University of Nigeria Research Publications

MGBEMERE, Kizito

Aut

hor

PG/MBA/00/31769

Title

Co-Operative Society As A Means of Combating Society of Food Crops in Imo State

Facu

lty

Business Administration

Dep

artm

ent

Management

Dat

e

July, 2003

Sign

atur

e

CO-OF2XATIVE SOCIETY AS A MEANS OF COMBATING SCARCITY OF FOOD CROPS IN IMO STATE

DEPARTiVIEN'F OF MANAGEMENT FACULTY OF BUSINESS AIDP+GNISTIIATION

UNIVERSITY 09 NlCERBPEA ENUGU CAMPUS

PROJECT SUPERVISOR: CHIEF P.C. UNANKA

CERTIFICATION

This is to certifL that this project was conducted by me at the Business

Management Department, University of Nigeria, Enugu Campus under the

Supervision of my supervisor.

(PROJECT SUPERVISOR)

................................. EXTERNAL EXAMINER

.................................................. DATE

.................................... DATE

..................................... DATE

DEDICATION

This thesis is dedicated to stafl and students of University

of Nigeria, En crgu Campus.

ACKNOWLEDGEMENTS

This, like every other work required assistance from many other

hands for its success. '

I therefore thank my supervisor who was the main intellectual

overseer of this work. His corrections and suggestions did not change the

work but enhanced it. I am glad I had Chief P.C. Unanka as my

Supervisor.

In a special way I acknowledge the help and contribution of Fr.

Columba Ibe and Fr. Kistler Alfred for their assistance.

I must not forget to thank those who assisted in putting the

manuscript into prints - Vincent Mgbemere, Happiness Chikeka, Anthony

Mgbemere, Onyinye Chikeka, Ujunwa Ojuizu, Ezeakacha Sylvia and Jane

Opara. They were quite helpful in seeing to the production of this project.

I also acknowledge with thanks those who contributed in seeing to

the success of this work but whose names could not be mentioned in this

work. Your invaluable role is not in vain as the Lord irz His infinite

mercies will reward you in all your endeavours.

Finally, all errors in this work are my sole responsibility.

Thank you.

Sincerely

Kizito Mgbemere

TABLE OF CONTENT

....................................................... TITLE PAGE

............................................... APPROVAL PAGE.

DEDICATION.. .................................................... ACKNOWLEDGEMENT.. ...................................... TABLE OF CONTENT ........................................... ABSTRACT.. ....................................................... CHAPTER ONE

....................................................... Introduction..

Background of Study. .............................................

............................................. Statement of Problem..

Objectives of the Study.. ...........................................

Research Hypothesis.. ...............................................

Significance of the Study.. ..........................................

Scope of Study.. ......................................................

Limitations. ..............................................................

i

ii

iii

iv-v

vi- viii

ix

vii

CHAPTER TWO: REVIEW OF RELATED

LITERATURE

Towards a definition of Co-operative Society ...................... 8-9

The Origin & Principles of Co-operatives ........................... 9-14

Financing of Agricultural Co-operatives ............................. 14-18

.................................. Types of Agricultural Co-operatives 19-20

............................. The Need for Agricultural Co.operatives 20-22

Problems encountered by Co-operatives in the Marketing of Food Crops ............................................... 23-29

References .................................................................. 30

CHAPTER THREE: RESEARCH METHODOLOGY ...... 31

................................. Sources & Method of Data Collecting 32

Research Instruments .................................................... 32-33

Validation Procedures ................................................... 33

CHAPTER FOUR: DATA PRESENTATION & ANALYSIS ............................... 34-43

Test of Hypothesis ...................................................... 43-44

viii

..................................................... Chi-square Formula

. . ............................................................ Decwon Rule

CHAPTER FIVE: SUMMARY OF FINDINGS & CONCLUSIONS

.................................................. Summary of Findings

Conclusion ................................................................. 54-55

BIBLOGRAPHY ......................................................... 55-56

ABSTRACT

Cooperative movement is a system of economic action and business

enterprise, characterized by the absence of the profit motive and involving,

as its primary hnction, the distribution of goods and services. Traditionally,

it is a movement of consumers who unite on the basis of their mutual interest

in reducing living expenses and benefiting from the ownership and control

of productive facilities and of accommodations shared by all.

From the above, the primary objective of cooperative society is the

distribution of goods and services and the reduction of living expenses of

number co-operators and the entire masses. But here in Nigeria, inspite of

the growing number of co-operative societies, these objectives have

continued to elude these cooperative societies.

In as much as the importance of co-operatives is increasingly being

reaIized in many developing countries Nigeria as a country is yet to reap the

h i t s o f cooperative society.

CHAPTER ONE

rNTRODUCTION

The importance of co-operatives is increasingly being realized in

many developing countries. According to an International Labour

Organisation (ILO) recommendation formulated in 1966, the

establishment and growth of cooperatives should be regarded as one of

the important instruments of economic, social and cultural development

as well as human advancement in developing countries. In Nigeria, the

Federal government has not lost sight of the importance of cooperative

society. No wonder in the Third National Development Plan (1975-80)

the Federal Government had a plan objective of having 20 million

Nigerians or 75% of each state's population into co-operatives by the

end of the plan year in 1980. Also in 1981-85, i.e. in the Fourth National

Development Plan, the Federal Department of Agricultural Co-

operatives Commissioned the University of Ife under the supervision of

Professor C.A. Osuntogun to undertake a special study on marketing

and distribution of food crops in Nigeria through development of

farmer's co-operatives.

All these efforts notwithstanding, the co-operative movement has

remained the object of serious criticisms by the general public for not

living up to expectations when compared to co-operative movement in

other parts of the world. Here, in Nigeria there is need for co-operative

movement to buckle up if it is to assume fully its role. According to

Ijere (1 980) alternative strategies to solving the problem of food scarcity

in this country is co-operative.

