COOPERATIVE AND AGRICULTURAL FINANCING. A CASE STUDY OF ABIA STATE.

CHAPTER ONE

1.0  INTRODUCTION

1.1  GENERAL OVERVIEW OF THE STUDY

       Agriculture is the oldest industry known to mankind and it is the source of our food and raw material for many industry (Lot, 1985), infact, it can be justifiably referred to as the worlds primary industry (Lot, 1985). At more than 25 years after the country’s political independence, it is a paradox that Nigeria agriculture still manifests the typical symptoms of a peasant agriculture, the farms are small averaging less than five (5) hectares of land and accounting for over 90 percent of the total production, the farming population is itself rapidly going down, with attendant deterioration in the vigour and stability of the human labour, the  primary production suffers from irreversible rural and urban migration which contributed to the depopulation of the country side thereby making labour more scare and thus more expensive, the livestock industry is dominated by nomadic herdsmen while the fishing sectors is essentially artisans, the forestry resources which are the bounties of nature suffer from massive exploitations without regeneration (Ijere et al., 1988).

       The result of that is low productivity and slow rate of growth which is between (1980-1985) has been put at one percent per annum. For an economy which is heavily skewed inferior of primary production, this growth rate will hardly be seen as impressive. The cause of this is stagnation in the agricultural sectors which is so numerous and varied as they are complex. It has been argued that the oil “syndrome” has undermined the performance of the agricultural sector by accelerating the shift of labour, capital managerial talent to other industries (Ijere et al., 1998). Also the past urban basis for public policies enhanced the productivity of investment in non-agricultural commodities to the detriment of investment in the agricultural sector (Ijere et al., 1998).

1.2  STATEMENT OF THE PROBLEM

The problem associated to cooperative and agricultural financing has caused a lot of harm than good in the industry and commercial sector. The major ones are the inadequate funds to execute a project in the rural areas. As a matter a fact farmers who live virtually below the subsistence level and have no real connections with the people that matter in the community or society have no tangible assets to bank or government grants. Presently the locations of commercial banks are almost confirmed to the urban areas. Being profit oriented, those commercial banks tend to favour their concentration on their branches alone which is the urban areas where business is booming (Ijere, 1985).

A pertinent question to ask then is at a micro level, are the rural areas’ industrialists and farmers doomed to external acute shortage of funds.