Evaluate The Performance Of Agro-Based Cooperative Societies. This work aims at challenging and providing good performance solutions to the problems faced by agricultural cooperative societies in this part of Nigeria.
1.1 Background Information
The Nigerian domestic economy is partly determined by agriculture which has experienced a rapid growth in recent years.
Agriculture has remained the fastest growing sector of the non-oil sector and has recorded a growth rate of above 5% in recent years compared with the less than 2% growth of the early 80s.
In 2005 alone, agriculture contributed 6.8% out of the 8.2% growth rate recorded by the entire non-oil sector and also employed about 65 million persons while contributing about 41% of the Gross Domestic Product (GDP) (Abduquadri and Mohammed, 2012).
Nigeria today has a population of about 175 million persons which is growing at a rate of 3.2% per annum, and if this is not checked, the population is likely to double in less than 25 years. This alarming growth rate is a challenge in a country where more than 90% of the agricultural output is accounted for by small-scale farmers with less than two hectares under production.
About 75% (68 million hectares) of estimated total Nigeria land has potential for agricultural activities but only about 33 million hectares is under cultivation. Similarly of the estimated 3.14 million hectares of irrigable land area, only about 220,000 hectares (7%) is utilized (Falusi, 2008).
In addition, more than 90% of Nigeria’s agricultural output is accounted for by households with less than 2 hectares with typical farm sizes ranging from 0.5hectares in the south to 4 hectares in the north.
Supply of agricultural inputs has also been generally inadequate, and thus inadequate input supply and mechanization contribute to the low level of agricultural production in Nigeria compared with the population growth of the country.
This is a problem to Nigeria’s economic development which demand proper attention in order to develop the agricultural sector of the country towards increased in GDP and self-reliance in food production (NEEDS, 2008).
One of the major problems of agricultural development in Nigeria is that of developing appropriate organizations and institutions to mobilize and induce members of the rural sector to a greater productive effort (ICA, 2010).
As such rural farmers who are characterized by low income, low resource utilization, small farm holdings and scattered plots, find it difficult to pool their resources in order to raise their farm income and substantially improve their living conditions.
Today, in an era when many people feel powerless to change their lives and transform the agricultural sector of Nigeria, cooperatives represent a vibrant and viable economic alternative.
Cooperatives are formed to meet people’s mutual needs and are based on the idea that together, a group of people can achieve a goal that none of them could achieve alone.
Cooperative organizations offer the best machinery for reaching the critical mass of small farmers in Nigeria ( Ahmad and Dogarawa, 2005).
The International Cooperative Alliance (ICA) (2010) defines cooperative as an autonomous association of persons unified voluntarily to meet their common economic, social and cultural needs through a jointly owned and democratically controlled enterprise.
Cooperative according to Omotesho (2008) is one of the most effective vehicles for efficient mobilization of production resources and accelerated rural development.
The importance arises from the fact that the small-scale individual capacity of the peasants production, cannot cope with technological and capital demands of modernized agriculture.
Even though the family farm may be considered efficient within the static framework of its motive of enterprise-self-sufficiency, the dynamic demands of modern times are such that such a framework has to be subjected to drastic structural changes, and the peasant should be educated such that he knows that his interest is being fostered (Anyanwu 2004).
Agricultural cooperatives have been there over the years to play this role of drastic structural change in agriculture towards achieving food security as well as the socio-economic upliftment of the famers.
Uchendu (1998) noted that the original impetus for the organization of cooperatives in Nigeria came from agriculture or more precisely from the marketing of cash crops for export. Since then cooperative development has taken different forms and dimensions.
According to Federal Ministry of Agriculture and Rural Development (FMARD) (2001), emphasis in cooperative development is now on multipurpose agricultural cooperatives for food production and marketing.
Uchendu (1998) noted that, 96% of cooperative societies in Nigeria are designed basically to serve the needs of agriculture and that the four percent which constitute non-agricultural cooperative societies have great relevance for agricultural product and by-product.
1.2 Problem Statement
Food production which is the basic function of agriculture is not keeping pace with population growth. This has resulted in the upward trend in the price of food stuff, thus creating a wide gap between the demand and supply of food.