This problem of food scarcity cannot be solved in the absence of

an efficient productive system, eficient storage system and eflicient

marketing system for our food crops. To make available sufficient food

crops for the teeming population of our country, the co-operative

movement must endeavour to look into the efficiency of their

production, storage and marketing systems. If these processes are

efficient enough, I believe strongly that through the collaborative

activities of the members of cooperative movement, the question of

fluctuations in the supplies of food crops and its consequent, instability

of prices of food crops will be checked.

BACKDROUND OF THE STUDY

In most States in Nigeria especially in Imo State food crop

production are the stable food for the masses. Majority of farmers are

food crop producers. For quite a long time, there has been increasing

fluctuation in the supply of these food crops in the state. Yet majority of

our farmers are food crop producers. Most of these farmers are members

of one co-operative or the other, yet the advantages of cooperative

society have not been fully harnessed,

The goals and operational targets of cooperatives in Imo state can

be brought into line with the welfare of the people at large and not just

for the well being of their members. However, the cooperatives'

performance in terms of stable supply of food crops, and stability of

prices of food crops have not been adequate. Many producers and

consumers alike are of the opinion that cooperatives have not been

efficient in their productive activities. This is why it becomes necessary

in a research of this nature to determine the factors inherent in this

problem.

STATEMENT OF PROBLEM

In most countries of the world today, cooperatives have been

used to create wealth, redistribute income, improve supply of food

materials, improve on their standard of living, raise agricultural and

industrial output. In Israel for instance, cooperative societies have

achieved so much that Israel like Sweden, can be called the Iand of

cooperative. In some European countries encouraging successes had

also been achieved. Generally speaking, cooperatives have been seen as

one of those organizations that are solutions to the problem of increasing

fluctuation in the prices and supplies of food crops in every economy.

Here in Nigeria, since 1934, cooperative society started in

Nigeria, its effects have not been significantly felt. In this work

therefore, our major concern and statement of problem for embarking on

this study is to find out why cooperatives have failed to eradicate the

incessant fluctuation in the supplies of food crops.

OBJECTIVES OF THE STUDY

The objectives of this study generally is to find out the causes of

the above stated problem.

Specifically the study is meant:

1. To find out level of awareness about the principles of

cooperatives among cooperators.

2. To determine the level of financial incentives to co-

operative society.

3. To find out if storage facilities available for them is

enough.

4. To determine if they apply some form of marketing

strategy in the sale of their products in order to achieve an

optimum level of gain.

5 . To suggest ways of improvement.

RESEARCH HYPOTHESIS

Hypothesis I

Ho: Lack of storage facilities do not reswlt in the low performance of

co-operative societies.

HI: Lack of storage facilities tesuIts in the low performance of co-

operative societies.

Hypothesis 2

H ~ ' Insufficient credit facilities do not affect the production ability of

the co-operatives

2 .Hz Insufficient credit facilities affect the production ability of the co-

operatives.

Hypothesis 3

El3' Lack of proper knowledge of the principles of co-operatives does

not result in their poor performance.

H: Lack of proper knowledge of the principles of co-operatives

results in their poor performance.

SIGNIFICANCE OF THE STUDY

Given the reality of the importance of co-operative societies in a

given economy, this research tends to awaken in cooperatives the need

to put in more efforts in order to save our economy from collapsing. It

will also serve as an instructor to potential cooperators on the need to

follow suit in the establishment /formation of more cooperative society.

The research will help to identif) the inherent factors militating

against the growth of cooperative society in our economy.

A study of this nature will be of great heIp in improving the

supplies of food crops for the teaming population of Nigeria.

SCOPE OF STUDY

Imo State is the focus of this study. The state is made up of

various Local Government Areas. Because of time available for this

study, it is not possibie to conduct a survey in all the Local Government

Areas of the state. To this end, the researcher based the study on two of

the local government areas- Ikeduru and Owerri North L.G.A.

LIMITATIONS

During the course of this project, there were many factors that

influenced the result of the project. Among these factors were financial

factor and the poor attitude of respondents towards the response to the

questionnaire. For instance, out of the fifty questionnaire sent out, only

thirty were returned.

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 TOWARDS A DEFINITION OF COOPERATIVE SOCIETY

Different authors have defined cooperative society differently.

According to Egbu (1986) cooperative organization is "an association of

persons having usually a limited means of income who have voluntarity

come together to form a democratically controlled business

organization by making equitable contribution to the required, and

agreeing to share equitably the risk or benefits that will result from the

undertaking". ' In the words of Ogbuli (1990) cooperative society is a "vohntary

association of persons as human beings on the basis of equality for the

achievement of their economic goals"

Madu in his article "Co-operative Marketing of AgricuItural

Products in Nigeria" in Business Management Topics, Volume 2.

quoting Calveit defines co-operative as a form of organization, wherein

persons voluntarily associate together as human beings on the basis of

equality for the promotion of the economic and social interests of

themselves".

Ijere (1985) defined cooperative as an association of persons, it is

not an association of capital" .' Adegeye (1982) defines cooperatives as business enterprises or

organizations owned and controlled by the members (member-patrons)

and they aim at rendering services for the mutual benefit of all members.

They are (or are supposed to be) self-reliant, self controlling and self-

sustaining peoples' organizations. 5

THE ORIGN AND PFUNCIPLES OF COOPERATIVES

Cooperative movements the world over owe their existence to the

development of cooperatives in the United Kingdom around 1844. The

idea of cooperatives developed during the period of the Industrial

Revolution in Western Europe, and their origin is usually associated

with Robert Owen and a group of Rochdale weavers commonly referred

to as the Rochdale Pioneers. Robert Owen advocated for what he called

Village of Cooperatives or Cooperative Colonies where workers would

form communities and pull resources together to improve themselves.

Cooperatives were introduced into West Africa in the late 1920's

and they were mainly farmers' organizations. They were organized

mainly to teach Coca and other cash crop producers the best methods of

10

producing high quality export crops. Food farmers' cooperatives and

consumer cooperatives came into existence in West Africa after the

Second World War.

Modern-day cooperatives could be said to be based on the

Rochdale Pioneers' Bible of cooperatives, The "Bible of Cooperatives"

refers to principles which the Rochdafe Pioneers laid down for the

running of their cooperative society which could be regarded as the first

ever successfUl cooperative society. The principles included the

following:

1 .

