Abstract
This study examined the role of financial institutions in
agricultural development. A case study of Nigeria Agricultural
Cooperative and Rural Development Bank, with a view to make
useful suggestions and recommendations as way of enhancing the
development of agricultural sector. The population for the study
includes large and small scale farmers and the sampling method
adopted for the study is the stratified random sampling in order
to ensure adequate representation of the population. In order to
achieve the objective of making useful suggestions that would
improve the agricultural sector, a number of hypotheses were
made and tested. Samples of one hundred and eighty responses
were collected and analyzed using the chi-square (ײ) and tested
method. It was discovered that bank credit loan scheme is making
some impacts in lending loans to farmers. The result also showed
that farmers prefer informal to the formal sources of finance
mostly because of the demand of formal institutions that farmers
most present collateral security. Finally, the study also indicated
that the problems facing agricultural financing.

CHAPTER ONE
INTRODUCTION
BACKGROUND TO THE STUDY
Nigeria is endowed with natural resources, large fertile farmland,
wide range of crops, and river amongst others. Despite its
abundant nature resources it is faced worth a poor food situation.
The poor food situation is traceable to the decline in the
agricultural sector. The problem of feeding and provision of
natural resources is increasing by the day. However, several
efforts are being made to improve the standard.
Prior to the discovery of petroleum in Nigeria agriculture used to
be the highest foreign exchange resources earner and its
contribution to gross domestic product GDP has been estimated
to about 62.63% in 1960, 48.08% in 1970, and 20.63% in 1980.
Recently due to the growing awareness of the role of agriculture,
the various governments have intensified efforts aimed at
transforming from its present subsistence level to a market
oriented production. One of those efforts was the ban made on
12
importation of agricultural products like palm oil, maize and rice.
This was done to encourage improvements on our production
standard.
Due to the fall in the level of production from decade to decade,
the country could no longer feed the large population, provide
raw material for domestic industries, engage in export of
agricultural produce and employ the labor force of the country
despite the abundance of human and material resources.
In spite of growing urbanization, Nigeria is known to be
predominantly rural in nature and majority of the population is
dependent directly or indirectly on agriculture for their livelihood.
Though, the Nigerian agriculture is characterized by low farm
income, low level capacity to satisfy the fond needs of the
country, due to the outdated and primitive techniques of
production, it is still the mainstay of the nation’s economy.
Measures and program setup to upgrade the Agricultural sector
involve the construction and reformation of the whole structure
of the agricultural sector by the creation of appropriate
13
institutions and public services. This would help strengthen the
economic position of the dependent farmers. Examples of such
measures are National Accelerated Food Production Project
(NAFPP), Structural Adjustment Program (SAP), Nigeria
Agricultural Cooperation and Rural Development Bank (NACRDB).
STATEMENT OF RESEARCH PROBLEM.
According to Anyanwu Etal (1997:14) ‘’the agricultural sector has
been recognized for a long time as an important sector to
Nigerian economy and development is one of the crucial
requirements for the overall economic growth. He noted further
that the decline in agricultural activities might appear natural in
any development process; it is obvious that in Nigeria agricultural
activities would remain the most important single sector for some
time to come. He emphasized that in the past, development
planners have introduce programs such as national accelerated
food production project (NAFPP), green revolution programs
(GRP), in search for all appropriate technique in order to increase
14
farm output an d productivity and such program have at one time
been implemented.
In recognition of the aforementioned that attempt is made in this
study to provide answers or solution to the research problems
below.