Open Science Repository Agriculture

doi: 10.7392/Agriculture.70081911


Effect of Agricultural Cooperative Membership on Farmers’ Income and Poverty in Delta State, Nigeria


Egbenayabuwa Friday Omoregbee, Alexander Ighoro

Department of Agricultural Economics and Extension Services, Faculty of Agriculture, University of Benin, Benin-City, Edo State, Nigeria


Abstract

The study examined the effect of membership in agricultural cooperatives on farmers’ income and poverty status in the Delta South senatorial district. Data on membership of agricultural cooperatives, farm income and poverty status were obtained from a total of randomly selected 244 respondent,s comprising 122 farmers’ cooperators and 122 non-cooperators, utilizing interview schedule and analyzed using frequency counts, percentages and means. Farm budgeting, Foster, Greer and Thorbecke model of poverty and t-test were also evaluated. Multipurpose cooperatives attracted the highest number of members than credit and thrift and fishery cooperatives. Farmers’ cooperators and non-cooperators were generally low income earners. The mean annual net income, incidence, depth and severity of poverty of farmers’ cooperators and non-cooperators together provide sufficient evidence that membership in agricultural cooperatives could serve as a way for improving farmers’ income and well-being. It is therefore recommended that the activities of cooperatives be improved upon and repositioned as an agent of change in the study area.

Keywords: cooperative membership, agricultural cooperatives, farmers income, farmers poverty, Nigerian agriculture.



Citation: Omoregbee, E. F., & Ighoro, A. (2012). Effect of Agricultural Cooperative Membership on Farmers’ Income and Poverty in Delta State, Nigeria. Open Science Repository Agriculture, Online(open-access), e70081911. doi:10.7392/Agriculture.70081911

Received: November 21, 2012.

Published: December 7, 2012.

Copyright: © 2012 Omoregbee et al. Creative Commons Attribution 3.0 Unported License.

Contact: research@open-science-repository.com


Introduction

The magnitude and expansion of poverty in Nigeria continue to worsen since the late 1990s despite its plentiful resources. In the year 2000, the incidence of poverty in Nigeria stands at 69.2% of the population (Central Bank of Nigeria, CBN, 2001). Globally in 2005 it was reported that 1 out of 5 in the world’s population lived in extreme poverty (Department for International Development, DFID, 2005). In 2006, Nigeria was considered one of the poorest countries in the world, with over 70% of the population as poor and 35% living in absolute poverty (International Fund for Agricultural Development, IFAD, 2006). Widespread poverty in Nigeria is especially severe among farmers who dwell in the rural areas (IFAD, 2006), where agriculture engages over 60% of the labour force, responsible for producing 90% of the total food consumed in the nation.

Cooperative as defined by International Cooperative Alliance (ICA, 1994) is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically–controlled enterprise. Agricultural cooperatives are important in the socioeconomic development of the rural economy. Basically, poverty entails low income, low or no access to production inputs, low productivity, illiteracy and lack of access to information and basic necessities of life. It describes a condition of low income that leads to low saving, resulting in low investment and, as a consequence of that, productivity remains low (Adegeye & Dittoh, 1985). Farmers are said to be trapped in this vicious poverty cycle due to their low output, low farm production; their income remains low and they are unable to make the necessary investments in farm expansion. The consequence of this is that they are unable to improve their living standard. To break out of poverty, farmers need strong institutions like cooperatives.

In an effort to raise awareness on the contribution of agricultural cooperatives to food security and poverty alleviation, there has been an increase in the promotion and registration of agricultural cooperatives. In the study area, the total number of active and registered agricultural cooperatives stands at 140, comprising 82 multipurpose, 39 credit and thrift and 19 fishery cooperatives. The extent to which farm households’ membership of these agricultural cooperatives has translated into increased income for improved standard of living of the farm households is yet to be evaluated.


Purpose and objectives of the study

The main objective of the study was to evaluate the effect of membership of agricultural cooperatives on farmers’ income and their poverty status in Delta South senatorial district, Nigeria. The following specific objectives were addressed:

1. To examine respondents’ membership in agricultural cooperatives and the types of existing cooperatives in the study area.