2.

3.

4.

5.

6.

7.

8.

Democratic Control

Open membership

Limited return on capital

Sharing savings in proportion to share contributions

Political and Religious neutrality

Cash trading

Promotion of education

Encouragement of the production (and supply) and pure

and unadulterated goods.

11

Democratic Control: This principles stipdates that those who are

members of a cooperative society must control it and the control should

not be tied to members' capital contributions. The control should be in

the hands of all members irrespective of their share contributions to the

society. Every member of the society has one and only one vote. This is

to stress the fact that the primary objective of cooperative societies is not

profit but services at cost.

Open Membership: Anybody who subscribes to the ideals of any

cooperative society or movement should be allowed to be a member.

Nobody or group of people should be barred from being members of a

cooperative society if it is their wish to do so. This is to ensure that

everybody, rich or poor, benefits fiom the organization and that nobody

or group of people can arrogate to themselves the control of the

organization.

Limited return on Capital : Cooperative societies endeavour to

operate at costs. they exist primarily to provide services to their

members at the lowest possible cost, hence cooperatives should not

expect to make large returns on their invested capital. The major

12

benefits to members of cooperatives should not be the return on their

share capital contributions but the services obtained.

Sharing Savings According to Share Contributions: Even though

every member of a cooperative society has one vote and the running of

the organization does not depend on membershoney contributions, any

savings that are made are shared to members according to their share

contributions. This is meant to encourage people who are able to

contribute more in the form of share contributions to the society to do

SO.

Political and Religious Neutrality: To ensure a very democratic,

self-reliant, self-contrdling and self-sustaining peoples' organization, all

members are expected to keep politics and religion out of cooperatives

activities. Members can have their different bdiefs but those beliefs

should neither be discussed nor promoted in cooperative organizations.

Cash Trading: Members of cooperatives are expected to do

purchases or sell produce strictly on cash basis. This simpIifies

transactions and removes ambiguities as to the value of goods.

Promotion of Education: Education of members of cooperatives

is regarded as a very important means of making them aware of their

rights and thus ensuring democratic cooperative organizations. The

education of members of farmers' cooperatives also includes educating

farmers on the correct use of inputs, the most profitable use of credit

facilities, new methods of storage and so on. This is important for the

advancement of the members.

Encouragement of the Supply of pure and unadulterated Goods:

The production and supply of pure and unadulterated goods is a very

important objective of most producer cooperatives. High quality

produce over a period of time puts confidence in buyers. Sales will be

faster and less risky and good prices would be paid for the produce. This

objective of producer cooperatives has been responsible for the high

quality coca produced in West Africa.

Present-day cooperative movements subscribe to most of these

principles but in addition put a little more stress on the business nature

of cooperatives. Since they have to compete with other business entities,

they have to be run like business enterprises, that is, aiming at profit ,

although this is still made subject to the social goals of cooperatives.

Most present-day cooperatives in most developing countries and

developed capitalist countries thus have management separate from

owners. Boards of directors drawn from member-patrons of the

cooperatives appoint managers who together with their staffrun the day-

to-day affairs of the cooperatives. Cooperatives are therefore more like

limited liability companies in that respect. All cooperatives, however,

jealously subscribe to the principles of democratic control and service to

members at cost as well as the promotion of education.

FINANCING OF AGRICULTURAL COOPERATIVES

Cooperatives, as we have already seen, are good channels for the

provision of agricultural credit to small farmers. This presupposes that

the proper financing of farmers' cooperatives is a key to increased

agricultural production. It was earlier pointed out that agricultural

finance per se is no guarantee of increased agricultural production unless

other conditions, such as the availability of inputs and the use of

appropriate technology, are assured. The financing of agricultural

cooperatives, therefore, has to involve the provision of necessary inputs

and machinery and equipment as well as other facilities such as sheds

and stalls.

Cooperative societies should ideally be financially independent,

that is, all the capital required should have been internally generated, but

the capital requirements of most societies are very large relative to the

share capital contribution of their members.

Moreover, the financing of agricultural cooperatives involves a

number of decisions and actions. Firstly, there must be decision as to the

financial requirement of a particular cooperative society. Secondly, there

should be an examination of the sources of finance and a decision as to

which source or sources the finance should be sought from. Thirdly,

there should be a decision on how to disburse money to members:

should it be in kind or in cash, for example, and how much to each

member and on what basis to make those decisions. Finally, a decision

has to be made on the mode of repayment.

The Financial requirements of Cooperative Societies

The amount of fund required by a particular cooperative society

depends on the type of cooperative, the size of the society, the fund

requirement of each member or groups of members, and the types of

investment the society or its members wish to undertake. Cooperative

movements also base their decisions on h n d requirements on the

availability of materials and machinery and equipment which members

require the hnds to purchase. This is to ensure that members do not

become unnecessarily indebted.

Sources of Finance to Cooperatives

The main sources of finance to cooperatives, including

agricultural cooperatives, include the cooperatives' own capital

resources and borrowed capital.

Cooperatives should as much as possible depend on their own

capital resources because it is the most stable form of finance and also

they usually offer the most liberal terns to their members. Cooperatives'

own capital is made up of their share capital and share contributions and

reserves such as undistributed surpluses, as well as entrance fees and

grants. In the early stages of cooperative societies, own capital in the

form of reserves could be a small proportion of the capital required by

the society. However, as the societies get dder the reserves and share

capital increase, even though these may not be enough for the societies

to depend exclusively on for their purposes.

Cooperative societies usually borrow capital from governments,

banks and other financial institutions as well as trading partners, and

from members within the cooperatives.

Governments lend money to cooperatives in the form of loans

while financial institutions normalIy do so in the form of overdrafts.

