Agriculture is defined as the science or practice of farming ie cultivation and production of raw materials for industries. It is well known that farming is the oldest occupation in the world and indeed it remain till date, one in which the largest number of people are engaged. The vast majority of the population of the world, depend on its more complex sense, agriculture is basically concerned with the production of food, which is the basic necessity of life.
The problems of capital security in agricultural production in most developing nation is generally giving cause for concern, because of the huge capital involvement. As a result of this development, subsistent agriculture now cultivate crops only for themselves and their immediate families hence the need for commercial banks to participate actively in agricultural financing materials for key industries and a major foreign exchange earners has further added to its premience among all human occupation.
As a business, it cannot be carried out extensively unless funds are available for maintenance replacement and capital equipments procurement and for other expenses.
THREE TYPES OF CREDIT ARE USUALLY REQUIRED.
(A) Short term credit to financial yearly planting operations, seed, fertilizer and farm expenses until the crop is sold.
The amounts involved here might not be credit in most predominantly felt by small farmers have little or no savings upon which to hang on.
(B) Medium term loan (longer than one planting year but less than three years). This is needed for acquisition of breeding stock and cheap with relatively short life.
© Long-term credit necessary to acquire major machines and equipments repairs and maintenance of farm lands, buildings, storage facilities.
1.2 STATEMENT OF THE PROBLEM
In this age of expanded business activities around the world especially in Nigeria. Agriculture more than ever needs financial assistance in form of bank loan to meet the increasing need for food production.
Obtaining such loans however has not be easy for farmers as a result of collection security, lack of proper accounting records and management among other limiting factors.
In spite of the importance of oil in the economy today, agriculture still remains the main stay of the Nigerian economy as it provides the greatest avenue for employment income of food for the Nigerian population. Its intrinsic position as a source of raw material for agricultural credit.
Agricultural credit therefore is a necessary ingredient in agricultural practices and in farm productivity especially it supplied on sufficient quantity and efficiently used. However, credit is only one of the “essential” for expansion and modernization, for credit pe-se, is not entirely inevitable, but a necessary key to a more prosperous future.
The commercial banks on their part has been replaced at tight situation in their bid to achieve what might be an optional level in banking lending.
1.2 PURPOSE / OBJECTIVE OF STUDY
It is a living concept among the people today that low returns to agriculture are entirely as a result of lack of finance. It is against this background supported by
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