2. To determine the influence of cooperative membership on respondents’ income.

3. To determine the relationship between agricultural cooperatives membership and poverty status of respondents.


Methodology

Interview schedule survey design was used to collect data from agricultural cooperative members and non-members. The study was conducted in Delta South Senatorial District. It is one of the 3 districts in Delta State, made up of eight Local Government Areas --Bomadi, Burutu, Isoko North, Isoko South, Patani, Warri North, Warri South and Warri South-West. The target population of the study comprised farmers who are either members or non-members of agricultural cooperatives in the study area. A total of 244 respondents constituted the sample size of the study and was split as follows: a total 122 members of various types of agricultural cooperatives made up of multipurpose cooperative (72); credit and thrift cooperative (34) and fishery cooperative (16) were randomly selected from a list of cooperators provided by a cooperative Desk Officer in State Ministry of Commerce, Trade and Industries; a total of 122 non-members of cooperative societies were chosen from farm households in the study area. Data on respondents’ income was derived from farm budgeting. Farm budgeting involves considering the resources and a calculation of expected receipts, expenditures and net farm income (Olukosi & Erhabor, 1988). Specification of net farm income is:

NFI = GI - TC (1)

TC = TVC + TFC (2)

Where: NFI = net farm income (N/ha), GI = gross income (N/ha), TVC = total variable cost (N/ha), TFC = total fixed cost (N/ha).

Poverty status of respondents was determined using the income approach and was computed using Foster, Greer and Thorbecke model.

The model specification is as follows:

Where: Pα= Poverty index; N = the size of the population under study (244); Z = poverty line; Z - Y = the gap between the poverty line and the income for each poor individual; q = number of individual below the poverty line; Yi = capita income of the ith poor household; α= non-negative poverty aversion parameter that takes the value 0, 1, 2.

Poverty line was placed at two-third mean income of respondents as adopted by FOS (1999) and the World Bank/FOS/NPC (1998). Based on this, the respondents were classified into three groups:

  • Non-Poor: those with income above two-third mean income of respondents, i.e. NP > 2/3 (mean income)
  • Poor: those with income between one-third and two-third mean income of respondents, i.e. between 1/3 and 2/3 (mean income)
  • Very Poor: those with income below one-third mean income of respondents, i.e. VP < 1/3 (mean income).


Findings and discussion

Multipurpose as a type of agricultural cooperative combines various activities, like credits, marketing, agricultural production, consumer activities (Adetunji, Oladejo, Okunola, & Adepoju, 2008). The multipurpose cooperative is therefore more suited to meet the diverse agricultural needs and interest of farmers than other cooperative types (Table 1). Farmers membership in the credit and thrift society may be attributed to the fact that it provides necessary fund for their farm needs, without stringent collaterals (International Labour Organization, ILO, 2002).The fishery and fishing cooperatives were common in the riverine areas of the study areas --Patani, Warri South west, Warri North, Burutu, Warri south and Bomadi. This is expected as the major farming occupations of the people in these areas were fish production and processing.

Table 1. Frequency distribution of respondents by membership, types of cooperatives and non-cooperators.

Cooperative type

Multipurpose (M)

Credit and Thrift (C)

Fishery Cooperative (F)

Neither M, C nor F member

Total

Frequency

72

34

16

122

244

Percentage

29.5

14.0

6.5

50.0

100.0

Comparing the modal annual net farm income of cooperators and non-cooperators, farmers in the study area are generally low income earners; but comparison on the basis of the grand mean revealed that farmers who are members of various types of cooperative earned higher farm income annually than farmers who are not members of any type of cooperative. Among farmers’ cooperators, multipurpose cooperative farmers earned the highest mean net farm income annually. The ILO study on poverty alleviation strategies through sustainable rural infrastructure development in 2002 found that agricultural cooperatives were some of the means of improving farmers’ income and reduction of poverty (ILO, 2002) and that the greatest direct economic impact of cooperatives at the micro level was reflected in the additional income they created for their members (Tables 2 and 3).

Table 2. Net farm income distribution of cooperators in the study area.

Cooperative type                 

Multipurpose

Credit and thrift

Fishery cooperative

Grand mean

N 50000 - 100000

35 (28.7)

16 (13.1)

8 (6-5)

N 101000 - 150000

19 (15.6)

9 (7.38)

4 (3.28)

N 151000 - 200000

11 (9.0)

5 (4.10)

2 (1.64)

N 201000 - 250000

5 (4.10)

2 (1.64)

1 (0.82)

N 251000 - 300000

-

2 (1.64)

1 (0.82)

N 301000 - 350000

-

2 (1.64)

-

Mean N


131357.14

106762.5

109440.62

121979.51



Table 3. Net farm income distribution of non-cooperators in the study area.