Trading partners, on the other hand, give credit in the form of trading

credit. Most governments normally establish development or special

banks to cater for particular interests which could include the financing

of cooperatives. The Nigerian Agricultural and Cooperative Bank

(NACB), for example, was established purposely to finance Nigeria's

agriculture in all its ramifications but with special attention given to

smalI farmers and to fanners' cooperative societies. Thus the first Eoan

ever approved by the Bank went to a cooperative society, and within its

first six years of existence (from 1974 to 1979) the NACB had disbursed

over N 126 million for production and produce marketing through

cooperatives. Some states in the country also have their own cooperative ,

banks while others have plans to establish their own. Throughout the

developing world, indeed, cooperative banks are major sources of

finance to cooperative organizations.

Method of Disbursement of Capital

The method of disbursement of capital, whether cash or in kind,

to members is a decision which can make or mar cooperatives. There

must therefore be a laid down procedure as to the basis for

disbursement. The decision as to disbursement must be taken bearing in

mind the need for the correct and prudent use of the money. The

cooperative movements have a duty to ensure that members use the

money for the purpose for which it is given.

Method of Repayment

The rate of repayment of loans is another factor which can make

or mar cooperatives as both governments and financial institutions

usually judge the success and effectiven'ess of a cooperative society by

its ability to meet its financial obligations promptly. It is, therefore,

important that members of cooperatives agree and abide by the

stipulated method or methods of repayment and the mode of punishment

for defaulters.

TYPES OF AGRICULTURAL COOPERATIVES

We have about five different types of Agricultural cooperatives

which include:

1. Farmers' Producer Cooperatives

2. Farmers' Consumer Cooperatives

3. Agricultural Produce Marketing Cooperatives

4. Thrift and Credit Cooperatives

5. Multi-purpose Cooperatives.

Farmers' Producer Cooperatives are mainly concerned with

solving the production problems of their members. This could be in the

area of inputs, credit and machinery acquisition and use; or in the

provision of extension services.

Farmers' Consumer Cooperatives are more concerned with the

sale of manufactured goods to their members at cost.

Agricultural Produce Marketing Cooperatives are also involved

in the marketing of members' produce. Initially, Agricultural Produce

Marketing Cooperatives were mainly for export commodities such as

cocoa, palm oil and others but now there are Food Crop Marketing

Cooperatives. The role of the these marketing cooperatives is mainly to

market members' produce cheaply and very conveniently for their

benefit.

Thrift and Credit Cooperatives, as we explained earlier, mobilize

funds from members and lend to them at very low interest rates for

either production or consumption purposes.

Multi-purpose Cooperatives combine many functions. They

integrate various functions such as production, marketing, credit, etc. for

the benefit of their members.

THE NEED FOR AGRICULTURAL COOPERATIVES:

Being aware of the need for Agricultural Cooperatives in the

development of our food economy, Izunobi G.C. (1980) states that

"members of cooperatives should learn the necessary skills to manage

their own affairs and some efforts made to educate the members on

cooperative principles"

Ijere M.O. also recognizing the great role of the cooperatives

recommended " the greater role of food crop cooperative marketing

organizations in the effort to reduce costs, especially in processing,

marketing and servicing of the fiscal role of government"

Specifically, agricultural cooperatives are needed to:

2 1

1 . counter the exploitative tendencies of middlemen in

agricultural marketing operations;

2. help in obtaining production and consumption credit from

financial institutions for its members as well as mobilizing

funds within the societies for production and marketing of

agricultural produce;

3. help in the education of members on modem agricultural

practices and provision of other vital information to

farmers;

4. help in the provision of agricultural inputs and machinery

to members;

5 . provide essential manufactured commodities to farmers in

the rural areas;

6 . take advantage of economies of scale in production,

processing and marketing of agricultural produce.

In an attempt to maintain stable price of farm products and

minimize the excesses of middlemen, many producers have decided to

form food crop cooperatives in the state bearing in mind the following

objectives:

1. Providing loanable funds to its members to encourage and

increase production.

2. They aim at developing anlong their members the habit of

thriftiness by encouraging and offering them the facility to

accumulate capital by saving and depositing with the

cooperatives.

3. Earning interest on savings.

4. Purchasing of goods at bulk prices and selling to members

at reduced prices.

5. Acquiring assets of any nature which it considers

necessary, for their business and lending them to members

at lower prices.

6. training of members in more productive activities and

henceforth promoting good working habits.

One would say that the basic objective in the formation of any

cooperative should be to better the economic and social condition of the

members and to achieve collectively what would have been otherwise

impossible for members individually. By collective efforts members are

able to mobilize large resources in terms of capital, labour, management,

and patronage, which will enable them to establish a Iarge business.

23

PROBLEMS ENCOUNTERED BY COOPERATIVES IN THE

MARKETING OF FOOD CROPS

Ijere M.O., in one of his articles captioned, "Modernizing Nigeria

Food Crop Cooperatives", stated among other things that "it is not

enough to produce but the marketing channel must be dependable and

7 regular". A significant problem of the food crop cooperatives

marketing according to him was lack of assured markets, poor

salesmanship and inadequate storage. He argued that cooperatives could

tackle these problem by applying business management principles to

their operations by forward planning.

In his own contribution to managerial problems of cooperatives,

Osubogun C.A., in his article "Improving the marketing of Farmers'

cooperatives" pointed out the following factors as impediments:

Multiplicity of middlemen, bringing about large number of

states in the distribution chain. This tends to be in the

advantage of the producers.

Inadequate information on current market conditions due to

weak communication media and large number of small

farmers engaged in production.

(c) Rural indebtedness: improvement suggested include the

use of food commodity marketing boards and cooperatives

and training of members"

The performance of cooperatives in terms of food crop marketing

in Imo state has not been adequate. Commenting on their poor

performance, Sam Udo in his article rejoinder to "Averting Risk in

Cooperatives" said that cooperatives production and marketing of food

crops have not commenced on an appropriate scale.

The establishment of cooperatives that will undertake the actual

production of food crops as well as processing of these commodities is

essential for the rapid economic expansion of the country. He stated

that in order to offer concrete inducement, a cooperative should be able

to improve marketing and better methods of processing. In addition it

should be able to obtain higher sales price by modifying the form of the

product sold, categories by controlling the volume of products sold in

accordance with changes in demand and by building up new demands.

At minimum, it should be able to increase the bargaining power of

producers and recapture for them part of the value of the product that

was diverted into monopolistic profit.

