THE DETERMINATION OF CREDIT NEEDS AND FACTORS AFFECTING REPAYMENT ABILITY OF FARMERS’ CO – OPERATIVE SOCIETIES IN KOGI STATE

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THE DETERMINATION OF CREDIT NEEDS AND FACTORS AFFECTING REPAYMENT ABILITY OF FARMERS’ CO – OPERATIVE SOCIETIES IN KOGI STATE

ABSTRACT

This study was conducted in three Local Government Areas in Kogi State namely Dekina, Lokoja and Ijumu. The objectives were to describe the socio-economic characteristics of members of farmers’ cooperative societies; determine their credit needs; determine the relationship between their credit needs and socio-economics characteristics; determine their level of loan repayment and determine factors that affect their repayment ability. Both primary and secondary data were used for this study. Analytical tools used were descriptive statistics, Budgeting techniques and regression analysis. The study revealed that most of the members of farmers’ cooperative societies (88%) in the study area were within the ages of 15-64 years defined by FAO as economically productive age. There were more males (93.3%) than females (6.7%) members of farmers’ cooperative societies. Most (88%) of the respondents attained both formal and non-formal education. The average family size in the study area was 9 persons. About 60% of the respondents had between 1 to 3 hectares of land and a majority (66%) had over 10 years of farming experience. About 67% of the respondents practiced other occupations such as civil service, brick laying, trading and so forth apart from farming. The study revealed that farmers estimated credit needs ranged from N2,520 to N35,100. The results of the linear regression between socio-economic characteristics and credit needs showed that age, farming experience, farm size, non – farm activities and cost of production were significantly related to credit needs. Also, the result of the logistic regression showed that family size, farming experience, farm size, membership of organization, non-farm activities and return to investment to significantly (P = 0.05) affect repayment ability in the study area. In conclusion, credit is needed by members of farmers’ cooperative societies in the study area, the identification of socio-economic factors that affect credit needs and repayment ability will help emphasis factors that should be considered before loan disbursement as this will go a long way to curb or reduce the level of loan default. The credit worthiness model will help identify financial capability of a borrowers before any loans are disbursed to help curb non-repayment. On the basis of the findings of the study, it is recommended that there is need for the availability of credit to farmers for procuring inputs and the credit should be made available through well established and registered farmer groups for easy monitoring, evaluation and the recovery of such credit. The repayment ability of prospective borrowers should be analysed before any form of credit is disbursed, such that where probability of recovering the loan/credit is low such applications should be rejected. Insurance policies should be extended to cover both farm and non-farm enterprises to encourage more banks to make credit available to farmers. The Agricultural Credit Guarantee Scheme Fund (ACGSF) should speed up settlement of claims to banks involved in the scheme to encourage greater participation in the scheme. Farmers need to be educated on the fact that repayment is vital to project performance and lender’s survival. Prompt repayment should be rewarded and farmers should be encouraged to keep savings accounts with banks of their choice.

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