Return Structure Of Cooperative And Non-Cooperative Poultry Farmers In Yewa North Local Government Area Of Ogun State.

Project and Seminar Material for Cooperative Economics and Management CEM

Return Structure Of Cooperative And Non-Cooperative Poultry Farmers In Yewa North Local Government Area Of Ogun State.


Chapter One


1.0 Introduction

1.1 Background Study

Agriculture plays a vital role in the economic development of Nigeria. It provides food for the growing population, employment for over 66% of the population, raw materials for industries and foreign exchange earnings for the government.

Agriculture has the potential of improving the country’s economy, if well managed. This will depend, to a large extent, on the encouragement given to the agricultural sector. Agriculture still remains the most important sector of the Nigerian economy in terms of provision of employment in spite of its reduced contribution to the nation’s foreign exchange earnings due to the over dependence in the oil sector as the main stream or source of income for the nation. About 64% of the country’s population depends on agriculture for their livelihood, since 34.8% of the GDP and over 38% of the non-oil foreign exchange earnings are contributed by the agricultural sector.

Agriculture on its own extends to 5 special branches which includes: Agronomy ( this study deals with soil management and the growing of crops), Horticulture ( this deals with the cultivation of fruits, vegetables and ornamental crops i.e. flowers ),Agricultural Engineering ( involving the knowledge of farm machines and equipment, and the development of new systems and practices to address problems facing agriculture),Agricultural Economics ( this deals with the business end of farming) and Animal Science ( the breeding and caring of animals for specific purposes, such as for their meat, milk and/or fur).

The word “poultry” refers to domesticated birds kept for meat, egg, and feather production. Poultry in Nigeria is undertaken in diverse ways, utilizing different types of resources, in a wide spectrum of socio-cultural and economic conditions. Major poultry species kept include chicken, ducks, guinea fowls, turkey, pigeons, quails, and ostrich of which chicken dominates the industry.

The poultry industry plays important roles in the development of Nigerian economy. It is a major source of eggs and meat which have a high nutritional value particularly in the supply of protein. Eggs are also important in the preparation of confectionary and vaccines. The poultry industry also provides employment opportunities for the populace, thereby serving as a source of income to the people. However, the poultry industry in Nigeria, as well as other developing countries of Africa, is continually characterized by low production levels (Okoli, 1991).

It has been argued that if only sufficient agricultural finance was made available, the decline in the production and supply of agricultural products in Nigeria, would improve (Oludimu and Fabiyi, 1983). An increase in the level of finance of the poultry industry, better management practices, leading to good nutritional egg and meat production, are required to supply the essential protein for the population (Oboth, 2003). Again, poultry production is considered a high risk investment by most financial institutions due to high rate of poultry mortality, low productivity in many cases and low levels of loan repayments. This situation has led to scepticism on the part of financiers when considering financial requests for poultry production. At present a large proportion of the operators in small scale poultry industry in Southern Nigeria are in poverty due to poor financial standing and high business risk which reduces the level of accruable profit (Oludimuet al. 2004). There is thus a growing concern for lack of credit to the poultry farmers even though there are credit policies on the ground.


1.2 The significance of cooperative in poultry farming

Poor farmers tend to resign to subsistence farming because of their inability to acquire required credit support to keep in business (Ammani, 2012). Financing agriculture involves lending money to farmers to stimulate the productivity of the limited farm resources (Muniraj, 1987; Adegeye and Dittoh, 1985; Osuntokun, 1992). Eswaram and Kotwal (1990) suggested that the provision of agricultural credit makes available additional capital that can be used to enhance the level of household’s productive and physical capital. Access to credit is expected to enhance farming households’ ability to acquire capital intensive technology and assets to facilitate and improve farming activities resulting in greater capacity to invest in cultivation of high yielding crops and larger farm holdings (Nwankwo, 1983; Palmer and Ojo, 1983; Feder et al., 1985; Emereole, 1995; Nwaru, 2004; Nwaru and Onuoha, 2010; Ammani, 2012). This may in turn lead to efficient resource allocation, increase farmers’ technical efficiency and, by implication, increase farmers’ profitability. Similarly, Qureshi et al. (1996) observed that an increase in credit to agriculture will lead to increase food production and farmers’ income because as the demand for credit increases, farmers output also increases, resulting in improvement in their well-being.Nwaru and Onuoha (2010) further observed that when agricultural credit is properly extended and utilized, it encourages diversification which stabilizes and often increases resource productivity, agricultural production, value added and net incomes of farmers.

