilization, farm income, and poverty index. The findings also show that socio-economic characteristics of beneficiaries and non-beneficiaries of the ABP significantly influenced their access to ABP, level of technical efficiency, credit demand and utilization, farm income, productive assets acquisition, and poverty status. The major challenges to credit demand and utilization among beneficiaries were institutional, institutional-bureaucratic, economic, and market factors while institutional, economic, socio-economic, administrative, and market factors were the major challenges to credit demand and utilization among non-beneficiaries of the ABP in the study area. It was recommended that Federal government should consolidate on the gains of ABP in the State and extend the credit to more rice farmers; the State government efforts should be directed towards policies and programmes that will further enhance those factors that increase rice farmers’ access to ABP, decision to demand and use agricultural credit; policies geared towards increasing resource use efficiency of rice farmers in the State should incorporate farmer specific efficiency factors in their formulation; and sensitization of rice farming households on the importance of family planning should be promoted.
TABLE
OF CONTENTS
Title
page
i
Declaration
ii
Certification
iii
Dedication
iv
Acknowledgement
v
Table
of Contents
vi
List of
Figures x
List of
Tables
xi
Abstract
xiii
CHAPTER
1: INTRODUCTION
1
1.1 Background
of the Study 1
1.2 Statement
of the Problem 3
1.3 Research
Questions
4
1.4 Objectives
of the Study 5
1.5 Hypotheses 6
1.6 Justification
of the Study
7
1.7 Scope
of the Study
9
CHAPTER
2: LITERATURE REVIEW
10
2.1 Conceptual Framework
10
2.2 Theoretical Framework
11
2.3 Concept of Credit and
Agricultural Credit
13
2.4 Overview of the Anchor Borrowers’
Programme (ABP)
16
2.5 Empirical Review
19
2.5.1 Effect of agricultural credit
on agricultural production 19
2.5.2 Demand and utilization of
agricultural credit
27
2.5.3 Determinants of poverty
30
2.5.4 Resource use efficiency 34
2.5.5 Challenges to credit demand and
utilization
40
2.6 Analytical Framework
43
2.6.1 Descriptive statistics
43
2.6.2 Likert scale rating
43
2.6.3 Regression model
44
2.6.4 The additive multiplicative
dummy variable approach 46
2.6.5 Foster greer and thorbecke
(FGT) poverty measure
48
2.6.6 Logistic regression model
51
2.6.7 Stochastic frontier production
function 54
2.6.8 Generalized likelihood-ratio
tests
58
2.6.9 Propensity score matching (PSM)
and double difference (DD) 59
2.6.10 T-test
61
2.6.11 Factor analysis 63
2.6.12 Endogenous switching
regression model 64
CHAPTER
3: METHODOLOGY
67
3.1 Research Design
67
3.2 Study Area
67
3.3 Sampling Technique
68
3.4 Method of Data Collection
70
3.5 Validation of Instrument
71
3.6 Method of Data Analysis 71
3.7 Model Specification
72
CHAPTER
4: RESULTS AND DISCUSSION
95
4.1 Socio-economic Characteristics of
Beneficiary Rice Farmers
95
4.2 Socio-economic Characteristics of
Non-beneficiary Rice Farmers 99
4.3 Comparison of the Value of Productive
Assets, Farm Output,
Income and Profit of Beneficiary and Non-beneficiary Rice Farmers
104
4.4 Effect of Anchor Borrowers’
Programme (ABP) on Farm income
107
4.5 Effect of Anchor Borrowers’ Programme
(ABP) on Productive
Assets Acquisition 115
4.6 Efficiency Analysis of
Beneficiary and Non-beneficiary Rice Farmers 122
4.7 Results of Hypotheses Test for
Beneficiary Rice Farmers
124
4.8 Results of Hypotheses Test for
Non-beneficiary Rice Farmers
125
4.9 Efficiency Estimation for
Beneficiary Rice Farmers
127
4.10 Efficiency Estimation for
Non-beneficiary Rice Farmers
132
4.11 Technical Efficiency for Beneficiary
and
Non-beneficiary Rice Farmers
137
4.12 Poverty Statuses of Beneficiary
and Non-beneficiary Rice Farmers 139
4.13 Foster, Greer and Thorbecke (FGT)
Analysis of Beneficiary and
Non-beneficiary Rice Farmers 140
4.14 Credit Demand among Beneficiary Rice
Farmers
142
4.15 Credit Demand among
Non-beneficiary Rice Farmers
148
4.16 Credit Demand for Beneficiary
and Non-beneficiary Rice Farmers 153
4.17 Credit Utilization among
Beneficiary Rice Farmers
155
4.18 Credit Utilization among Non-beneficiary
Rice Farmers
160
4.19 Credit Utilization for
Beneficiary and Non-beneficiary Rice Farmers 165
4.20 Determinants of Income of
Beneficiary Rice Farmers
167
