CHAPTER ONE

INTRODUCTION

1. BACKGROUND OF THE STUDY

The agricultural sector is among the major contributors to the economic growth and development in Nigeria. The farmer cooperative society over the years has been the backbone of the rural farmers that have limited access to credits. These associations were formed in major cocoa producing areas and they were independent of government support (Ihimodu, 1998). The collapse of traditional mode of cooperatives was attributed to incapacitation of members to bear risk, expectation of high returns on investment and poor management. Cooperative organizations have undergone changes over the years ranging from traditional, informal to modern and formal institutions (Harris and Stefanson, 2005). The cardinal objective of introducing agricultural cooperative was to increase crop production and credit facilities to cultivators. They have been deeply involved in activities that have impacted on the livelihood of members in particular and rural people in general. This opinion was shared by Omotosho (2007) that cooperatives often ploughed back resources in terms of dividend on share capital and distributed proportionally to members as patronage bonus. These voluntary social organizations are found in communities possessing common interests but differ in size and degree of interaction among members (Thompson, 2002).

        In these societies members have had the ability to influence ideas and actions of the government through a common bargaining power. Royer (2005) and Chambo (2009) had the belief in principle that agricultural marketing cooperatives were competing favourably with private individuals including multinational companies amidst of various challenges such as price fluctuations, legislative controls and low capital accumulation. In this regard, most community and agricultural development agencies have sought the support of these organizations as effective means of imparting new ideas, techniques, harnessing their resources towards improving agricultural production and this constitutes the significance of farmers’ cooperative organizations towards the development of agricultural sector. The country embarked on many agricultural development strategies such as input subsidization, marketing boards, and institutional reforms geared towards improvement of agricultural production.

        Nowadays the rural farmers do not only get access to credit from the farmer cooperative but also from the public sector. The introduction of the CBN anchor borrower scheme might lift the burden on the shoulders of the famer cooperative. Central Bank of Nigeria in line with its developmental function established the Anchor Borrowers’ Programme (ABP) in year 2015 with a view to collaborate with anchor companies involved in the production and processing of key agricultural commodities. The Programme is targeted toward helping local farmers increase production and supply of feedstock to the processors, reduce importation and conserve Nigeria’s external reserves. Under the Scheme, Anchor firms serve as Off-takers in recognition of their track record and experience in working with out-growers involved in production. The Scheme involves a finance model whereby the anchor firms, CBN, NIRSAL and State Governments organize the out-growers and ensure that they comply with contractual terms thereby reducing the incidence of side-selling. The financing institutions serve as veritable channels for delivering credit to the out-growers. It has been two years since the inception of the programme, and enough periods based on the contractual arrangement, for the beneficiary farmers to be evaluated in order to determine the impact of anchor borrower program (ABP) on the farmers’ return, as well to examine the impact of ABP on agricultural commodity price and employment generation. It is to this regard that the study is based on the benefits and challenges of CBN anchor borrower scheme for farmers’ cooperatives in Nassarawa state

1.2 STATEMENT OF THE PROBLEM

The CBN anchor borrower scheme has long been implemented but there have been little or no impact on the farmer cooperative in Nigeria because of the challenges faced by the stakeholders in the CBN anchor borrower scheme. Some of the these problems include high level of illiteracy in the rural areas, lack of proper documentation for accessing credits from the CBN anchor borrower scheme and secondly, the issue of delay in disbursement of funds to farmer cooperatives in Nigeria. Lastly there have been lots of works done by researchers on the CBN anchor borrower scheme but none of these studies have tried to determine the benefits and challenges of CBN anchor borrower scheme for farmers’ cooperatives in Nassarawa state; hence a need for the study. 

1.3 AIM AND OBJECTIVES OF THE STUDY

The study seeks to determine the benefits and challenges of CBN anchor borrower scheme for farmers’ cooperatives in Nassarawa state. The objectives of the study are:

1. To examine the efficiency of the CBN anchor borrower scheme since its inception
2. To determine whether farmers cooperatives in Nassarawa State have benefited from the CBN anchor borrower scheme
3. To identify the challenges faced by farmers cooperatives in Nassarawa State in assessing funds from the CBN anchor borrower scheme
4. To investigate the factors affecting the performance of the CBN anchor borrower scheme
5. To recommend ways to improve the performance of farmers cooperatives through the CBN anchor borrower scheme

1.4 RESEARCH QUESTIONS

The following research questions guide the objectives of the study:

1. How efficient has the CBN anchor borrower scheme being since its inception?
2. Have farmers cooperatives in Nassarawa State benefited from the CBN anchor borrower scheme?
3. What are the challenges faced by farmers cooperatives in Nassarawa State in assessing funds from the CBN anchor borrower scheme?
4. What are the factors affecting the performance of the CBN anchor borrower scheme?
5. What are the ways to improve the performance of farmers’ cooperatives through the CBN anchor borrower scheme?

1.5 STATEMENT OF THE HYPOTHESIS

H0: the CBN anchor borrower scheme has not been efficient since its inception

H1: the CBN anchor borrower scheme has been efficient since its inception

1.6 SIGNIFICANCE OF THE STUDY

The study on the benefits and challenges of CBN anchor borrower scheme for farmers’ cooperatives in Nassarawa state will be of immense benefit the farmers cooperatives in Nassarawa state. The study will guide the farmers’ cooperatives on how to benefit from the CBN anchor borrower scheme. The study will also identify the loopholes in the CBN anchor borrower scheme and proffer solution to that effect. The study will serve as a repository of information to students, farmers and other researchers that desire to work on the above topic. Finally the study will contribute to the body of the existing literature on the benefits and challenges of CBN anchor borrower scheme for farmers cooperatives in Nassarawa state.

1.7 SCOPE OF THE STUDY

The study covers on the benefits and challenges of CBN anchor borrower scheme for farmers’ cooperatives in Nassarawa state with focus on small scale farmers in Nassara State.

1.8 LIMITATION OF THE STUDY

TIME CONSTRAINTS: One the challenges experienced by the researcher is the issue of time; the research will simultaneously engage in departmental activities like seminars and attendance to lectures. But the researcher was able to meet up with the deadline for the submission of the project.

FINANCIAL CONSTRAINTS: Every research work needs funding; however lack of adequate funds might affect the speed of the researcher in getting materials for completion of the project.

1.9 DEFINITION OF TERMS

CBN: Central bank of Nigeria

FARMERS COOPERATIVES:  An farmers cooperative, also known as a agricultural cooperatives, is a cooperative where farmers pool their resources in certain areas of activity