Abstract:

The problem of agricultural credit cooperative' arrears on the Agricultural Development Bank (ADE) loans has been a growing one since the early 1970's. As a result of government's concern, the Department of Cooperative Development started amalgamating small societies with unlimited liability into larger and supposedly more efficient societies. The specific objectives of the study are to identify factors affecting efficiency in societies, assess causes of low membership participation displayed through poor loan discipline and its implications for the operations of the ADB as well as to assess the possibility of supplementing ADB loans and NetWorth with savings deposits.
The methodology of this research can be divided into four stages. Having identified a problem in the initial stages of the study, in the area of agricultural cooperative credit, literature on the subject was reviewed and a number of observations were made. Agricultural credit cooperatives still have an important role to play especially in developing countries as the demand for agricultural credit far exceeds what is supplied by all institutional credit agencies. There are idle surpluses in rural areas which need to be mobilized and utilized for productive purposes and that although small farmers are
capable of saving, few are creditworthy.
Formal lenders are reluctant to lend to numerous small farmers because of high lending costs. On the other hand, small farmers find it very difficult to obtain loans from formal lenders as they do not meet the creditworthiness criteria and
also because of high borrowing costs.
burse group loans.
A compromise situation is to dis
group lending is an innovation favourabJe to both
lenders and small farmers. Credit cooperatives are used as conduits for
channeling credit to farmers.