4.21 Determinants of Income of
Non-beneficiary Rice Farmers 173
4.22 Income Determinants for Beneficiary
and
Non-beneficiary Rice Farmers
176
4.23 Determinants of Poverty among
Beneficiary Rice Farmers
178
4.24 Determinants of Poverty among
Non-beneficiary Rice Farmers 182
4.25 Poverty Index for Beneficiary
and Non-beneficiary Rice Farmers 188
4.26 Challenges to Credit Demand and
Utilization among Beneficiary
Rice Farmers 190
4.27 Challenges to Credit Demand and
Utilization among Non-beneficiary
Rice Farmers
194
CHAPTER
5: SUMMARY, CONCLUSION AND
RECOMMENDATIONS
199
5.1 Summary
199
5.2 Conclusion
206
5.3 Recommendations
209
5.4 Contribution to Knowledge 212
5.5 Limitation of the Study
213
5.6 Suggestions for Further Study
213
References
214
Appendices 228
LIST OF FIGURES
Figure 2.1: Determinants of ABP Access
Outcomes among Rice Farmers in
Benue State 10
Figure 2.2: Smallholder Theory of
Change
12
LIST OF TABLES
4.1: Socio-economic characteristics
of beneficiary rice farmers 96
4.2: Socio-economic characteristics
of non-beneficiary rice farmers 100
4.3: Estimated ATE and t-test analysis of
variables used to determine
effect of ABP 105
4.4: Full information maximum likelihood
(FIML) estimates of the
endogenous switching regression model for farm income 108
4.5: Full information maximum likelihood
(FIML) estimates of the
endogenous switching regression model for
productive assets
acquisition 116
4.6: Distribution of technical efficiency
estimates of beneficiary and
non-beneficiary rice farmers 123
4.7: Generalized-likelihood ratio tests of
hypotheses involving the
parameters of the stochastic frontier and inefficiency model for
beneficiary rice farmers in Benue State 124
4.8: Generalized-likelihood ratio tests of
hypotheses involving the
parameters of the stochastic frontier and inefficiency model for
non-beneficiary rice farmers in Benue State 126
4.9: Stochastic frontier production
function results for the beneficiary
rice farmers 128
4.10: Stochastic frontier production
function results for the
non-beneficiary rice farmers 133
4.11: Estimated production function for
the beneficiary and
non-beneficiary rice farmers 138
4.12: Distribution of respondents
according to poverty level 140
4.13: FGT result of beneficiary and
non-beneficiary rice farmers 141
4.14: Determinants of credit demand
among beneficiary rice farmers
143
4.15: Determinants of credit demand
among non-beneficiary rice farmers
149
4.16: Estimated credit demand function for
the beneficiary and
non-beneficiary rice farmers 154
4.17: Determinants of credit
utilization among beneficiary rice farmers 156
4.18: Determinants of credit utilization
among non-beneficiary rice
farmers 161
4.19: Estimated credit utilization
function for the beneficiary and
non-beneficiary rice farmers 166
4.20: Income determinants among
beneficiary rice farmers 169
4.21: Income determinants among
non-beneficiary rice farmers 174
4.22: Estimated income function for
beneficiary and non-beneficiary
rice farmers 177
4.23: Poverty determinants among
beneficiary rice farmers 179
4.24: Poverty determinants among
non-beneficiary rice farmers 183
4.25: Estimated poverty index function for
the beneficiary and
non-beneficiary rice farmers 188
4.26: Challenges to credit demand and
utilization among beneficiary
rice farmers 190
4.27: Challenges to credit demand and
utilization among
non-beneficiary rice farmers 194
CHAPTER 1
INTRODUCTION
1.1
BACKGROUND
OF THE STUDY
Inadequate capital to the
productive sectors (agriculture, building, transport, trading, and
manufacturing sectors) of the Nigerian economy has persisted over the past
three decades. This has led to low productivity, output, income, saving,
investment, employment and backwardness of these sectors. According to Nzeka et al. (2016), high cost of capital has
continued to pose a constraint to agricultural growth and exports in Nigeria. The
rice sub-sector of the Nigerian economy is not spared of this challenge of
inadequate capital. In addition to inadequate improved varieties, scarcity and
high input costs have constituted key problems facing rice farmers. According to Daramola (2005), this has resulted
to rice farmers not utilizing inputs such as fertilizers and agrochemicals and
even those who make use of them use sub-optimal proportions of these inputs,
thus resulting in low and poor quality yields.
