Impact Of Microfinance Credit On Agricultural Productivity

1.1 Background to the Study
In most developed countries, subsistence has been directly or indirectly linked to agriculture. According to the Food and Agriculture Organization (2016), more than 60% of the world’s population relies on agriculture as their main source of livelihood. About 75 percent of the world’s poor live in rural areas, and 86 percent of them earn money in agriculture (ECG, 2011). Maintaining a good crop is important for all of these people. Recently, the growth of agriculture has slowed down. Growth of the world’s essential nutrients is approximately 1% per annum (FAO, 2009a), while the recent growth rate of the world’s population is approximately 1.2%. Land is a rare commodity; Land expansion cannot be achieved in many developing countries (ECG, 2011).
Microcredit is form of credit that enable small and marginalized farmers to purchase the inputs they need to increase their productivity, as well as financing a range of activities adding value to agricultural output. However, much remains to be done, to integrate microcredit institutions fully into the mainstream of rural financial systems and for commercial banks to recognize their full potential (Nosiru et al. 2010).
Credit has been recognized as an essential tool for promoting small and medium scale enterprises as well as agricultural production. An appreciable percentage of the population is engaged in agricultural production. The Federal and State Governments in Nigeria have recognized that, for sustainable growth and development the financial empowerment of the rural area as the life wire of agricultural production vital, being the repository of the predominantly poor in society and in particular the small scale farmers (Idewarumi, 2015). If this growth strategy is adopted and the farming capabilities of this large segment of the people is sufficiently stimulated and sustained, then positive multipliers will be felt throughout the economy. To give effect to these aspiration various policies have been formulated over time by the Federal Government to improve Agricultural production capabilities, positively channel the potential of farmers to enhance their standard of living and to put the sector as a priority of Government’s development strategy (Idewarumi, 2015).
Agricultural productivity is measured as the ratio of agricultural outputs to inputs. While individual products are usually measured by weight, which is known as crop yield, varying products make measuring overall agricultural output difficult. Due to insufficient land for arable land and integration, modernization of agriculture in many parts of the world may result in faster-than-large-scale agriculture growth. Therefore, developing more and increasing strategies and resource savings are important goals as well as diversification (Dixon et al., 2001). The discrepancy between the actual benefits of most crops and the actual crops suggests that there is a greater potential for increased food and crop production through efficiency (Zepeda, 2001).
The FAO estimates that about 80 percent of growth in food production in developed countries is due to crop production, and that only 20 percent crops of the area (FAO, 2009c). Therefore, significant strikes are important not only to meet the growing demand for more crops, but also to further deforestation, damage to the planet. accidents and global warming. From supplies and needs, recreational farming can play an important role in industry (Johnston and Mellor, 1961). For example, agriculture has provided raw materials to industry and other industries and needs input from the modern world such as research and development. information technology. In terms of demand, high yields can increase the incomes of the rural population and thus increase the demand for local products (Dethier and Effenberger, 2011).
In this way, it has the potential to create a seamless connection between agriculture and modern industry, create new jobs, and improve urban and residential incomes. Additionally, food security is among the challenges facing the world community. Food security refers to the situation when “everyone has to adapt their diet, lifestyle and lifestyle to an active, healthy lifestyle that meets their physical, health and economic needs at all times” (FAO, 2010) Olon. People think of it as a simple human right, but thousands of people all over the world, especially in low-income countries in the food sector, continue to suffer from poverty and hunger (IEG, 2011). Most of these people live in rural areas and rely on agriculture to meet their daily needs and livelihood. In this sense, improving the rural economy is often an important tool for reducing poverty, improving food security and improving rural living through the use of sustainable crops (Pinstrup-Andersen, Pandya-Lorch, 1998).
Another important factor in food safety is longevity. This means that cooking should be done not only for future generations, but also to order. The reality is that the average annual crop growth rate in the world fell from 2.42% in 1974-82 to 1.78% in 1982-90 (Rosegrant et al., 1995).) The leading rate in Asia is 2.62-1.66%, and in China 4-6.%. It shows a similar picture of other crops, such as corn, wheat, sorghum and other staple foods (Pinstrup-Andersen, 1994). Food security and food security benefit from many physical, social, economic and political factors, both nationally and internationally (Chang and Zepeda, 2001). In addition to infrastructure and infrastructure development, there is a need for several key economic sectors, population growth, population change, rapid urbanization, and revenue generation. In terms of support, agriculture can play an important role in supporting world food supply (Rosegrant, et el, 1995).