The resulting effect of this imbalance between demand and supply of food is malnutrition, poverty and deteriorating living condition. Efforts at improving agriculture over the years in order to feed the population all round the year has been hampered to adopt an improved farming system.
According to Idachaba (1995), because of the inability of the famers Nigeria’s agriculture depends overwhelmingly on low productivity resources, land of progressively declining fertility, unskilled farm labour, local farm implements and low yielding agricultural and traditional farming practices.
Also inadequate finance and poverty are factors that contribute to low agricultural productivity since farm holdings are small which leads to low income and low capital investment.
One of the possible ways of addressing these constraints is to mobilize the small holder farmers to utilize the potentials inherent in agricultural cooperative.
There is also the problem of inadequate financial coordination of agro-based cooperative societies as fraudulent activities of leaders of cooperative societies have limited the success of the societies.
Not withstanding the wide literatures on farmers’ cooperative societies, there seems to be a bridge in knowledge on the performance of farmers’ cooperative societies in Ohaukwu L.G.A of Ebonyi State.
In trying to resolve the problem, the following research questions were addressed;
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1.3 Objective of the Study
The broad objective of this study is to evaluate the performance of agro-based cooperative societies in Ohaukwu Local Government Area of Ebonyi State Nigeria. The specific objectives include to:
Ho: Membership of cooperative society has no significant effect on farmers livelihood.
1.5 Justification for the Study
The problems which cooperative societies, especially agro-allied cooperative societies encounter hinder food production increasingly as more food is lost on daily basis as a result of the inadequate management of cooperative societies.
This work aims at challenging and providing solutions to the problems faced by agricultural cooperative societies in this part of Nigeria.
Students who wish to understand the types, classification and roles of cooperative societies, its effect on Agriculture and mitigation measures to the problems encountered by these societies will benefit from this work.
This work provides correct information on the types, composition of agricultural cooperative societies in this part of Nigeria and as such will be a good source of information to the government in assisting the farmers on how to tackle the problems encountered by these societies.
Extension agents and workers will benefit from this work as it will be relevant for them to understand the benefits in belonging to cooperative societies.
Farmers in the rural areas will to a great extent benefit from this work as it will expose them to cooperative societies, its effects on their productivity, their income and savings, as well as best management methods of these societies of which when adopted will to a great extent help them grow more crops, rear more animals, provide more food for their families and as well more raw materials for the industries.
Ebonyi state government also will benefit from this work as the government will rely on the data so collected and the estimates made in making their plans and as well as implementation in order to enable it forecast the economic situation of the state in the future.
This chapter focuses on the review of related literatures and this was done under the following subheadings; Origin of cooperative movement, Meaning and scope of agricultural cooperatives, History of cooperative in Nigeria, Small scale farmers and their problems, The role of cooperative and their contribution to small scale famers.
2.1 Origin of Cooperative Movement
Britain can easily be said to be the initiator and homeland of the consumer cooperative movement. Although there are other forms of cooperative societies in Britain, Consumer Cooperative clearly dominated all other forms.
There were many years of experimentation, and series of attempts before the successful cooperative was established.
In 1844, twenty-eight unemployed community members in Rochdale, England pooled their resources and participated in cooperation for mutual benefit (Holyoake, 1908; Shaffer, 1999).
The Rochdale consumer co-operative was founded on three principles: equality, equity and mutual self-help (Co-operatives Secretariat, 2003; Holyoake, 1908; Shaffer, 1999).
Formally known as the Equitable Pioneers of Rochdale Society, Rochdale is seen as the foundation of the modern co-operative movement.
Based on the three principles, the co-operative movement expanded into areas of the economy beyond consumer retail (England) and agriculture (Germany).
Co-operatives were developed around financial issues such as loans and savings, employment opportunities or lack of opportunities and housing opportunities (Harris A. et al., 1996).
These principles remained until 1963, when the International Co-operative Alliance (ICA) extrapolated the three principles into seven principles (Craig, 1980; Shaffer, 1999).
The new seven principles are still underlined with the original three Rochdale principles.
Industrialization and the specialization of labour created an environment in which the Rochdale principles were able to succeed among community members.