Credit is therefore a necessary input in the various aspects of farm operations. With poor socio-economic and production characteristics of the farmers, inconsistent and unfocussed government policies, poor infrastructural base, low level of agricultural investment, poorly developed agricultural research system, underdeveloped land property rights, low level of technology, inefficient use of resources, natural disasters and lack or insufficient access to credit and other production resources interacting in a synergism to restrict the agricultural sector, the result is low production, low farm income, high prices of food items, inflation, underdevelopment and concomitant poverty(Okuneye, 2001). The Federal Government has continued to broaden the economic base of the country through revamping of the agriculture sector. It is anticipated that this will alleviate poverty and generate employment within the nation. The provision of adequate finance, therefore, becomes a necessity to facilitate the extent to which planned projects and programs could be executed in public finance (Adegbite et al., 2008).

A number of studies have been carried out on the impact of cooperatives on agricultural development. In fact, academic interest that shows the impact of cooperatives on agricultural development is evidenced by the fact that some academic journals have devoted special issues to research establishing this linkage. Some scholars focused on the mechanism by which poverty is reduced. Amin et al. (2003) focused their article on the ability of cooperatives to reach the poor and vulnerable farmers. They focused their article in such a manner because of concerns that cooperatives is only serving people slightly below or above the line of poverty, however the really poor and small-scale farmers are being systematically excluded. By contrast, Copestakeet al. (2001) analyzed the impact of cooperatives on firms and individual wellbeing. They focused on business performance and household income to establish a link between the availability of cooperatives and overall wellbeing of the poor. Evans and Adams (2009) approached the cooperatives question at a slightly different angle.

However, Evans and Adams (2009) seek to explain non-participation in the cooperatives evolution, stating that while cooperatives is used as a viable tool in fighting poverty, more than 75% of the poor individuals choose not to participate for various reasons. Ryne and Holt (2004) provided a meta-analysis of cooperatives and focuses on women empowerment, intending to show why various studies conflict in their conclusions as to the impact of cooperatives on women empowerment. Parker (2001) evaluated the actual cooperatives programmes in China using three key measures (targeting, sustainability and overall impact).

Thus, both research and practice have seen an increasing concern about the impact of cooperatives on development. In spite of this emphasis, none of these researches provided sufficient justification for the link between cooperatives and small-scale poultry business in developing countries. Besides, the empirical evidences emerging from few studies on the effect of cooperatives on small-scale poultry production have so far yielded mixed results that are inconclusive and contradictory. Thus, the question of whether cooperatives improves or worsens poultry production is still worthy of further research such as the one being undertaken in this study. Also, empirical evidence remains largely scanty, isolated and devoid of in depth analysis of the combined effects of socioeconomic factors and microcredit on poultry production in the context of their sign and size in Nigeria.


1.3 Problem statement

In recent times the experiences of farmers have shown that poultry production has been suffering some setbacks caused by increasing cost of feeds amongst others. This reduces the net return from the business significance (Aihonsu, 1999). Also many of the existing poultry farms are folding up and prospective investors are becoming increasingly reluctant to invest (Aihonsu, 1999). This situation threatens the survival of poultry industries and this call for concerted efforts to save the industry from total collapse.

However, the poultry industry in Nigeria, as well as other developing countries of Africa, is continually characterized by low production level (Okoli, 1991). This is largely associated with lack or limited credit finance for the procurement of basic poultry equipment and materials. This makes it difficult for the farmers to produce and supply sufficient and good quality feeds to the poultry birds (Oyenuga et al., 1977; Ogunfowora et al., 1975).

This is largely associated with lack or limited finance (credit facilities) for the procurement of basic poultry equipment and materials. Feed ingredients are also expensive. This makes it difficult for the farmers to produce and supply sufficient and good quality feeds to the poultry birds (Oyenugaet al., 1977; Ogunfoworaet al., 1975).

Oboth (2003) observed that about 88.9 percent of the poultry farms were funded to the tune of N2.5 million per annum while the average annual funding rate was N1.701 million. This thus indicated the poor funding status of the small scale poultry farms in Southern Nigeria. Oboth (2003) also reported that only 4.21% of the poultry farms had between N3.1 –N3.5 million funding rate per year. As the majority of these farms operated below fund secure level, there were limited credit facilities to procure necessary items such as high quality and abundant feeds, drugs and vaccines, cages and feeding troughs, hybrid chicks and so on. Funds were also required for settling workers‟ salaries, constructing feed mills and rendering various marketing services.

