CARD International Journal of Science and Advanced Innovative Research (IJSAIR)

ISSN: 2536-7315 (Print) 2536-7323 (Online)

Volume 1, Number 3, December 2016
http://www.casirmediapublishing.com

Challenges and Prospects of Agricultural Cooperative

Societies in Nigeria
1
Brai M.A, 2Ehiomogue P, 3Eriakha E.C., & 4Okoduwa O. J.
1
Department of Sciences, National Institute of Construction Technology (NICT), Uromi Edo State
2
Department of Agricultural Engineering, Michael Okpara University, Umudike
3
Department of Agricultural and Bio-Environmental Engineering, Auchi Polytechnic, Auchi
4
Department of Surveying and Geoinformatics, National Institute of Construction Technology, Uromi
Email: [email protected]

ABSTRACT
This paper looked at the challenges and prospects of Agricultural Cooperatives in
Nigeria. The objective of the study is to find out the explanation of cooperative
societies, types, importance, advantages, disadvantages of cooperative, and the roles
played by co operative society in the economic development of Nigeria. Farmers who
belong to cooperative society can often get inputs against liens over produce for sale
through the society. The marginal savings rate of the poor, when viewed from a
holistic perspective are not small; this high volume of savings from the poor who
usually constitute the target group of credit co-operatives can be encouraged and
efficiently mobilized for the benefit of the individuals by encouraging agricultural
expansion, the co-operative and the entire economy.
Keywords: Cooperative, enterprises, challenges, consumers, association

INTRODUCTION
A Cooperative society represents a form of private business
organization. These are formed to meet the needs of the populace. This
is based on the self-helped organization of people who solely decide to
come together in other to achieve a set goal that none of them could
achieve as an individual. The cooperative society is a taxable entity
under the income tax Act 1960.And to be treated as an association of
persons (AOP) which is included in the definition of person under the
income tax Act 1960 (Ezewele S.E.2016).

Agricultural cooperatives have been formed for production of food and

cash crops. Of course, cooperatives like any other enterprise will need
funds to finance their operations. Whether or not innovations in

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 CARD International Journal of Science and Advanced Innovative Research (IJSAIR)
Volume 1, Number 3, December 2016

cooperatives can be undertaken and financed; will largely depend on the

capability of the leadership and management to mobilize members’
resources.

Over the past 140years, Cooperative has changed the lives of people
providing a unique method for meeting the needs of those who willingly
belongs to such groups.

According to Osoba C.O. (2008) Cooperative society is the association

of individuals who voluntarily come together as a unit to achieve a
common economic goal. This is made possible by the formulation of a
democratically controlled business organization, making equitable
contributions to the required capital and accepting a fair share of the
risks and benefits of the undertaking. Agriculture and Non Agricultural
cooperatives help salary earners to save for the future, through a soft
deduction from the worker’s salary which is usually on a monthly basis.
There is usually a reduction of prices by getting rid of the middlemen
thereby maximizing the welfare of members, more also profit are shared
in the form of dividend among others. In the time past majority of the
salary earners find it difficult to save their money, having the notion that
the cooperative association is meant for the low income earners.

Ahmed (1985) opined that banks see agricultural enterprises as a very

risky enterprise in which depositors fund should not be committed. All
the members bearing the risk on the business making sure that the
control and management is a democratic, member having equal right in
decision making.

TYPES OF COOPERATIVE ASSOCIATIONS

There are different types of cooperative societies. These include;

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Challenges and Prospects of Agricultural Cooperative Societies in Nigeria

Producers Cooperative
This is an association of people producing similar commodities. They
often come together either to market their product or to produce their
commodities. They elect their members to carry out the managerial
function, the profit realized from the business is shared among the
cooperative producers and their fund is raised through their members,
banks, Government etc.

Taking a look at the agricultural cooperative society today, you find that
farmers come together, gather their resources in order to produce on a
larger scale which will go a long way to yield more profit for them. When
these farm produce are harvested, it gives the farmers more favourable
bargaining power. Higher profit is maximized by selling in bulk.

Consumers Cooperative
This is referred to as the coming together as consumers. They are formed
for the main purpose of purchasing g goods in whole sale prices from the
producers and dispose them at retail prices to their members and non
members of the association at cheaper prices. They do not partake in
producing commodities unlike the producer’s cooperative .Each member
in consumers cooperative is oblique to pay a registration fees before they
are allowed to join the association and are also entitled to share of the
profits in the form of dividends to all members of the cooperative and
equal access is given to all members of the cooperative.