By offering an alternative, co-operatives were seen as helping people obtain goods and services that they may not otherwise be able to access, tailoring to their member’s needs, building stronger communities and creating autonomy from external factors (Holyoake, 1908; Shaffer, 1999; Craig, 1980; Harris A. et al., 1996).
Cooperation is as old as man. The family is based on cooperation, so is the village, the tribe, the nation. It is the outward expression of the instinct spirit of human solidarity and brotherhood present in every human being.
In traditional societies, cooperation is reduced to custom and enforced by the authority of elders. People join hand to do their domestic work like joint farming, community work like constructing roads, markets etc.
In Nigeria the “Isusu” is popular, whereby people contribute money weekly and give it to their members in turn, as a form of credit.
Onuoha (2002) described these forms of joint association as mutual assistance and not cooperative in the strict sense of the word.
Since they are based on reciprocity (you help me today and I help you tomorrow), they may be called “mutual”. They are preliterate informal, fragile and temporary activities.
They are not project-oriented and also not permanent institutions for the regular production of goods and services. They are not registered and do not have any written byelaws or accounting records.
They have no capital investment, no recurrent expenditure, and no permanently hired staff.
On the other hand, modern cooperatives are formal contractual organizations engaged in business undertakings in which men, money and materials are employed on a permanent basis for the production of goods and services.
They are registered in law and based on sound principles and written record.
The principles of co-operatives include: Voluntary and open membership, Democratic member control, Member economic participation, Autonomous and independence, Education, training and information, Co-operation among co-operatives and Concern for community.
All co-operatives are expected to uphold each principle. First, co-operatives are to be open all members and voluntary.
They are not intended to have discriminatory membership requirements. Secondly there is democratic member control.
Members have equal voting rights, one member one vote. The third principle is that there is member economic participation.
Members contribute to the capital of their co-operative. Surplus can be allocated back to members in the form of equity or it can be allocated for developing the co-operative, creating a reserve or to support other member approved activities.
The fourth principle is that co-operatives are autonomous and independent. Co-operatives are self-help organizations that are controlled by their membership. The promotion of education, training and information is the fifth principle of co-operatives.
Local co-operatives are to provide education and training to their members to ensure that each member can contribute effectively to the progress of the co-operative.
The sixth principle is cooperation among co-operatives. The co-operative movement is most effective by working together with other co-operatives at different scales; local, regional, national or international.
The seventh and final principle is a concern for the community.
Cooperatives, by their nature, are focused on the needs of their members.
Through attempting to achieve these needs, co-operatives work towards sustainable development of their communities (Canadian Co-operative Association, 2003b; Co-operatives Secretariat, 2003; Shaffer 1999).
2.2 Meaning and Scope of Agricultural Cooperatives
Cooperative comes from the verb “operate” meaning to work and a prefix “Co” meaning together and merging the two gives the “Cooperation” In its broadest sense, it means any two or more persons working together to achieve some aims.
Working together may be on an economic or non-economic basis on long or short term.
Umeabali et al. (2009) farmer cooperatives are organization of farmers facing common problems and have accepted a joint action in solving the problems by contributing financially and otherwise, bearing all the risks.
Farmers’ cooperative can get into production, marketing service, processing, thrift and credit among others.
While Madu (2004) defined agricultural cooperative as an association of persons who have voluntarily or willingly joined together to achieve a common aim through the formation of democratically controlled organization making equitable fair share of risks and benefits of the undertaking in which the member actively participate, thus a cooperative society is a self-help project, voluntary and systematic association in which the members with common interest pool together their resources to perform functions which they cannot undertake as an individual for the promotion of their common welfare (Ozowa 2004).
In Nigeria, an agricultural cooperative is a society in which the rural farmers usually participate and is an association of farmers formed and run according to the definition by Umebali (2004) and is used to enhance their agricultural productivity.
The definitions of cooperative societies are similar in all respects. They lay emphasis on the important word; voluntary, free and economic.
The association is purely voluntary and there can be no compulsion of any kind. It is a cooperative organization established in the community/village level comprising farmers and their small holders with the aim of promoting agriculture and other allied function in the area.
The problem of development of agriculture should be solved by cooperatives Arua (1980) He concluded that cooperatives are unified in a single center providing the orientation to activities most urgently needed by the society.