Net farm income

N 50000 - 100000

N 101000 - 150000

N 151000 - 200000

N 201000 - 250000

N 251000 - 300000

N 301000 - 350000

Mean: N 110450.82

Frequency

72

29

11

6

3

1

Percentage

59.0

23.8

9.0

4.9

2.46

0.82


Comparing the poverty categories of farmers’ cooperators and non-cooperators, there is a very high percentage of the core poor among farmers’ cooperators than non-cooperators. On the basis of income, the likelihood of crossing over the poverty line is higher among the poor farmers’ cooperators than farmers’ non-cooperators. For example, it was possible for few (6.5%) farmers’ to earn annual net farm income above the poverty line while there was none among the non-cooperators. This implies that agricultural cooperatives undertake certain diversified activities that increase income and employment opportunities for farmers in the study area. Statistical significance test was conducted to show whether the difference in the annual net farm income of farmers’ cooperators and non-cooperators has any significant influence on farm income propensity below or above poverty line among the respondents. The computed t-value (1.233) was significant at 5% (t0.025, P< 0.05) (Table 4).

Table 4. Poverty classes of cooperators and non-cooperators.

Poverty classes

Extremely poor cooperators (mean net income < N 40659.84; 1/3 mean net farm income = N 40659.84)

Extremely poor non-cooperators (mean net income < N 36816.94;1 /3 mean net farm income = N 36816.94)

Moderately poor cooperators (mean net income between N 40659.67 ≤ Z < N 81319.67)

Moderately poor non-cooperators (mean net income between N 36816.94 ≤ Z < N 73633.88)

Non-poor cooperators (mean net income ≥ N 81319.67; 2/3 mean net farm income = N 81319.67)

Non-poor non-cooperators (mean net income ≥ N 73633.88; 2/3 mean net farm income = N 73633.88)

F

109

47

5

75

8

-

%

89.3

38.5

4.10

61.5

6.56

-

tc = 1.233; t0.025 two-tail probability test (p<0.05); tt =1.960.


Also, incidence of poverty (P₀ = 0.930) among the cooperators means that 93% of them in the study area are subsisting on income less than the poverty line, the value of P₁ = 0.021 means that the poor farmers’ cooperators are short of subsisting income by 2.1%, and P₂ = 0.011 implies that the problem of income poverty is 1.1% severe in the study area whereas the incidence of poverty (P₀ = 1.00) among farmers’ non-cooperators was 100%, implying that all of them are subsisting on income below the poverty line, all of them are short of subsisting income by 3% (P₁= 0.030) and the problem of poverty of income is severe among them by 2.3% (P₂ = 0.023).

Table 5. Incidence, depth and severity of poverty.

Poverty indices

Farmers’ cooperators

Farmers’ non-cooperators

P₀

0.934

1.00

P

0.021

0.030

P

0.011

0.023


Conclusion and recommendations

Multipurpose cooperatives attracted the highest number of members than credit and thrift and fishery cooperatives. However, the type of occupation engaged in by the farmers is also an important factor in deciding the type of cooperative to be affiliated. Farmers’ cooperators and non-cooperators were generally low income earners. The mean annual net income, incidence, depth and severity of poverty of farmers’ cooperators and non-cooperators together provide sufficient evidence that membership in agricultural cooperatives could serve as a means for improving farmers’ income and well-being. Based on the study’s findings and results, the following recommendations are made:

1. Agricultural extension and rural extension services should focus more attention in promoting formation of multipurpose cooperatives among farmers, alongside the formation of single function cooperatives.

2. Farmers’ low income predisposes them to poverty, poor standard of living and vulnerability to shocks. To enhance the farmers’ income level, agricultural cooperatives in the study area have several responsibilities to play in the education of farmers. This is because the majority of them are illiterates who need new knowledge, skill and attitudinal change for effective and efficient farm management operations.


References

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[2] Adetunji, M.O, Oladejo, J. A., Okunola, S. O., & Adepoju, A. A. (2008). Cooperative economics: Principles and Practices. ISBN 978-080-177-4.

[3] Adegeye, A. J., & Dittoh J. S. (1985). Essentials of Agricultural Economics. Ibadan, Nigeria, Impact Publishers Ltd, 147-159.