Credit and Thrift Cooperative

Similar interest which are usually from the low income earners. They
proceed to contribute and save money together. Members are given room
to borrow as long as they meet the criteria of the cooperative association
which is usually minimal interest rate. On members may also be
considered to borrow at a higher rate compared to the non members.

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Volume 1, Number 3, December 2016

People also come together for the interest of obtaining loan. For example
farmers that produce a particular type of crop such as rice or cassava
could form a cooperative in order to raise loans. This goes a long way, by
encouraging the saving habit of its members and enjoying low interest
rate.

Advantages of Cooperatives Association

 Easy to form. It is a voluntary association and does not require living
the complicated legal preliminary during formulation.
 It assists in raising loans for agricultural practices on other form of
production.
 Profit incurred by the cooperative is shared among members of the
organization.
 Organizing adult literacy classes for its members.
 They contribute in the development of the area in which they are
operating by issuing grants to the community.
 Credit thrift cooperatives society encourages the deliberate act of
saving money. This is mostly practiced in West Africa where most
people have no inclination to save.
 Loyalty of cooperative members bring about trade stability
 Agricultural cooperatives grant loans to farmers for agricultural
expansion from Agricultural cooperative banks such as Bank of
Agriculture which makes it easier than the individual producers.
 Members of the cooperative have equal voice in the management and
each member has only one vote.
 The essence of forming the consumers cooperative is to raise the
standard of living of its members to support their direct marketing.
This combines the function of all other forms of cooperative
association. They may combine the features of credit thrift
cooperative, producers and consumer’s cooperative, purchasing,
saving and granting loans.

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Challenges and Prospects of Agricultural Cooperative Societies in Nigeria

Problems of Cooperative Societies

Cooperatives are found in every nook and crannies of the world. In
almost all parts of the world, cooperatives face one challenge or more.
Anyanwuocha (2011) identified five major problems for cooperative
societies in Nigeria. These are as follows; Difficulty in searching for an
experienced person to manage the business, inadequate capital in the
cooperative association, fraud and embezzlement of fund by corrupt
leaders, misuse of fund for political purposes, and profit of the
cooperatives are not subjected for taxation.

Managing the Cooperative Society

There are several instances where the people that mandated or voted for
to run the affairs of the association and have no adequate knowledge and
experience in the human resource management which is aimed at
organizing and coordinating the requirements of the availability of
different kind of employees who are self-motivated and target oriented.
This makes them find it difficult to carry out their task effectively well
so as to arrive at the landmark of the cooperative goals, by focusing on
the demand and supply of labour involving the acquisition and
development of the members of the association and foreseeing the need
to groom young entrepreneur from the agricultural sector in enhancing
the growth and development of the economy (Brai M.A, 2016). Based on
the method used to appoint such a sensitive position, the right person
may not be chosen.

More also, there arises the problem of Inadequate training and

lackadaisical attitude to work in the cooperative which thereby results in
inefficiency of both the management and other workers may lead to low
profit margin. For instance when the Federal Government of Nigeria
encourages the production of rice but goes other way to import foreign
rice thereby endangering the fortune of local producers. Many part of the
world grant preferential treatment to local producers including
agricultural cooperative society by way of subsidies and grant.

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Volume 1, Number 3, December 2016

Agricultural cooperatives are now found all over the world being it
institutions, organizations, colleges etc.
Inadequate capital has been a major challenge a cooperative
organization. This is essentially true when cooperatives are
managed by people with low incomes. On this ground, it therefore
becomes arduous to raise capital from members. An inadequate
capital base tends to prevent the free movement of the business
operations.
Report of cases of fraud and embezzlement of funds by corrupt
officials. Corrupt and misuse of fund is quite glaring, if the
cooperative is owned by people who have no knowledge of cash
accounting.
The misuse of cooperative funds for political purposes has become
the order of the day in most cooperative associations. There have
been reported cases whereby the executives of the association
team up without the consent of their members to invest the
association funds in political campaigns and patiently expecting
returns when the party contestants eventually emerges as the
winner of the election. This tends to create room for frustration
and jeopardy on the members of the cooperatives.
The profits of the cooperatives are not subjected to taxation which
may lead to an unhealthy competition between the competitive
and other forms of business organizations whose profits are
subjected to taxation.
Another major challenge that hampers agricultural cooperative
societies in Nigeria are loan repayment to financial institutions.
The problem of nonpayment of loan given to farmers is brought
about by loan diversification to other uses than for agricultural
purposes. Despite policies put in place by the Government to
assist agricultural cooperatives their impact is not noticeable
because of improper management of funds by Non-Governmental
Organization and Government delegates to the detriment of the
processors and poor farmers in the country. This need to be

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Challenges and Prospects of Agricultural Cooperative Societies in Nigeria

properly addressed as a drastic step to take the country from the

shell of recession and make life worth living for the citizens of
Nigeria.

