PERFORMANCE OF FARMERS’ MULTIPURPOSE COOPERATIVE SOCIETIES IN ENUGU NORTH AGRICULTURAL ZONE OF ENUGU STATE, NIGERIA

PERFORMANCE OF FARMERS’ MULTIPURPOSE COOPERATIVE SOCIETIES IN ENUGU NORTH AGRICULTURAL ZONE OF ENUGU STATE, NIGERIA

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ABSTRACT

The study examined the Performance of Farmers’ Multipurpose Cooperative Societies (FMCS) in Enugu North Agricultural zone of Enugu State, Nigeria. Purposive and proportional sampling techniques were used to collect primary data from 30 FMCS through their chairmen. The analytical techniques involved both descriptive and inferential statistics. It was revealed that 46.7% of the cooperative had between 31 and 50 members (i.e. cooperators). About 47% of FMCS had less than N 200,000.00 annual savings from members. About 37% of the selected FMCS had between 16 and 20 years of existence (i.e. cooperative age). The greatest percentage (93.3%) of the selected FMCS was registered with the appropriate Government agency. About 43% of the FMCS had a total share of not more than N 1,000,000.00. Many of the FMCS (60%) in the study area received assistance one time or the other from government. Majority of the leaders of FMCS (73.3%) were males and 83.3% of them had formal education. It was revealed that 33.3% of the selected FMCS had good performance, 40% of them performed poorly and 26.7% of the FMCS performed moderately. The multinomial logit regression analysis comparing moderate performance as base outcome, showed that cooperative years of existence (i.e. cooperative age) , and years of formal education of the chairmen had positive and significant relationship with good/high performance at (p<0.001) and (p<0.0.05) respectively. Government assistance had negative and significant relationship with poor/low performance of the FMCS at (p<.0.05). The study also looked into the constraints hindering effective performance of FMCS in the study area. These constraints were inadequate storage facilities, inadequate capital, inadequate commitment of members, too much intervention of Government and poor management by officials among others. Therefore, any assistance inform of training and other support from government and NGOs should be based on the issue of years of existence of the FMCS and not on political affiliations as it seems to be presently for the FMCS to perform optimally in the study area.

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CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Agriculture constitutes a significant sector of Nigeria’s economy. The sector is significant in terms of employment of labour, contribution to Gross Domestic Product (GDP) and until early 1970, agricultural exports were the main sources of foreign exchange earnings (Amaza, 2002). During the 1960’s the growth of the Nigerian economy was derived mainly from the agricultural sector. However, in more recent years, there has been a marked deterioration in the performance of Nigeria’s agriculture. The contribution of agriculture to the GDP which stood at an average of 56% in 1960 – 1964 declined to 47% in 1965, 1969 and more rapidly to 32% in 1996 – 1998 (Amaza, 2002).

Smallholder agriculture is the dominant occupation of rural Nigerians. The rural dwellers earn low income from their economic activities and as a result they save less. Low savings bring about low investment which leads to low capital formation (Umebali, 2004). Based on the foregoing, the rural dwellers are poor (Umebali, 2004). Evidence in Nigeria reveals that the number of those in poverty is on the increase. The number of those in poverty increased from 27% in 1980 to 46% in 1985. It declined slightly to 42% in 1992. In 1999, it was estimated that more than 70% of Nigerians lived in poverty (Ogwumike, 2005). Therefore, reducing rural poverty has been on the agenda of international development agencies as well as governmental and non-governmental organizations for a long time.

It should however, be noted that poverty is largely caused by inadequate access to productive resources such as land for the majority of producers and low productivity of agriculture resulting in low levels of income. The formation of cooperative societies has since

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been recognized as one possible way of promoting access to production resources and markets in rural areas (Hoyt, 1989; Ortmann and King, 2007).

Different authors and agencies have defined cooperatives in different ways, For instance, the Federal Department of Cooperatives in its official newsletter “AGRICOOP-101”, writes that a cooperative society is a voluntary association of persons having a mutual interest in providing themselves some needed services on a non-profit basis. It further adds that a cooperative society is organized as a legal entity to accomplish an economic objective through joint participation of its members. Chukwu (1990) defines cooperative as a democratically controlled business i.e. it is owned and controlled by the members and gives benefits to the members. The International Cooperative Alliance (ICA, 2010) defined a cooperative as “an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly – owned and democratically controlled enterprise”.

The definitions of cooperative societies are often supplemented with the distinguishing features of seven cooperative principles adopted by ICA. These are: voluntary and open membership, democratic member control, member economic participation, autonomy and independence, education, training and information, cooperation among cooperatives , and concern for community. Cooperative societies function on the basis of the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility and caring for others (ICA, 1995).

The Agricultural cooperative organization in contemporary Nigeria, is geared towards increasing production by the utilization of mechanized agriculture through the village group farming cooperative (Arua, 1988). The cooperative movement is significant both in terms of

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membership and impact. Agricultural Cooperatives are the most prevalent type of cooperatives in Nigeria providing food-stuffs, financial services as well as services to consumers (ILO, 2005).

Although cooperatives vary in type and membership size, all are formed to meet the specific objectives of members, and are structured to adapt to members’ changing needs. Services offered by cooperatives differ depending on the type of cooperative. Banaag (2002) classified cooperative as credit, consumers, producers, marketing, service and multipurpose cooperatives.

Multipurpose cooperatives unlike single-purpose cooperatives undertake diversified activities. They function on the basis of a fully integrated framework of activities, planned according to members’ requirements identified at the grass root level, taking the socio-economic life of the members in its totality (Chukwu, 1990). The multipurpose type of cooperative societies is gaining wide popularity among Nigerians because of a number of benefits which include reduced administrative costs, diversification of interests and services, economies of scale and linkage of economic activities (Agbo, 2010).