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Connections

[1] Chaddad, F. R., & Cook, M. L. (2004). Understanding New Cooperative Models: An Ownership–Control Rights Typology. Applied Economic Perspectives and Policy, 26(3), 348-360.FIND ONLINE

[2] Harris, A., Stefanson, B., & Fulton, M. (1996). New generation cooperatives and cooperative theory. Journal of Cooperatives, 11, 15-28.FIND ONLINE

[3] Cook, M. L., Iliopoulos, C., & Chaddad, F. R. (2004). Advances in cooperative theory since 1990: A review of agricultural economics literature. Restructuring Agricultural Cooperatives, Rotterdam, 65-90. FIND ONLINE

[4] Bates, R. H. (2005). Markets and states in tropical Africa: the political basis of agricultural policies. University of California Press. FIND ONLINE

[5] Ortmann, G. F., & King, R. P. (2007). Agricultural cooperatives II: can they facilitate access of small-scale farmers in South Africa to input and product markets?. Agrekon, 46(2), 219-244. FIND ONLINE

[6] Jayne, T. S., Mather, D., & Mghenyi, E. (2010). Principal challenges confronting smallholder agriculture in sub-Saharan Africa. World development,38(10), 1384-1398. FIND ONLINE

[7] Adeniji, O. B., & Joshua, A. O. (2009). Evaluation Of Loan Disbursement And Repayment Of Supervised Credit Scheme Of Nigeria Agricultural Cooperative And Rural Development Bank (Nacrbd) In Zaria And Kaduna North Local Government Areas Of Kaduna State, Nigeria. Journal of Agriculture and Social Research (JASR), 8(2). FIND ONLINE

[8] Ojeh, V. N., Origho, T., & John, P. H. (2012). Agriculture as an Index of Socio-Economic Development of Delta State of Nigeria. World Environment, 2(4), 62-68. FIND ONLINE

[9] Enete, A. A. (2010). Registration of cooperatives with government in Enugu state, Nigeria: What difference does it really make? Outlook on Agriculture,39(2), 149-152. FIND ONLINE

[10] Ofuoku, A. U., & Urang, E. (2009). Effect of cohesion on loan repayment in farmers’ cooperative societies in Delta State, Nigeria. International Journal of Sociology and Anthropology, 1(4), 070-076. FIND ONLINE

Cite this paper

APA

Omoregbee, E. F., & Ighoro, A. (2012). Effect of Agricultural Cooperative Membership on Farmers’ Income and Poverty in Delta State, Nigeria. Open Science Repository Agriculture, Online(open-access), e70081911. doi:10.7392/Agriculture.70081911

MLA

Omoregbee, Egbenayabuwa Friday, and Alexander Ighoro. “Effect of Agricultural Cooperative Membership on Farmers’ Income and Poverty in Delta State, Nigeria.” Open Science Repository Agriculture Online.open-access (2012): e70081911.

Chicago

Omoregbee, Egbenayabuwa Friday, and Alexander Ighoro. “Effect of Agricultural Cooperative Membership on Farmers’ Income and Poverty in Delta State, Nigeria.” Open Science Repository Agriculture Online, no. open-access (December 7, 2012): e70081911. http://www.open-science-repository.com/effect-of-agricultural-cooperative-membership-on-farmers-income-and-poverty-in-delta-state-nigeria.html.

Harvard

Omoregbee, E.F. & Ighoro, A., 2012. Effect of Agricultural Cooperative Membership on Farmers’ Income and Poverty in Delta State, Nigeria. Open Science Repository Agriculture, Online(open-access), p.e70081911. Available at: http://www.open-science-repository.com/effect-of-agricultural-cooperative-membership-on-farmers-income-and-poverty-in-delta-state-nigeria.html.

Nature

1. Omoregbee, E. F. & Ighoro, A. Effect of Agricultural Cooperative Membership on Farmers’ Income and Poverty in Delta State, Nigeria. Open Science Repository Agriculture Online, e70081911 (2012).

Science

1. E. F. Omoregbee, A. Ighoro, Effect of Agricultural Cooperative Membership on Farmers’ Income and Poverty in Delta State, Nigeria, Open Science Repository Agriculture Online, e70081911 (2012).


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Research registered in the DOI resolution system as: 10.7392/Agriculture.70081911


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