It has been indicated that the encouragement of farmers for cooperatives societies will provide a basis for introducing modern farming techniques to peasant farmers who operate widely scattered holdings (Agu 2007).
Looking critically at the objectives of cooperative societies Umeabali (2004) emphasized that the overall objectives are to increase productivity and name of the farmers, to train and educate the farmers in basis democratic principles and modern agricultural methods and inputs can be channeled to the greatest number and for greatest good; to provide tangible and factual groups through with government agricultural planned economy can be put into practice.
Other forms of agricultural cooperative societies are;- Arable farmer’s cooperative societies, fishery and fisherman cooperatives, rural thrift and credit cooperatives, agricultural produce marketing produce, forestry cooperative societies (Jacobson 1992).
Cooperatives are economic enterprises founded by and belong entirely to the members. These enterprises are created in order to render the best possible service at the lowest possible cost to their members.
Cooperative stands over two legs, in order to be solid and sustained (Akinwumi, 1989).
The equal ownership of members of their cooperative. Members pay with their money, be it by cash payments or by loans undertaken by the cooperative, to create the fixed assets of the cooperative.
Therefore, the cooperative belongs to them entirely, equally, and members own equal shares. T
hese are the Property Shares. In most cooperatives in Africa, and in other parts of the world, this notion doesn’t exists and the cooperatives belong to members on an indivisible basis namely; belonging to everyone commonly and belonging practically to no one. In my view this is one of the major reasons to the declining of many cooperatives in so many places.
The cooperative is rendering to members the best possible service at the lowest possible cost. This means that cooperatives are working not to generating profits or surplus to enable the head of the cooperative, to show to members that he was successful in creating this wealth.
This wealth came from members pockets when applying a policy of very expensive price of participation on members. Members have created their cooperatives when they believed it will rendered them a service, or enabling to purchase a commodity in so low price, they couldn’t afford when alone.
There can be many variations to the agricultural cooperative model each playing a critical function in fulfilling its members’ needs. Supply cooperatives, for example, make various products available to its members, while marketing cooperatives act as a marketing body for famers to sell their products.
Some cooperatives combine both these activities while others provide additional services such as custom harvesting of crops. The cooperative structure and its commonality of their goals.
2.3 History of Cooperative in Nigeria
According Madu (2004) cooperative societies were established in Nigeria in the early 1930’s. An Indian cooperation expert named Mr. C.F. Strickland was appointed in 1933 by the federal department of Agriculture to study and to report on the desirability and possibility of establishing cooperative societies in the colony and protectorate of Nigeria.
He later submitted the report in April 1934 recommending the establishment of cooperative society’s ordinance was enacted in 1935 while the regulation regarding the managerial conduct was enacted in 1936.
The major content of the report of Strickland are as follows:- The Nigeria was fit for introducing cooperative societies, the objectives of cooperative, the nature of cooperative societies, the types of cooperative suitable in Nigeria.
Just like many other countries such as Italy, Indian, Ireland the earliest form of cooperative that existed were made up of farmer; cocoa farmers in the then eastern and western Nigeria (Elom, 1992).
He further stated that the first society to be registered was Gbedun cocoa FMCS Ltd. In 1937, subsequently, other societies followed suit and had read the total number of one hundred and eighty one (181) in 1994.
Cooperative federation of Nigeria was then formed which coordinated the cooperatives societies in the Nation. The division of Nigeria into three regions viz north, south and west in 1951 gave rise to regional cooperative bodies.
It is important to note that one of the major reasons why cooperative thrive easily in Nigeria was because there were other forms of it. Cooperative existing such as “Isusu” groups, communal work etc. thus the introduction of the formal cooperative become a matter of nation.
Cooperative societies are very popular in Nigeria. Onuoha (2002) in his study of cooperative history in Nigeria state that there are traditional and modern cooperative societies.
The modern cooperative societies started in the country as a result of the Nigerian cooperative society law enacted in 1935 following the report submitted by C.F Strickland in 1934 to the then British colonial administration on the possibility of introducing cooperatives into Nigeria.
Cooperatives societies in Nigeria like their counterparts all over the world are formed to meet people’s mutual needs.
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