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SOCIO-ECONOMIC DIMENSIONS AND CREDIT SUPPLY TO POULTRY FARMERS IN ODEDA LOCAL GOVERNMENT AREA OF OGUN STATE NIGERIA

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CHAPTER ONE

INTRODUCTION

1.1       Background to the Study

The Agricultural sector in Nigeria has remained one of the largest contributors to the Gross Domestic Topic of the nation’s economy. For the past two decades it has contributed an average of 39% of the country’s GDP. Over 80% of the country’s population living in the rural areas is directly or indirectly dependent on agriculture for its livelihood (NBS, 2005). Livestock sector plays a crucial role in rural economy and livelihood. This is one sector where the poor contributes to the growth directly instead of getting benefit from growth generated elsewhere. In Nigeria, the livestock sector forms an important livelihood activity for most of the farmers, supporting agriculture in the form of critical inputs, contributing to the health and nutrition of the household, supplementing incomes, offering employment opportunities, and serving as a store of wealth in times of need. It acts as a supplementary and complimentary enterprise. Livestock is also important as a part of agriculture diversification and income enhancement. Livestock plays a vital role in the overall economic development of the farm households and nation as a whole.

 

The prolificacy of livestock which include; goat, pig and poultry are the influencing factors for rearing them. The returns are quick; losses, if any, are recovered soon and the poor can afford them. The multiple species-animal husbandry system is also environmental friendly. Income from livestock production contributes a significant percentage of the total income of rural farm households engaged in agricultural production (Johnson, Perry and Morehart. (1995).  Among livestock – based vocations, poultry occupies a pivotal position because of its enormous potential to bring about rapid economic growth. The importance of the poultry sub-sector is chiefly in the provision of meat and egg as well as the provision of employment either directly or indirectly and the contribution to the revenue (Gross Domestic Topic) of the country. The poultry sub-sector of the economy in Nigeria remains chiefly primitive. This is because government, at all levels, has neglected it for a long time. The poultry industry in Nigeria has the highest number of poultry farm in Africa.  Currently, Nigeria has about 10% of the population, and is responsible for less than 15 to 18% employment opportunities, due to the fact that the industry is mainly subsistent.( Afolami (2011), in comparison with other livestock products (e.g. beef, mutton, pork), poultry is considered to be more palatable, having lower level of cholesterol and high protein value (Adegbola, 2000) Egg, a product of the industry, gives about 3.5 g of the total 7.2 g animal protein requires for individual dietary need per day. For developing countries, poultry contributes just about 15% of total animal protein intake, with approximately 1.3 kg of poultry products consumed per head per annum (NLDC, 2000).

 

The World Health Organization (WHO) and Food and Agriculture Organization (FAO) recommended 3.6 kg per capita intake of poultry products per annum. Therefore to meet the basic minimum of the dietary needs of Nigerians, the country requires an annual production of 10 to 20 billion eggs and 0.3 to 0.6 million tone of poultry meat (NLDC, 2000).  In Nigeria, production of food has not increased at the rate that can meet the increasing population. While food production increases at the 2.5%, food demand increases at 3.5% due to high rate of population growth of 2.83% (CBN, 2004). The apparent disparity between the rate of food production and demand for food in Nigeria has led to increasing resort to food importation and high rates of increase in food prices. The demand and supply gap for animal protein intake is so high.

 

The Food and Agricultural Organization recommends that the minimum intake of protein by an average person should be 65gm per day; of this, 36gm (i.e. 40%) should come from animal sources. Nigeria is presently unable to meet this requirement. The animal protein consumption in Nigeria is less than 8gm per person per day, which is a far – fetched from the Food and Agricultural Organization minimum recommendation (Niang & Jubrin, 2001). Poultry food plays a useful role in bridging the protein gap in Nigeria. It is palatable and generally acceptable. This acceptability cuts across nearly all cultural and religious boundaries in the country. The importance of poultry to the national economy cannot be overemphasized, as it has become popular industry for the small holders that have great contribution to the economy of the country. The enterprise has assumed greater importance in improving the employment opportunity and animal protein production in Nigeria. To this end, an up-to-date knowledge of the profitability and efficiency of resource utilization in the industry will go a long way in bridging some knowledge gap and help in formulating policies aimed at ensuring increased and more profitable poultry production in the country.