The word participation has been widely used and promoted in development programmes. It could be defined as an active process which people take initial lives and action that is stipulated by their own thinking and deliberation and which they can effectively influence (FAO, 2006). Participation with regard to community based projects include peoples involvement in decision making process, in implementing programmes, their sharing of benefits of development programmes and their involvement in efforts to evaluate such programmes (Oakely, 2002). Farmers’ participation is considered necessary to get community support for agricultural development projects (Cole, 2007).

Aref (2010) identified lack of effective and strong government institutions as some barriers to participation by farmers. Farmers’ participation is an important factor for sustainable agriculture in rural areas. Farmers’ participation issues are the areas of concern at national and local levels (Subedi, 2008). Without participation, there are obviously no partnerships, no developments and no programme (Arefet al., 2010). Therefore lack of participation in the decision to implement an agricultural policy can lead to failure in the agricultural development. Active participation is often constrained by lack of information and knowledge. Knowledge of the decision making process is important if farmers are to take active part in agricultural planning (Cole, 2007). The World Bank recognized lack of participation in donor sponsored programmes as a reason to the failure of many development and poverty reduction strategies in developing countries (World Bank, 2012). Most of these programmes centre on community development approach rather than agricultural oriented strategies which have marginalized resource poor farmers thus causing them to be eluded from active participation in the programmes (Nwaobiala, 2013). However, various agricultural development agencies established in sub-Sahara Africa that were meant to reduce poverty has failed to achieve its set goals because of lack of stakeholders (farmers) involvement in the agricultural policy formulation. Such issues will be incapable of being successfully resolved, unless all parties are fully involved in working out solutions on their implementation and monitoring of results (Oyedele, 2008, Dolan and Opondo, 2005). Currently, the World Bank is promoting a new initiative known as International Fund for Agricultural Development-Niger Delta Development Commission/Community Based Natural Resource Management Programme in conjunction with the Federal Republic of Nigeria which started in 2005.

Again, poultry production is considered a high risk investment by most financial institutions due to high rate of poultry mortality, low productivity in many cases and low levels of loan repayments. This situation has led to skepticism on the part of financiers when considering financial requests for poultry production. At present a large proportion of the operators in small scale poultry industry in Southern Nigeria are in poverty due to poor financial standing and high business risk which reduces the level of accruable profit (Oludimuet al. 2004). There is thus a growing concern for lack of credit to the poultry farmers even though there are credit policies on the ground. For instance, in the year 2000, a total of N5 million was provided by the federal government through the Nigerian Agricultural Cooperative and Rural Development Bank as an investment revolving fund in each local government area in the country (FRN, 2000).


1.4 Research problems

  1. What are the demands for cooperative loans by poultry farmers?
  2. What are the determinants for the use of cooperatives by poultry farmers?
  3. What are the technical efficiency differential between the cooperative and non-cooperative poultry farmers?
  4. What is the profitability of the cooperative and non-cooperative poultry farmers?

1.5 Research Objectives

The general objective is to examine the return on cooperative participation among poultry farmers in Yewa North L.G.A of Ogun State

The specific objectives are to;

  1. Determine the socio-economic characteristics of the poultry farmers
  2. Know the demand for the cooperative loan by the poultry farmers
  3. Determine the technical efficiency differentials between cooperative and non-cooperative poultry farmers
  4. CIV. compare the profitability of the cooperative and non-cooperative poultry farmers

1.6 Justification of the Study

The poultry industry plays important roles in the development of Nigerian economy. It is a major source of eggs and meat which have a high nutritional value particularly in the supply of protein. Eggs are also important in the preparation of confectionary and vaccines. The poultry industry also provides employment opportunities for the populace, thereby serving as a source of income to the people (Akanni, 2007).

The significance of this study is to determine the returns on cooperative participation among poultry farmers in Yewa North Local Government Area of Ogun State.

This study will enable us to know the socio-economic characteristics of the poultry farmers in the study area, the rate or level of cost and returns, the productivity efficiency and the problem encountered by the poultry farmers.

This study will also enlighten us on the contribution of cooperative participation by poultry farmers on their poultry business with respect to economic growth and development of individuals as well as the Nation.

In addition, this study will also add to the existing research work on the effect of cooperative participation on agricultural poultry production as whole, thereby benefitting the policy makers in the area of agricultural policy formation.

For this reason, it is therefore expedient to carry out this research for the development of the poultry farmers and the nation at large taking into consideration comparism between cooperative poultry farmers and non-cooperative poultry farmers: Returns structure of cooperative and non-cooperative poultry farmers in Yewa North Local Government Area of Ogun State.


Return Structure Of Cooperative And Non-Cooperative Poultry Farmers In Yewa North Local Government Area Of Ogun State.


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