In terms of processing facilities, the Imo producers cooperative

societies have made it possible for cooperatives to have access to

processing and storage equipments which they cannot own individually.

Many producers cooperative societies and food crop cooperatives

inclusive, have been known for their poor management and informal

organizational structure. These have seriously affected the societies in

terms of obtaining financial support from both government and other

financial organizations wilIing to help such cooperatives.

Writing on poor credit management of cooperatives, Akinayo

Akinfemin in his article "Cooperatives and their cash problem"

contended that, "the falling and weaknesses of cooperatives marketing,

are based on these categories. The first category relates to loans and the

second relates to defects in the marketing system". The standard of

loan repayment is appalling in that over due Ioans are recorded each

year. As a result, the commercial banks periodically call upon

government to honour its guarantee for over draft, which are over due.

Such amounts then become "bad debts" due to government cooperative

regard such loans as government bounty.

Moreover, some loans do not often go to the needy farmers, but

go into the pockets of influential men. And sometimes the loans are not

issued a the right time instead they are given when the cultivating season

is we11 advanced. Again, the number of farmers who benefit from such

loan scheme are always generally few, compared to the many farmers

that require it.

The disadvantages of the cooperative form of business however

are that there is lack of profit incentive and they at times do not pay

sufficient salaries to attract competent workers. Moreover, many

cooperative societies is the framework through which the activities of an

enterprise are coordinated. In case of cooperatives, especially food crop

cooperative societies, the management is composed of amateurs,

majority of who are slightly educated. This affects the policy objectives

of the organizations. It creates a situation whereby some staff are

supervised by more than one person and some are not supervised at all. .

It least ensures that appropriate span of control is maintained and

increases loitering and absence of effective control of staff as a result of

supervisory IoophoIes.

One still cannot refute the statement that problems involved in the

financing of the cooperative enterprise are always chaIlenging.

According to Sam Udo Onyemachi of University of Nigeria, in his

article, "Problems of financing Cooperatives", he categorized these

problems into three, namely:

1. "The need for assessment of the financial requirement of a

cooperative society according to their quality and quantity.

2. The need to search for sources whereby sufficient funds

can be secured to fulfill the requirements and

3. The need for subsequent application and control of the

f ~ n d s . " ' ~

From the above, the society is expected to determine the amount

and type of capital needed for initial set up, maintain and provide for

future expansion of its business. The source and major method of

cooperative finance is through their own capital. This comprises share

contributions from members of the society, undistributed surpluses,

entrance fees, grants and many others.

Unfortunately a cooperative society may find it difficult in

financing its business ventures with the owned capital. This is because

the fund realized from the various sources and owners capital are

relatively inadequate. The value of the cooperative share for example is

designed in such a way as to permit many prospective members to

subscribe for shares. In other words, the money worth of the stores is

normally kept at minimum. This practice does not always augur well for

the cooperatives since funds realized from shares are always inadequate

for financing business ventures.

These problems of financing of cooperatives also affect the

marketing of food crops by cooperatives as food crop cooperative

societies are just a part of entire cooperative societies faced with such

problems.

Dr. Emmanuel J. Nwosu rightly pointed out, "we have already

noted that apart from efficient and dedicated management, the greatest

problem facing the cooperative movement in Nigeria is inadequate

finance and timely finance"." This is mainly because the average

income of people is very low and even a system of collective thrift

usually succeeds only in accwrnuIating a paltry amount of funds.

Finance has been a thorny point in the development of the cooperative

movement in Nigeria. It is such a desired but neglected element that the

pace of growth has been predicted on its availability or absence as

opined by Dr. Agom Eze. He said that in an attempt to be self sufficient

as possible, cooperatives have tended to rely on their own sources of

finance-savings shares, reserves and loans fiom apex organizations,

unfortunateIy these sources are not usually precarious since the lending

agencies are not usually sympathetic to the objectives and set-up of

cooperatives.

Finally, he stated that it is certainly unreasonable to expect the

citizens, many of them illiterate or barely literate to be able unaided to

master the business techniques of cooperation. Hence, such

governments, must not only provide the bare minimum of legal

provision of cooperation, but must also actively foster cooperative

development in all its ramifications. It is also important for government

to create positive environment within which cooperative thrive. In our

environment therefore, close and continuing governmental regulation,

supervision, advice and assistance must be regarded as an indispensable

condition for a successful cooperative development.

REFERENCES

Egbu, C.O.

Ogbuli, C.C.

Madu, I.M.

Ijere, M.O.

Adegeye, A. J.

Ijere, M. 0.

Ijere, M.O.

Osutogun C.A.

Akinayo, A.

10. Udo, S.O.

"What is cooperative" The cooperator maiden issuc, May 1 986, P. I.

The Meaning and Medanies of Cooperative Society, Ibadan Press Nig. Lit. 1990. p. 12 1

"Cooperative Marketing of Agricultural Products in Nigeria" in Business Management Topics, Vol. 2, Oktek Nig. Ltd., Enugu, 2000, p. 231.

Modernising Nigeria Cooperatives: Fred Aloki Pub. Company Ltd., Lagos, 1985 p.20

Essentials of Agricultural Economics. CARD Publishers, University of Ibadan, 1982. p. 188.

Food Nutrition in Economic and Technological Development of Nigeria, Fred Atoki Pub. Co. Ltd. Lagos, 1988. p. 10.

Modernising Nigeria Food Crop Cooperatives Fred Aloki Pub, Corn. Ltd. Lagos, 1985, p. 25

"Improving the Performance of Marketing Cooperatives in Nigeria" in Nigeria Journal of Co-operatives Studies, Vol., No. 1, 1980.

Cooperatives and their Problems in Business: Business Times, July 25, 1983 p. 23.

Rejoinder to Averting risk in cooperative: Business Timcs, Octuber 17, 1983, p. 4 -7.

CHAPTER THREE

RESEARCH METHODOLOGY

This study is going to be carried o~i t from empirical, descriptive

and analytical methods to arrive at an acceptable and objective criteria

in this work.

