APPRAISAL OF THE PROBLEMS FACED BY SMALL FARM HOLDERS IN ACCESSING LOAN FACILITIES: A CASE STUDY OF OVIA NORTH EAST LOCAL GOVERNMENT AREA OF EDO STATE ABSTRACT This work is designed to examine the problems faced by small farm holders in accessing loan facilities in Ovia North East Local Government Area of Edo State. The researcher examined the role of commercial banks in financing agriculture in Edo State. Recommendations were made to resolve the problems faced by small farm holders in accessing loan facilities in Ovia North East Local Government Area of Edo State. Questionnaires were designed in such a way to be able to elicit unbiased response from respondents. The questionnaire designed for this study was divided into two segments. There were questions meant for the entire respondents, while others are meant for the respondents who have obtained loan under the agricultural credit facilities scheme. TABLE OF CONTENT Chapter One Introduction 1.1 Background of the study 1.2 Significance of the study 1.3 Purpose of study 1.4 Statement of problem 1.5 Research question 1.6 Limitation of study 1.7 Definition of terms Chapter Two Literature review Chapter Three 3.0 Research Methodology 3.1 Population 3.2 Sample/sample procedure 3.3 Instrument of data collection 3.4 Validation of the instrument 3.5 Method of data collection 3.6 Method of data analysis Chapter Four Presentation and discussion of results Discussion of findings Chapter Five Conclusion, implication and recommendations Implications of findings Suggestions of findings Suggestions of further research Recommendations Reference Questionnaires CHAPTER ONE INTRODUCTION BACKGROUND TO THE STUDY Farmers need productive resources and these resources are acquired with owned or borrowed fund. Agriculture is very important to the economy of most developing countries of the world and because of this, a supply of adequate finance is essential for national well-being. Since agriculture is the backbone of Nigeria economy providing employment to about 70% of its population yet this important sector has suffered neglect since the oil boom days. Agriculture has totally declined since the early 1970s Nigeria export crops such as groundnut, oil palm and cocoa have evaluate disappeared and the country is a net importer of food crops. Agriculture recorded growth rate in 1975 at about 2.6% while the population grew at about 70% compared to 57.7% in 1993. The small scale farmers according to the National Agricultural Policy Documents of Nigeria (NAPDN) constitute over 90% of the food and fiber requirement of Nigeria on the other hand large scale farmers produce has more than 1% of farm output in Nigeria but tend to have greater access to farmer inputs including farm credit or loan. STATEMENT OF THE PROBLEMS This study is to investigate and analyze the problems associated with obtaining credit for financing agricultural production in Edo State. it would be seen that many problems arise mostly are problems encounter by the farmers in the area. The inability of the farmers to meet up with the collateral security required by the commercial bank is a major problem hindering agricultural sector., this is as a result of farmers to deposit the collateral security before obtaining credit for agricultural development. High interest rate is another factor that discourage farmers from obtaining credit in most commercial banks, payment of interest involve when fund is borrowed. The low educational background of the farmers also constitutes hindrance in obtaining agricultural credit. The bureaucratic process involved in the process of obtaining credit or loans for agricultural purpose have not being encourage on the part of the farmers. Credit facilities are not easily accessible to small farm holders. It is on this note that the researcher intends to identify some of the hindering factors in order to proffer solution. PURPOSE OF THE STUDY The main purpose of this study is to find the major problems of obtaining credit or loan for financing agricultural production in Nigeria with particular reference to Edo State. the objective of the study are; To identify the problem militating against adequate financing of agriculture. To enumerate and analyze the agricultural credit granted to farmers in recent years To know how much the commercial banks have helped in financing agriculture. To look at how agriculture has developed in Edo State. To create awareness of the problem posted by agricultural financing inadequacies. To investigate how these problems can be tackled. SIGNIFICANCE OF THE STUDY This research study will be important to that future researcher in the economy and agricultural science who would like to use it as reference materials or for further investigation. The study is to create awareness to farmers in Edo State, the reasons of low agricultural production and also to bring to the notice of the general public loans for financing agricultural production in the locality. It will form a good basis to the government for the formulation of policies. To serve as encouragement to those farmers in the area of study. RESEARCH QUESTIONS Some questions to be tackled in the course of this study has been rise as follows; Is collateral security a problem of obtaining credit from commercial banks? Does high interest rate increase the incidence of bad debts? Does educational background hinder the potentials of obtaining credit? Is a credit facility accessible for small farm holders? Does bureaucratic process pose a lots of problem in obtaining loans to farmers? 1.6 SCOPE OF THE STUDY This study is aimed at providing detailed knowledge and understanding of the operation, function and to determine the problems of obtaining loans for financing agricultural production in Edo State through the federal Government Agricultural Credit Guarantee Scheme (FGACGS) found since 1977 with the view of providing useful suggestion to ease the problem of agricultural development in Nigeria, it is directed towards the application of problems obtained for financing agriculture view of this more emphasis will be placed on the success of credit facilities lending procedure as a criteria of measurement. The performance of the commercial banks in this regard will be assessed by using the present farmer’s areas to the agricultural credit facilities as well as the hindrance which the small farm holders face in obtaining loans from financial institutions. 1.8 DEFINITION OF TERMS Credit: This is the process of obtaining control over the use of money, goods and services with promise to repay at a future date. Agriculture Finance: This means ways and means by which a farmer obtain all the necessary fund required in order to carryout agricultural production. Interest: This means the price paid for the use of borrowed money and is usually expressed as a present on annual basis. Collateral: This means anything offered as a promise of loan repayment to be given to a lender in case of non-payment.
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