Analysis of Risks in Financing Agriculture a Case of Agricultural Cooperatives in Benue State, Nigeria

Subject Areas : Extension and Economic

Odey Ogah ¹ , Felix Ikyereve ² , Francis Ogebe ³

1 - Department of Agricultural Economics, Federal University of Agriculture, PMB 2373 Makurdi, Benue State, Nigeria
2 - Department of Agricultural Economics, Federal University of Agriculture, PMB 2373 Makurdi, Benue State, Nigeria
3 - Department of Agricultural Economics, Federal University of Agriculture, PMB 2373 Makurdi, Benue State, Nigeria

Received: 2020-05-10 Accepted : 2020-06-22 Published : 2020-06-30

Keywords: agriculture, cooperatives, analysis, Finance and Risk,

Abstract :

The study analyzed risks in financing agriculture by agricultural cooperatives in Benue State, Nigeria and use research questionnaires for data collection. A multistage sampling technique was used to select the sample of 210 respondents from 21 agricultural cooperatives. Descriptive and inferential statistics were employed in data analysis. Loan defaulting (66.7%) and reduction in savings by members (51.4%) were the major causes of risks faced by agricultural cooperatives in the study area. Other were: adverse changes in commodity prices (48.6%), disaster (45.7%) among others. Risks adversely influence the profitability and competition of agricultural cooperatives (82.9%). Multiple regression analysis results showed that the coefficient of multiple determinations was 0.67 implying that the explanatory variables included in the model accounted for 67% of the variation in the level of profitability of agricultural cooperatives. The number of loans, average amount of loan and the interest rate were significant and important determinants of profitability of the cooperatives. Majority of the respondents (88.6%) made use of loan guarantors as a strategy of managing loan default/ repayment. It was found that majority (70%) of the respondents faced the challenge of lack of insurance cover. The study recommend that Agricultural cooperative officials should be encouraged to undergo formal training and education so as to easily acquire administrative skills in the management of agricultural loans, Farmers loan size should be increased and released on time to enable them use it effectively. Policies that enhance insuring farm activities should be put in place so as to discourage farmers risk aversion.

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