The empirical method is meant to assist with the use of the

hypothesis to arrive at an empirically verified facts on the importance of

co-operatives to the growth of the Nigeria economy.

The second method is the historical/descriptive method. This

method has been played up in the literature review in chapter two. The

essence of this method is that it helps to achieve a better insight into

how such subject matter was done initially and ensures a better

projection towards an objective analysis.

The analytical method is aimed to bring out clarity and

understanding into the work under study. All the methods are

interrelated. None of them is going to be in exclusion of others.

Therefore, it is going to be a connecting web of interwoven research

method.

SOURCES AND METHOD OF DATA COLLECTION

The use of questionnaire and interview were used in the collection

of the primary data for the study.

The sources of primary and secondary data for the study are

shown below:

Primary Data: This was collected through the use of questionnaire

and interviews from the co-operative societies. The questionnaire were

administered to the respondent to gather primary data from the target co-

operatives.

In the interview, some of the members of the co-operative

societies were interviewed.

Secondary Data: The secondary data were collected from the

following sources: Text books, JoumaIs, Magazines etc.

RESEARCH INSTRUMENTS:

The research is going to be carried out using descriptive analysis

and the use of questionnaire that has been administered to the co-

operative societies. As regards to use of questionnaires, to obtain a quick

response from them, the co-operatives slated for distribution must be

visited so as to get the views and perceptions of the members.

VALIDATION PROCEDURES

The data collected is going to be analyzed empirically using

tables, percentages, chi-square (x2) text and regression analysis. It is a

combination of chi-square and regression analysis.

The chi-square (x2) is the major test statistics used to test the

hypothesis formulated in chapter one.

Key questions in the questionnaire would be used to test the

hypothesis.

CHAPTER FOUR

DATA PRESENTATION/ANALYSIS

Table 4.0 Questionnaires Distribution

Number

Distributed Collected

Gain: 60%

Lost 40%

A total of 50 questionnaires were printed and distributed. The

questionnaires were given to those personalities of managerial acumen

who have the necessary knowledge as regards answering properly to the

questions.

The major cooperative societies where these questionnaires were

administered were: Orimovuo Cooperative Society, Naze, Owerri,

Umuobom Women Cooperative Society, Umuofor Ikeduru L.C.A. The

questionnaires were distributed to some government personalities, and

staff of Agricultural Banks.

Out of the 50 Questionnaires distributed 30 were returned while

20 were lost. The 30 returned was 60% of the total questionnaires

received, while 20 that was lost formed 40% of the distributed

questionnaires. With 60% of the questionnaires, it is more than half of

the distributed questionnaires. Therefore, we worked with the 60% of

the Questionnaires received fiom respondents.

Table 4.1 Cooperatives Assisting Growth of the Economy

Question

Number

No. 1

Percentage

Yes Yes: 50%

Response Option

No: 36.67%

Total

No

No Response: 13.33%

This table shows that 50% of the respondents believe that

cooperatives have assisted in the growth of the Nigerian economy, while

36.67% responded that the cooperatives have not assisted in economic

growth. 13.33% did not take any positio~l by not indicating any

response. Deductively the SO% response gave to contribution to the

economy a fair chance in economic growth. This is a pass mark but not

a great contribution to making an impact on the Nigerian economy.

No.

Response

30

36

13.33% who failed to make a response could not take any position for

reasons of 36.67% who felt that cooperatives have not contributed to the

economy growth was not convincing enough as to nullify the positive

respondents.

Table 4.2 Obasanjo's Administration Favouring Formation of

Co-Operatives

Table 4.3 above shows that 76.67% of respondents responded

Question

that the Obasanjo's administration does not favour the formation of co-

Response Option

operative societies. 20% were of the opinion that his administration is in

favour of the formation of co-operatives. A negligible 3.3% did not give

any response.

Total

30

30

Number t es Percentage

Yes: 20%

No: 76.67%

No Response: 3.33%

100%

NO

23

23

2

NO.

Response

1

1

6

6

Deductively from the respondents, Obasanjo's administration

does not favour the formation of cooperatives.

Table 4.3 Lack of Storage Facilities Result in Low Performance of

Co-operative Societies

Question

Number

Response Options

Yes Total Percentage No

30 1 Yes: 76.67% I

No.

Response

No: 16.67%

No Response: 6.67%

Table 4.3 shows that 76.67% were positive that lack of storage

facilities result in low performance of co-operative societies. 16.67%

responded negatively. 6.67% silent on the question.

38

Table 4.4 Extension of Credit Facilities to the Cooperatives By

Government

Question ( Response Options

No.

Response

Number Total Yes Percentage

Yes: 43.33%

No: 46.67%

No Response: 10%

In table 4.4, 43.33% of the respondents responded that the

government gives adequate credit facilities to the co-operatives while

46.67% did not agree that governments extends adequate credit facilities

to the cooperatives. 10% did not give any response.

39

Table 4.5 Lack of Credit Facilities Affect the Productive Ability of

the Cooperatives

Question / Response Options

Number I Yes I No 1 No. I Total

Response

Percentage

Yes: 86.67%

No: 10%

No Response: 3.33%

In table 4.5, 86.67% respondents were of the opinion that lack of

credit facilities affect the productive ability of the cooperative society,

while 10% were of the opinion that it does not affect its productive

ability. 3.3% respondents were silent.

Tablc 4.6 Poor Knowledge of the

Among Members

Question 1 Response Options

Number Yes 1 No I No.

Response

4 0

Principles of Cooperatives

Total

1 No: 80%

Percentage

30

No Response: 6.67%

Yes: 13.33%

Table 4.6 shows that 80% respondents agreed that of the members

of co-operative societies do not have adequate knowledge concerning

the principles upon which cooperatives strive. 13.33% of the

respondents responded that members have adequate knowledge of the

principles of cooperatives. 6.67% did not give any response.

4 1

Table 4.7 Poor Performance of The Cooperatives Due To Poor

Knowledge of the Principles

Question 1 Response Options

Total Percentage

Yes: 73.33%

No: 20 %

No Response: 6.67%

Table 4.7 shows that 73.33% respondents responds that lack of

adequate knowledge concerning the principles upon which cooperative

societies thrive result in poor performance of the co-operative societies.