Prospects of Cooperative Society In Nigeria

The prospect of the cooperative business that will assist to alleviate the
suffering of the less privilege is some of vital importance to the growth
and development of the citizens living in the country. The education of
cooperative farmers would go a long way to eradicate the problem of
agricultural development.

According to Todaro and Smith (2003), the marginal savings rate of the
poor , when viewed from a holistic perspective are not small; this high
volume of savings from the poor who usually constitute the target group
of credit co-operatives can be encouraged and efficiently mobilized for
the benefit of the individuals , the co-operative and the entire economy.
Besides the needs and problems of the poor including emergencies such
as unanticipated deaths of those relatives, school fees, rents, among
others, are not likely to cease in the near future. These needs will
constantly require attention whenever and wherever they occur. Having
in mind that Cooperative can thrive anywhere in respective of the
region; be it in the rural or urban settlement. It is does not grow by lack
of infrastructure as power supply as other establishment depend on for
their day to day running of their organizations being it a manufacturing
firm, servicing companies, telecommunication firms etc.(Claycon
G.E.1999).

CONCLUSION
Regardless of its purpose or membership, starting a cooperative requires
considerable time, energy, commitment and technical resources.
Recognition of a common need is fundamental to the formation and
successful operation of cooperative. Potential members must devote
much time and energy to developing their new business. Selecting

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 CARD International Journal of Science and Advanced Innovative Research (IJSAIR)
Volume 1, Number 3, December 2016

knowledgeable directors and competent managers should be put in place

to manage the finance which will steer the members to be more
committed to the association.

RECOMMENDATION
A strategic business plan is important to harmonize all the ingredients
for cooperative’s progress by encouraging farming in large scale, such as
cooperative farming.

In order to achieve their maximum strength and effectiveness there is a

need for the Government to purchase more of the necessary agricultural
inputs such as machinery and establish agencies that will hire out farm
machineries to cooperative farmers who are zealous to go into large scale
farming which will serve as a step towards having surplus produce for
sale during the cropping season.

Payments should be made to members to stabilize their income as at

when due to enable they actualize their set plans for the year.
As business organizations, cooperatives are partly private, partly
public, but essentially different from both private enterprise and public
enterprise. They are a middle way, an economic sector in their own right.

Government should provide a workable supportive policy, legal and

institutional framework, provide support measures based on activities,
provide oversight on terms equivalent to other forms of enterprise, and
adopt measures to improve access to finance for less privileged groups.
Such as the peasant farmers who are tied in the arms of selfless
organizations who solely decide to prank on the farmers in order not to
disburse their Agricultural loan to them.
Government can contribute significantly to improving cooperative
performance by facilitating access of cooperatives to support services
and setting up monitoring agencies to ensure high quality output.

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REFERENCES
Ahmed, A. A. (1985). Role of Banking System in Agricultural
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Anyanwuocha R.A.I (2011) Fundamentals of Economics (Third Edition)
for SSCE, NBCE Examinations. pp 46-49.
Brai, M. A. (2016). Journal of Strategic & Development Studies, vol
1,Number 1. Published by Centre for Strategic and Development
Studies. Ambrose Alli University Ekpoma, Edo State, Nigeria
(No 52).
Claycon, G. E. (1999). Economics: Principles and Practice, New York.
M.C Graw-Hill
Ezewele, S. E. (2006). Fundamentals of Business (Entrepreneurship
Development).
Omoruyi, S. A, (1999). Prescribed Agricultural Science for Senior
Secondary Schools Revised Edition .Pp 403.
Osoba, C. O. (2008). Small Business Management: A Contemporary
approach Auchi: A&B Computer ventures.
Todaro, M. P, & Smith, S. (2009). Economic Development: Pearson
Educational, India.
www.omafra.gov.on.ca/english/busdev/facts/02-019.How to form
cooperative society, Retrieved date, 31st May, 2012.

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