Cooperative activity in agricultural production is encouraged among farmers. Cooperatives all over the world are instruments of social and economic transformation (Ijere, 1992). The relevant social aspects of people from Africa, according to Ijere (1992) are those aspects that deal with their attitudes to life and themselves, their modes of behaviour and relationship with one another as well as their customs. People come together to help themselves. That is to say, that individuals form groups or cooperatives to complement their individual efforts geared towards solving economic problems such as scarcity of goods and services,

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matching wants with available resources and seeking ways to augment any short fall or optimizing the given situation by different types of combinations (Ijere, 1992).

Assessing the performance of any organization like cooperative societies entails evaluating, determining and assigning value or worth of actual accomplishment or output of such organization vis-à-vis plans and targets. (Banganan and Banganan, 2007). It also includes the identification of the success and failure factors and all other processes involved in the implementation of any programme of the cooperative societies.

However, there are cooperative performance indices used in measuring performance of cooperative societies. They include ; loan recovery ability, access to credit facilities from public financial and government institutions ,access to agricultural input , leadership training and regular organization of annual general meetings (Kanoma, 2011). There is however, insufficient information/data on the performance of farmers’ multipurpose cooperative societies in these vital areas.

1.2       STATEMENT OF PROBLEM

Government has always given emphasis to the development and promotion of cooperatives to facilitate agricultural activities, For instance in Nigeria, government established two cooperative development agencies; Nigerian Agricultural Cooperative and Rural Development Bank (NACRDB)Ltd and the Nigerian Agricultural Cooperative Marketing Organization (NACMO), to accelerate cooperative development in Nigeria (Agbo,2010) . Promotion of multipurpose cooperatives has significant contributions in enhancing rural development through production, distribution and marketing of farm inputs and supplies. Also, cooperative societies provide trainings and seminars for members as well as credit facilities

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(Agbo, 2010). These are among the measures that define the performance of cooperative societies. However, only limited studies have been carried out on the performance of farmers’ multipurpose cooperative societies. Akor (2008) investigated the performance of farmers’ multipurpose cooperative societies in Benue state, while the efficiency of farmers’ multipurpose cooperative societies in Imo state was studied by Onuoha (1986). There is however, a knowledge gap about the performance of multipurpose cooperative societies especially in Enugu North agricultural zone of Enugu State, the area of this study.

Furthermore, sufficient studies have not been carried out on the factors that affect the performance of FMCS. According to Agbo (2010), efforts at cooperative development since its introduction in Nigeria have not yielded a good measure of success. Poor management practices, low level of cooperative education, low income and lack of access to credit facilities, etc have been identified by few studies as limitations to cooperative performance (IJere, 1977; Akinwumi, 1991; Umebali, 2000). Sisoda (2001), was of the opinion that the ultimate performance of cooperative societies depends largely upon the techno-managerial skills possessed by the management of cooperative societies. This is very essential if the members’ needs are to be satisfied and members inspired to participate in activities of cooperative societies. In Enugu North agricultural zone, these factors have not been empirically determined.

The plurality of cooperative objectives is a unique feature of cooperative societies. Unlike other business organizations with the primary motive of profit maximization, cooperative business is deemed as successful if it passes the multiple tests of democratic management, social responsibility and economic efficiency (Agbo, 2010). According to the Federal Department of Cooperatives in its official newsletter “AGRICOOP -101”, Cooperatives must operate on cost basis for the member users rather than being operated on profit basis for the investors. However,

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this does not imply that they do not make profits, because without sufficient returns, cooperative societies will not be able to meet their obligations as a business organization. Studies on the income and expenditure profile (i.e. Profitability)of the FMCS in the study area are scanty and therefore create a vacuum. This study has attempted to fill these gaps by ascertaining the income and expenditure profile of the selected farmers’ multipurpose cooperative societies in the study area.

1.3       OBJECTIVES OF THE STUDY

The main objective of the study is the performance of farmers’ multipurpose cooperative societies in Enugu North Agricultural Zone of Enugu State. To achieve this, the following specific objectives guided the study. These are to:

(i)                 describe the characteristics of farmers’ multipurpose cooperative societies (FMCS) in the area;

(ii)               describe the organizational structure of FMCS;

(iii)             identify and assess the performance indicators of FMCS in the study area;

(iv)             determine the factors that affect the performance of FMCS;

(v)               estimate the income and expenditure profile of the selected FMCS in the study area; and

(vi)             identify the constraints to effective performance of FMCS in the study area;

1.4         HYPOTHESES

This study was guided by this hypotheses

H01: Selected leadership and structural characteristics of the Farmers’ multipurpose cooperative societies have no significant effect on their performance

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1.5       JUSTIFICATION OF THE STUDY

Majority of small-scale farmers are consigned to a vicious cycle of poverty. In an attempt to solve these problems, the government of Nigeria uses cooperatives as one of the vehicles for the attainment of agricultural and socio-economic development (Ahmadu, 1990)

Poverty being a rural phenomenon in most developing countries like Nigeria, the way forward is the organization of cooperative associations (Adebayo, Chinedum, Dabo and Pascal, 2010). Agricultural Cooperatives help farmers get better deal at various stages of production and distribution. Through Cooperatives, farmers are collectively able to negotiate better prices for inputs, transport and storage facilities (DFID, 2010). The role and potential of Cooperatives have recently come to the fore again in poverty reduction (Simmons and Birchall, 2008). Agricultural Cooperatives have significantly contributed to the mobilization and distribution of financial capital by creating employment and income-generating opportunities (Wanyama, Develtere and Pollet, 2008), and is considered as an important economic and social organization in rural societies.

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