20% respondents were against the opinion of 73.33%. 6.6% did not give

any response.

Table 4.8 Official Visits of the Government Cooperatives Officials

Response Options

(a) Very Outstanding

(b) Outstanding

Respondents

Number

1

L

(c) Very good

(d) Good

(e) Fair

In table 4.8, 3.33% scored cooperative officials very outstanding

on their visits to various cooperatives societies. No one scored them

outstanding and good. 3.33% scored them very good, while 46.67% of

respondents scored them equally in areas of Fair and Poor.

-

(f) Poor

This assessment by respondents shows how poor the officials of

cooperatives societies from the government visit the various cooperative

societies in other to advise and to motivate them and also to be at home

with their short-comings.

Total '

1

Percentage

3.33%

-

3.33%

-

46.67%

I

14

30

- 1 1

14

30

46.47%

100.00

-

14

-

14

4 3

TabIe 4.9 Motivation of the Members Through the Official Visits

of Cooperatives Officials

I Response Option

Number Response

Total

30

Percentage

Yes: 43.33%

No: 46.67%

No Response: 10%

100.00

In this table 4.9, 43.33% were of the opinion that the visits of

government representatives (Cooperative Officials) do not motivate

them into greater action, 46.67% responded positively that their visits do

motivate them. 10% did not give any response.

TEST OF HYPOTHESIS

DECISION RULE IN THE USE OF CHI-SQUARE TEST

When we compare calculated value of chi-square x2 and the

critical value, the decision rule is:

(i) Accept null hypothesis (H.) if chi-square x2 is less than or

equal to critical value x2e

(ii) Reject the null hypothesis (H,), if chi-square x 2 0 is greater

than critical value x 2 e

When the null hypothesis is re-jected, the alternative hypothesis

(HI) will be accepted.

Note: To test our stated null hypothesis if the value of the

calculated chi-square X' is greater than the critical value at a level of

significance with some degree of freedom, we reject the hypothesis but

accept if otherwise.

The choice of the chi-square x2 is due to its use to determine

relationship between variable (Spiegel 1992:245)

CHI-SQUARE FORMULA

X' = (0 - e)

----------

e

Where 0 = Observed Frequency

e = Expected Frequency

We shall use tables 4 .3 , 4 .5 and 4.7 to test the following

hypothesis respectively.

Ho = lack of storage facilities does not result in low performance

of the Co-operative Societies

HI = lack of storage facilities result in low performance of co-

operative societies.

H ~ ' = Lack of credit facilities does not affect the productive

ability of the co-operatives

H: = Lack of credit facilities affect the productive ability of the

co-operatives.

H ~ ' = Lack of the knowledge of the principles of co-operative

society does not result in the poor performance of the Co-

operative Society.

H: = Lack of the knowledge of the principles of co-operative

society results in the poor performance of the co-operative

society.

For table 4.3

1 Response Options

Question

3

Yes

23

Total

30

Percentage

76.67% Response Yes:

No: 16.67%

Total I 23 No Response: 6.67%

Computed Table for Table 4.3

Response Option

Yes

-- -

No Response

For table 4.5

/ Response Options

Question Yes

Total 1 2 6

No

Response

1

Total

30

Percentage

Yes: 86.67%

No: 10%

No Response: 3.33%

No Response: 6.67%

Computed Table for Table 4.5

1 Response

I Option

No Response r

For table 4.7

Response Options

Response

Qr~estion

Total

Total

30

Percentage

Yes: 73.33?4

Na: 20%

No Response: 6.67%

Yes

22

22

No

6

6

Computed Table: for Table 4.7

1 No Response 1 2 1 . 10

Response

Option

X' For the three tables are

x2 For table 4.3 = 25.8

x2 For table 4.5 = 38.8

x2 For table 4.7 = 22.4

The degree of freedom (df) = (R- 1) (c -1)

= (3 - 1) (2 - 1)

= 2 x l = 2

Decision Rule

From chi-square table (x2) for 2 degree of freedom (d - f) at 5%

level of significance that theoretical chi-square value (x') is 5.991. This

0 e

shows that all the computed or calculated chi-square (x2) is greater than

critical value of theoretical value. That is:

In table 25.8 > (x2) = 5.991

In table 38.8 > (x2) = 5.991

In table 22.4 > (x') = 5.991

Therefore the nu11 hypothesis (Ho) are rejected and the ahernative

hypothesis (HI) are accepted. Hence the following are accepted:

(HI) = Lack of storage facilities result in low performance of

cooperative societies.

(HA = Lack of credit facilities affect the production ability of the

co-operatives.

CH~? = Lack of the knowledge of the principles of co-operative

society results in the poor performance of the co-operative '

society.

CHAPTER FIVE

SUMMARY OF FINDINGS AND CONCLUSIONS

5.1 SUMMARY OF FINDINGS

In the last four chapters, this research has been examining various

aspects of the co-operative society. The main thrust of the thesis is to

find out the factors responsible for the low performance of the co-

operatives in Nigeria, using Ikeduru and Owerri North Local

Government Areas of Imo State as our study area.

Indeed, the central theme of this work is our co-operative society

which is one of the many forms of business organization. Its importance

in our economy is also treated.

Co-operative societies have not received a good attention from

past government administration. Obasanjo's administration from

findings shows that the administration was not favourable to co-

operative societies. There are lack of incentives and provisions of

amenities to boast the activities of co-operative society. The little

incentives that is granted to co-operators or members of co-operative

are directed by the concerned authorities to their personal

purse. This affects seriously the productive level of co-operative society.

Co-operative society works on some stated principles. These

principles are the pivot on which co-operative societies thrive. It was

found out that most co-operators are not well informed about the

principles of co-operative society. The first ever cooperative society

usually associated with Robert Owen and commonly referred to as the

Rochdals Pioneers was successful because all the principles upon which

co-operative society is based were adequately applied. In some of the

co-operatives under study, the principles of Democratic Control, open

membership, promotion of education etc are seriously lacking. This

inevitably affects the production level of the co-operative society for

bad.