 

1.2       Statement of the Problem

The provision of credit has increasingly been regarded as an important tool for raising the incomes of rural population, mainly by mobilizing resources to more productive uses (Atieno, 2001). Access to sufficient credit is certainly a requisite to viable production outfits, especially as the industries are some of the way out of industrial backwardness, unemployment and mass poverty.

Inadequate credit affects the purchasing power of producers to procure farm implement, and make farm related investments, which they can fall back on to help augment incomes and alleviate poverty. Inadequate access to credit indirectly affects the risk behaviour of producers (Eswaran & Kotwal, 1990; Guirkinger & Boucher, 2005). It usually compels poultry farmers to invest in less risky and less productive technologies rather than in the more risky but productive ones (Dercon, 1996). Risk behaviour has negative effects on technical efficiency of the poultry farmers in that it limits the effort of the poultry farmers in attaining maximum possible output and, hence, efficiency is compromised.  It is possible that some of the famers in Odeda Local government areas operate below their full capacities. A lot of poultry farms are likely to have folded up as a result of this inadequate access to credit. It is possible that socio – economic dimension has influence on access to credit. This perceived problem of access to credit by poultry farmers in Odeda Local Government, area of Ogun State moved the curiosity of the researcher to investigate socio-economic dimension of the poultry farmer in relation to access to credit.

 

1.3       Objective of the Study

The main objective of the study is to determine how socio-economic factors affect credit supply to poultry farmers in Odeda local government of Ogun state. The specific objectives are to:

  • show how level of education affect credit supply to poultry farmers;
  • determine how years of experience influence credit supply to the poultry farmers;
  • analyse the relationship between household size and credit supply of the poultry farmers;
  • establish how farm size affect the supply of credit to poultry farmers and
  • show the extent of the relationship between collateral security and credit supply to poultry farmers

 

1.4        Research Questions

  1. How does level of education affect credit supply to the poultry farmers?
  2. How do years of experience influence the supply of credit to the poultry farmers?
  3. What is the relationship between the household size and suitability of the poultry farmers to access credit?
  4. How does the size of farm affect the supply of credit to poultry farmers?
  5. To what extent does collateral security affect credit supply to the poultry farmers?

 

  • Hypotheses

The null hypothesis is at level 10% significant

Ho1:     Level of education has no significant effect on credit supply

Ho2:     Credit supply is not significantly affected by years of experience

Ho3:       There is no significant relationship between household size and suitability of poultry farmers to access credit

Ho4:     There is no significant relationship between size of farm and credit supply to poultry farmers

Ho5:     Collaterals do not have significant relationship with credit supply to poultry farmers

 

1.6       Significance of the Study

The findings of the study expose some factors that might be responsible for poor production of poultry farming. The identified areas where government at different levels could come in to assist poultry farmers would be brought into focus in order to bridge the gap. This study might be of significant use to stakeholders such as farmers, investors, local government, policy makers, and nation at large.

To the Farmers, this study would be relevant to farmers who want to go into poultry business because it could provide the detailed information on economic importance of poultry farming. To the investors, the study would also throw more light on the performance and profitability of poultry business for investors that are interested in poultry business and for expansion of already existing ones. To local government, its gives education concerning farm size and population of farmers in the entire local government so as to attract credit facilities either from government or private individuals. To policy makers, the intricate of credits constraints and supply of credit by financial institutions would be reviled as this would be used to policy makers and national development planners to know where emphasis and logistic supports are needed. To the nation at large, government needs the information in order to know how to allocate budget for agricultural production in rural development.

 

  1.7     Scope of the Study

This study was designed to examine socio-economic factors that determine access to credits by poultry farmers in Odeda Local Government. It is expected to be used for further investigation on, either the efficiency or access to credit in poultry farms in Ogun State, Nigeria. The report emanating from the study is based on statistical data, reports, and literature information. This study has covered one hundred (100) poultry farms in Odeda Local Government Area of Abeokuta, Ogun State.

1.8       Justification for the Study

The study is significant as it aimed at investigating socio-economic dimension of the poultry farmers in relation to access to credit and providing suggestions on how the identified problems can be solved.

 

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