A
report by FAO (2016) showed that since 2015, rice farmers have had to depend on
open markets for input supplies with further fertilizer supply disruptions
reported to be linked to official efforts to prevent their use in explosives in
the northern areas affected by conflict. The macro-economic environment under
which the Nigerian rice is cultivated is partly responsible for the
sub-sector’s lack of competitiveness. In a study on government policies and
competitiveness of Nigerian rice economy, Daramola (2005) posited that the
reasons for the gap between annual domestic output of rice and annual demand
for rice in Nigeria include improper production methods, scarcity and high cost
of inputs, less developed post-harvest and processing techniques, less
developed milling techniques as well as poor marketing standards mainly in
terms of polishing and packaging. Nzeka et
al. (2016) attributed this difficulty of rice farmers utilizing inputs in
the required quantities to the depreciation of the naira, the increased cost of
public utilities and reduction in subsidies on fertilizer, fuel, agro-chemicals
and seeds.
The
Nigerian rice sub-sector is presently not competitive as it faces issues such
as high inputs costs in addition to policy instability that makes
decision-making and planning highly uncertain thereby putting investments at
great risk. As a result of the previously mentioned challenges in assessing
farm inputs in the required quantities by rice farmers in the country, the
performance of the sub-sector has not been encouraging over the years. Domestic
production of rice has never been able to meet domestic demand thereby leading
to considerable imports which as at the year 2017 stood at 3.7 million tons
with domestic consumption estimated to be 6.4 million tons leaving a huge gap
of 2.7 million tons (PwC Analysis, 2017). This situation has continued to promote
dependence on importation. Since this rice import is paid in foreign currency,
this has resulted to the precarious balance of payment position of the country.
In
an effort to reduce the country’s dependence on imported rice and boost local
production and the milling sectors, the Government of Nigeria through the
Central Bank of Nigeria (CBN) established the Anchor Borrowers’ Programme (ABP)
which was launched by President Muhammadu Buhari (GCFR) on November 17, 2015
(Central Bank of Nigeria, 2016). The programme aims at providing farm inputs in
kind and cash to small scale farmers to increase production of agricultural commodities
like rice, maize wheat etc, stabilize inputs supply to agro processors and
address the country’s negative balance of payments on food. Considering the
importance of rice in the socio-cultural and economic lives of Nigerians, there
is the need to appraise the ABP in terms of the income and productive assets
acquisition among rice farmers in the country.
1.2
STATEMENT OF THE PROBLEM
The inability of rice
farmers to access tractors, credit and other requisite farm inputs at
affordable prices make them to be perpetually poor as farm size and yield
remain stagnated. Consequently, Nigeria has failed to bridge the gap between
domestic production of rice and domestic demand for rice making the country to
depend on the international markets to fill the demand-supply gap at a colossal
amount of foreign exchange owing to the low productivity in the local
production of rice. In response to these
challenges pose by high cost of farm inputs among rice farmers in Nigeria,
successive governments have adopted different policies such as tariff
protection, subsidy, and credit support (USAID, 2008) for rice production which
have all functioned to stimulate smallholder rice production. One of such
credit support schemes is the Anchor Borrowers’ programme (ABP).