As a way of motivation, the ministry of co-operatives and

industries, should from time to time send out their officials to visit the

various co-operative societies in their states. This regular action has

been found to act as a motivational tool to the co-operators. But it was

discovered that the government oficiabs that visit these co-operative

societies are not encouraging at all. When they visit, and the problems of

these co-operators are tabled before them, they hardly go back to the

government and furnish them about the stated problems that was tabled

before them. What these co-operators hear is nothing but unfulfilled

promises.

Such co-operatives like Farmers' Producer Co-operatives and

Agricultural Produce Marketing Co-operative which are mainly

concerned with solving the production problem cannot take care of the

problems for which they were established as a result of poor knowledge

of Agricultural practices, machinery acquisitions and lack of credit

facilities and the provision of extension services.

Farmers' Consumer Co-operatives who are more concerned with

the sale of manufactured goods to their members at low cost are highly

incapacitated to do so due to lack of storage facilities. Some of their

products which could be stored and sold during scarcity of the products

cannot be stored without spoilage because there is no adequate storage

facilities. Hence the end result is that during the season of that particular

farrn1Agricultural product, the market is flooded with the product. Later

on, there will be fluctuation in the supply of these products. This aIso

causes fluctuation in the prices of Agricultural products.

5.2 CONCLUSION

In this work, we have been able to look at ail ramification of the

co-operatives under study. The study has touched on critical issues

affecting the economic growth of the development.

Nigerians have not been able to improve their conditions of life

through the co-operative societies. Albeit, they had thought that the past

administration and present democrative government were going to

improve their conditions through some Agricultural policies that will

improve their conditions, but this was discovered to be a mirage.

In conclusion, both government and individual co-operators have

duties to undertake towards the improvement of co-operative society in

Nigeria, Inasmuch as government has a duty of providing basic

Agricultural facilities such as credit extension the individual co-

operators have a duty to show their readiness and willingness towards an

adequate utilization of the credit given to them. These co-operatives

should not see the government as "Father Christmas" who will provide

for all their needs. They should endeavour to make use of their

initiatives towards the improvement of their various co-operative

societies.

BIBLIOGRAPHY

Abbot, J.C. and J..P, Makeham Agricultural Economics and Marketing

in The Tropics. Longman Group

Limited (1979.

Ijere, M.O.

Ijere, M.O.

Laidlaw, A.F

Role of Marketing Co-operatives in

Rural Development: An Indian Scene in

the Year Book of Agricultural Co-

operation (1 974).

New Trends in African Co-operatives:

The Nigerian Experience; Fourth

Dimension Publishers, Enugu (1 976).

"The Evolution and the hture of

Farmers' Multi-Purpose Co-operatives

in Nigeria" Journal of Co-operative

Management Vol. 9, No 3, (1974).

Mobilization of Human Resources

Through Agricultural Co-operatives,

F.A.O. of the United Nation, Rome

(1 973)

Obibwaku, L.O. An Appraisal of the Impact of

Agricultural Co-operatives in Anambra

State.

Adegeye A.J and J.S. Ditteh Essential of Agricultural Economics

Helicon Press Limited Agodi, Ibadan

(1 982).

Alan, M. (1971) The manager and training: London:

Pitman

Antis R.D. Fishlock S. H. E. & Practical business education: An

C. E. Stafford (1978)

Appleby, R. C. (1976)

Elendu 0. E. (1988)

Lysbeth, W. A. &

Wendy, R. (1979)

Musselman, V. A. & Hughes E. A. (1969)

integrated approach: Estover:

Macdonald and Evans

Modern business administration (2nd

Edition) - London: Pitman

Introduction to business management.

Ibadan: University Press

Communication for business and

secretarial students (2nd Edition)

London: Macmillan

Introdzxtion to modern business: Analysis and interpretation - New Jersey: Prentice Hall

School of Post Graduate Studies Department of Business Management University of Nigeria, Enugu Campus, Enugu.

SirMaclam, I am a post graduate student of the University of Nigeria, Enugu Campus and offering a programme in Business Management. I am conducting a research on the topic below: PRODUCER CO-OPERATIVE SOCIETY AS A MEANS OF COMBA TING SCARCITY OF FOOD CROPS IN IMO STATE.

Your co-operation in answering the questions in this questionnaire will go a long way in helping me to find out facts on the above topic, hence to arrive at a conclusion scientifically.

I wish to assure you that the information given out will not in anyway be revealed or used against you.

Thank you for your co-operation

Yours Faithfilly

Mgbemere Kizito C

Now Answer the following question:

PERSONAL DATA

Name: (Not Compulsory)

Sex: male [rl female

Age: 15-25 25 - 40 0 over 40 0 Marital Status: Single Married Widow 0

Divorced

Educational Qualification:. . . . . . . . . . . . . . . . . .

RESEARCH QUESTION

1. Have the Co-operatives assisted in the growth f Nigeria econon~y?

YES NO [7

2. Does Obasanjo's administration favour the formation of Co-

operative society? YES 0 No 0

3 . Does lack of storage facilities result in the low performance of

Co-operative society? YES 0 NO [7

4. Does the government extend adequate credit facilities to the Co-

operatives? YES NO 0

5. Lack of credit facilities affect the productivity ability of the Co-

operative? YES NO n 6. Do the machines of Co-operative societies have an adequate

knowledge concerning the principles upon which Co-operative

societies strive? YES [7 NO

7. Lack of adequate knowledge concerning the principles upon

which Cooperative societies strive in poor performance by the

Cooperative. YES NO

8. How often do the Cooperative officials visit your Cooperatives?

Very often U often U Not encouraging U Do not visit a1 all

9. Does their visit motivate you? YES NO

t O.In your own opinion do you think that Co-operative societies can

lead to a better economic growth if taken serious by government?

YES NO

11.117 your opinion what are the main problems associated with the

formation of Cooperative society?

12.Can you make recommendations on how Cooperative societies

can be better implemented in assisting the growth of the Nigerian

economy.