1.2 Statement of the Problem
The Nigeria Financial system have put in place policy that enables credit access. The objective is to ensure that farmers have access to credit to carry out their agricultural activities. Financial institutions such as micro-finance banks, commercial banks and the Agricultural Bank of Nigeria have urged them to increase lending to the agricultural sector. One way to do this is to evaluate whether the activities of the credit unions have responded to the analysis of the farmers involved in the credit market. The cultivation of various agricultural products, such as rice, requires high fees to cover the cost of cultivation during the growing season.
Therefore, the micro-finance credit plays an important role in increasing agriculture (Iqbal, Munir and Abbas, 2003). The importance of credit for small farmers in agricultural productivity cannot be denied (Siddiqi et al., 2004). The availability of credit services can help expand the technological development of agriculture, which can increase incomes.
Credit financing have played an important role in improving agriculture before planting and harvesting (Akpokodje, Lançon & Erensten, 2001); Therefore, it is very important that farmers receive income and credit on time, as argued by Saboor, Hussein and Munir (2009), to obtain the tools, raw materials and labour necessary for agriculture. Loans should be necessary not only for agriculture, but also for family consumption, especially during non-planting season. According to the National Bankruptcy Reform Commission (NAP), the Nigerian Agricultural and Cooperative Bank (NACB) is developing special loans to improve agricultural production. The number of loans for cereal production under the program increased from 3,000 in 1989. Up to 5,780 loans approved (Akpokodje, Lançon & Erensten, 2001).
To improve the situation, the government has implemented measures such as the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL), including the 2009 investment to increase productivity in Agriculture. Hence, this study is therefore carried out to assess the impact of micro-finance credit on Agricultural productivity in Nigeria.

1.3 Objectives of the Study
The aim of this study is to assess the impact of micro-finance credit on the productivity of the agricultural sector. Specifically, the study seeks to:
1. Determine the impact of agricultural credit on agricultural productivity in Nigeria.
2. Determine the impact of interest rate on agricultural productivity in Nigeria
3. Examine the impact of inflation rate on agricultural productivity in Nigeria
4. Ascertain the impact of exchange rate on agricultural productivity in Nigeria

1.4 Research Questions
The following questions provides a guide to the study:
1) How does agricultural credit affect agricultural productivity in Nigeria.
2) To what extent does interest rate affect agricultural productivity in Nigeria
3) What is the impact of inflation rate on agricultural productivity in Nigeria
4) What is the impact of exchange rate on agricultural productivity in Nigeria

1.5 Hypotheses of the Study
The following null hypotheses was developed and tested in this study
Ho: There is no significant relationship between agricultural credit and agricultural productivity in Nigeria.
Ho: There is no significant relationship between interest rate and agricultural productivity in Nigeria
Ho: There is no significant relationship between inflation rate and agricultural productivity in Nigeria
Ho: There is no significant relationship between exchange rate and agricultural productivity in Nigeria

1.6 Significance of the Study
Micro-finance credit services specifically government-funded have adopted a traditional soft lending approach, mainly targeting the agricultural sector and other non-agricultural activities. However, the consequences were short-lived. The Nigerian economy can reap greater benefits if concrete measures are taken to save the agricultural sector.
For the researcher, this work will be an opportunity for increased knowledge. To the farmers in Otuoke, they will better understand the opportunity provided by the micro finance banks to help increase their agricultural inputs.
To the policy makers, the challenges and findings identified in this study will aid in developing policies aimed at increasing agricultural production and funding programs in Bayelsa state and more so in Nigeria. This study should not be seen as the end of research and decision making, but rather as a guide that takes into account its limitations.

1.7 Methods of Data Analysis
This study is a quantitative type of study and will adopt the Pearson correlation analysis to determine the relationship between micro-finance credit and increase in agricultural produce in Otuoke. Responses from the survey will be analysed using the chi-square statistical tool to test determine if farmers in Otuoke have access to credit facility provided by Micro-finance banks.

1.8 Scope and Limitation of the Study
This study intends to accommodate data and views on farmers in Nigeria and Agricultural productivity in Nigeria. However, due to inaccessibility of some information and in order to present precise and concise findings, this study will be limited to farmers in Otuoke, Bayelsa state and the activities of micro-finance banks in Bayelsa state.

1.9 Organisation or Plan of the Study
This study will be carried out in five chapters. Chapter one explains the research problem, objectives for the study and the formulated null hypotheses. Chapter two reviews related literatures, builds a theoretical framework and reviews some empirical works. In chapter three, the methods and approach adopted for this study is explained. This includes the data collection method and the statistical tool. Chapter four presents the data collected and analyses this data for meaningful interpretation. In the fifth chapter, a findings from the previous chapter were reiterated. A summary for the study is ensured and a conclusion is reached.