Several empirical studies
have been carried out to appraise the CBN programmes and schemes in
agricultural development in Nigeria. For instance, Ayeomoni and Aladejana
(2016) studied agricultural credit and economic growth nexus in Nigeria; Udoka et al. (2016) studied the effect of
commercial banks’ credit on agricultural production in Nigeria; Obasi (2015)
looked at the efficiency of agricultural lending schemes in Nigeria; Eneche et al. (2014) examined the effect of
Agricultural Credit Guarantee Scheme Fund (ACGSF) on production efficiency of
rural farmers in Benue State, Nigeria; Ayegba and Ikani (2013) studied the
impact of agricultural credit on rural farmers in Nigeria; Obilor (2013)
studied the impact of commercial banks’ credit to agriculture on agricultural
development in Nigeria.
However, I am not aware
of any study on the effect of Anchor Borrowers’ Programme on the income and
productive assets acquisition among rice farmers in Nigeria. Thus, this study
aimed at bridging this knowledge gap.
1.3
RESEARCH QUESTIONS
The research was intended
therefore to provide answers to the following questions:
i.
What are the differences
in the value of productive assets, farm output, income, and profit of
beneficiary and non-beneficiary rice farmers in the study area?
ii.
What is the effect of ABP
on the income and productive assets acquisition among rice farmers in the study
area?
iii.
What is the difference
between the technical efficiency levels of beneficiary and non-beneficiary rice
farmers in the study area?
iv.
What is the poverty
status of beneficiary and non-beneficiary rice farmers in the study area?
v.
What are the determinants
of credit demand and utilization among beneficiary and non-beneficiary rice
farmers in the study area?
vi.
What are the determinants
of beneficiary and non-beneficiary rice farmers’ income in the study area?
vii.
What are the determinants
of poverty among beneficiary and non-beneficiary rice farmers in the study
area?
viii.
What are the challenges
to credit demand and utilization among beneficiary and non-beneficiary rice
farmers in the study area?
1.4 OBJECTIVES OF THE
STUDY
The
broad objective of this study was to assess the effect of Anchor Borrowers’
Programme on the income and productive assets acquisition among rice farmers in
Benue State, Nigeria.
Specifically,
the study aimed to:
i.
compare the value of
productive assets, farm output, income, and profit of beneficiary and
non-beneficiary rice farmers;
ii.
examine the effect of ABP
on the income and productive assets acquisition among rice farmers in the study
area;
iii.
determine and compare the
technical efficiency levels among beneficiary and non-beneficiary rice farmers;
iv.
examine the poverty
status of beneficiary and non-beneficiary rice farmers;
v.
identify and analyse the
determinants of credit demand and utilization among beneficiary and
non-beneficiary rice farmers in the study area;
vi.
estimate the determinants
of beneficiary and non-beneficiary rice farmers’ income in the study area;
vii.
examine the determinants
of poverty among beneficiary and non-beneficiary rice farmers in the study
area; and
viii.
identify and analyse the
major challenges to credit demand and utilization among beneficiary and
non-beneficiary rice farmers in the study area.
1.5 HYPOTHESES
The
following null hypotheses were tested:
HO1:
there are no significant difference in the value of productive assets, farm
output, income, and profit of beneficiary and non-beneficiary rice farmers;
HO2:
there is no significant effect of ABP on the income and productive assets
acquisition among rice farmers;
HO3:
socio-economic characteristics of beneficiary and non-beneficiary rice farmers
have no significant influence on their access to ABP, farm income, and
productive assets acquisition;
HO4:
beneficiary and non-beneficiary rice farmers are technically inefficient in
rice production;
HO5:
beneficiary and non-beneficiary rice farmers’ socio-economic characteristics
have no influence on their technical inefficiency in rice production;
HO6:
socio-economic characteristics of beneficiary and non-beneficiary rice farmers
have no significant influence on their credit demand and utilization;
HO7:
beneficiary and non-beneficiary rice farmers’ socio-economic characteristics
have no influence on their income level; and
HO8:
socio-economic variables have no influence on the poverty status of beneficiary
and non-beneficiary rice farmers.
1.6 JUSTIFICATION OF THE
STUDY
This
study will be of immense benefit to the Benue State government, rice farmers,
policy makers, researchers, and other stakeholders responsible for rice
development in Nigeria.
This
study will enable stakeholders involved in rice sub-sector development to
identify the challenges faced by rice farmers in their bid to access credit
facilities and be able to come up with interventions that will help bridge the
gap between what is and what ought to be.
In
an effort to design relevant policies that will result in an efficient and
effective accessibility and utilization of credit facilities from government
agricultural programmes like the Anchor Borrowers’ Programme, for optimum
agricultural productivity, there is need to carry out a study of this nature.
This will enhance policy makers to identify constraints and potential areas for
its improvement considering the need to enhance food security.
Efficiency
of resource use has been identified as one of the measures to increasing rice
productivity and production. A study of this nature is very important as it
will guide stakeholders responsible for the development of the rice sub-sector
in the North-Central zone of the country to come up with interventions on how
rice farmers can efficiently combine scarce resources in the right proportion
to achieve a given level of output.
The
scourge of poverty in Nigeria is an incontrovertible fact which results in
hunger, ignorance, malnutrition, disease, unemployment, poor access to credit
facilities, and low life expectancy as well as a general level of human
hopelessness (Abiola and Olaopa, 2008). This study is geared towards
identifying those variables that influence poverty among rice farmers in the
zone. These variables when used by policy makers in rice development in the
zone will address the poverty level of these farmers and thus, translate to
high productivity and production in the rice sub-sector.
One
of the major constraints to agricultural production in Nigeria is the fact that
Nigerian agriculture is still being carried out through the use of physical
strength which declines with age. This study will be of importance to the
Extension Department of the Ministry of Agriculture, Benue State in formulating
strategies that will make youth see rice production as lucrative thereby
increasing their involvement in the production of rice. This will go on long way to address the
supply-demand gap experienced in the Nigerian rice sub-sector.
Self-sufficiency
in rice production has eluded Nigeria for a long period. Despite concerted
efforts to make Nigeria self-sufficient in rice production, the achievement of
the various policies objective has remained elusive. There is need to appraise
the effectiveness of ABP in terms of income and productive assets acquisition
among these rice farmers with a view to re-direct the effort of the government
towards the realization of the policy objective in the rice sub-sector using
Benue State as a case study.
In
addition to adding to the body of knowledge on how socio-economic variables
influence ABP access, credit demand and utilization, productive assets
acquisition, poverty level, farm income as well as challenges to credit demand
and utilization, this study will guide other researchers who want to embark on
similar studies especially the effect of ABP on income and productive assets
acquisition among producers of rice and other commodities in other
geo-political zones in the country.
Finally,
Nigeria has continued to spend billions of dollars for the importation of rice
that could have been channeled to other productive areas. A study like this
will encourage Non-Governmental Organizations and other stakeholders
responsible for rice development in Nigeria to come up with innovative
strategies such as campaigns aimed at discouraging people on the danger of consuming
foreign rice at the detriment of Nigerian local rice as well as creating
awareness on the nutritional benefits of consuming local rice as reported by
Bamidele, Abayomi and Esther (2010) which stated that local rice has higher raw
nutrients composition.
1.7 SCOPE OF THE STUDY
The
study covered the economic activities of the beneficiary and non-beneficiary
rice farmers in the Anchor Borrowers’ Programme (ABP) in Makurdi, Gwer-West,
Gwer-East, Buruku, Tarka, Guma, Agatu, Oju, Otukpo, Obi, Ohimili, Apa, Ukum,
Kwande, Katsina-ala, Vandeikya, Konshisha, and Logo Local Government Areas of Benue
State, Nigeria for 2015/2016 and 2016/2017 cropping seasons.
Effort
to evaluate and improve on the ABP established to address the high cost of farm
inputs experience by smallholder rice farmers cannot be achieved if answers to
the research questions posed are not realized. The answers to these questions
require detailed knowledge of ABP access, credit demand and utilization,
technical efficiency, poverty level, challenges to credit demand and
utilization. This study analysed these variables in the context of
beneficiaries and non-beneficiaries of the ABP in Benue State, Nigeria.
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