INTRODUCTION
Value chain framework has been perceived as
an efficient strategy and magic formula for development of sustainable
agriculture in Nigeria. It is defined as a chain of activities required to
bring a product from production through delivery to final consumer and final
disposal after use (Kaplinsky and Moris, 2001; Kumar et. al. 2011). These activities are interwoven as well as interdependent
and aside from improving farmers’ incomes, are best ways to address
unemployment, poverty and food security issues in the country. Cassava being
one of the major tuber crops grown for consumption in West Africa provides food
to over 550 million people in most of tropical Africa where it contributes
about 40 percent of food calorie intake and plays an important role in rural
livelihoods (Aerni, 2006; Sanni et. al. 2009; Adenle et al, 2012; Kleih et al, 2012; Manyong and
Ayedun, 2014; Odongo and Etany, 2018). It is the most cultivated root plant
with double advantage of being both a food and cash crop. It supports limited
soil fertility and has the potential to produce high yields under poor
conditions (Nweke, 2003). Its drought-tolerance, resilience on marginal
agricultural land, and ability to be stored in the ground up to three years
make it an important food security crop for smallholder farmers (FAO, 2000;
Sayre, 2011). Its importance in terms of food security, food nutrition,
improving yield and soil fertility has resulted in the establishment of a
number of projects and programs for the promotion of root and tuber crops in
the country. However, it has to cope with financial problems which hinder its
overall value chain development process in the country adjudged to be world
leader in production but not an active participant in cassava international
market due to weak segments in value chain (Henri-Ukoha et. al, 2015; Adewole and Omeye, 2018).
Poor financing of cassava value chain is one
of the main challenges limiting actors from taking full advantage of their
activities in the value chain. This is in part resulting from lack or little
confidence of commercial banks and other financial institutions in providing
loans, lack of update record on assets that are hard to use as collateral for
seeking loans and policy-induced distortions in the rural financial markets
(Miller and Jones, 2010; Shwedel, 2010; IFC, 2012;). Financial institutions
often confront problems of information asymmetry leading to adverse selection,
higher transaction costs and lending risks. Nevertheless, it is believed that
some of these challenges can be ameliorated by developing holistic value chains
approach that emphasizes on competitiveness and risk management of the entire chain.
The chain-based financing or value chain financing is thus, considered an
effective means for financial institutions to improve their business prospects
in agriculture. The product market orientation of the value chain can be
assumed as a substitute for physical collateral and also a means to overcome
lending risks (Meyer, 2007; Casuga et al., 2008; Shwedel, 2010; Miller and
Jones, 2010; IFC, 2012; Narayanan, 2012). The value chain actors, on the other
hand, are better-informed about the businesses and relationships of one
another, and the financial institutions can utilize this network to overcome
the problem of asymmetric information, and also to design financial products
and/or service for different chain actors (Miller, 2012).
Value
chain finance as a concept refers to financial products and services that flow
to or through any point in a value chain in order to increase returns on
investment, growth and competitiveness of that chain (UNIDO et al., 2010). A
thorough analysis of value chain finance is important to address the constraints that limit
productivity and development of value chains if Nigeria’s agricultural sector
is to evolve. Despite many development programs that support value chain
development and in parts, deal with the issue of finance, the type of finance
they provide is not sufficient to cover needs of the entire value chain.
Concerning cassava products, their supply chain tends to begin with small-scale
production units, followed by small-scale processing units for the drying and/or
milling of cassava (ARC 2013). Thus, financial
needs are particularly acute for farmers, who can rarely access
sufficient amount of finance to operate their businesses profitably and there
are many small agribusinesses in
primary processing which can increase profitability through
technological upgrading and organization, but also find it difficult to access
finance for this. Moreover, quite a number of researches have been done on
cassava value chain without regards to the issue of finance which is a paramount
element in value chain development. Based on these facts, this study attempt to
describe socioeconomic characteristics of selected actors in cassava value
chain, profile their financial needs as well as determine factors for finance
accessibility and extent of each actor.
METHODOLOGY
The
study was carried out in Oyo State and the actors targeted were cassava farmers and processors selected
through multistage sampling technique across ADP Administrative Regions in the
state. Data collected using structured questionnaire from 150 farmers and 150
processors were subjected to descriptive and tobit regression. Tobit regression model which was
originally developed by Tobin (1958) and used by many researchers such as
Adejobi (2004), Austin and Edward (2003), Omonona (2000) and Rahji (1999) has
been described as an extension of Probit model (Gujarati, 2004). The model was used to evaluate the extent of finance accessibility of selected actors
in the cassava value chain. The
stochastic model underlying Tobit may be expressed by the following
relationship;
if 
≥ 0 and
if ≤ 0
where Yt
is the dependent variable, Xt is the
vector of independent variable, β is the vector of unknown coefficient,
μt is the independently
distributed error term assured to be normal with zero mean and constant
variance σ2 and t = 1,2,……….N. Thus, the model assumes that
there is an underlying stochastic index equal to which is observed only when it is
positive and hence qualifies as an unobserved latent variable. The expected
value of Y in the model as shown by Tobit is:
;
where
, f(z) is the unit normal density and F(z) is the cumulative normal
distribution function. Furthermore, the expected value of Y for the
observations above the limit, here called Y* is simply Xβ plus expected
value of truncated normal error term;
Consequently, the basic relationship between the
expected value of all observations Ey, the expected value conditional upon
being above the limit Ey* and probability of being above the limit f(z) is Ey =
F(x)Ey*. The composition that we have
found useful is obtained by considering the effect of a change in the ith
variable of X on Y;
It is explicitly expressed as follow:
Where;
Y = Farmers’
extent of finance accessibility (value of finance received divided by value of
finance needed) ; β0 is the intercept and β1 – β8 are the regression coefficients; 
is the error term while X1
– X8 are
the independent variables specified and defined below: X1 = sex (male = 1, female = 0); X2
= age in years; X3 = education in years; X4 = number of dependent;X5
= experience in years; X6 = enterprise size (dummy if small scale =
1, otherwise=0); X7 = secondary occupation (if yes =1, otherwise =
0); X8 = total income from farming per year (Naira); X9 = Amount of credit needed in naira; X10 = Credit purpose
(farming = 1, non -farming = 2, both = 0); X11 = Borrowing experience (if yes = 1,
otherwise = 0); X12 = Credit ration (received amount applied for
= 1, otherwise = 0); X13 = nature of borrowing
experience (if
satisfactory = 1, otherwise = 0); X14 = Interest rate in percentage; X15 = Collateral
security (if yes = 1, otherwise = 0); X16 = Disbursement lags (if timely = 1,
otherwise = 0); X17 = Repayment period in months;= Error term.
RESULTS AND DISCUSSIONS
Socio-economic characteristics of actors in cassava value
chain.
Table
1 reveals that 79.3% of farmers were male and all the processors were female.
This might be attributed to the fact that processing and preparation of foods
were usually the role of women in the socio-cultural setting of the people
under study; this is in line with (Sasson, 1991; Adegeye and Dittoh, 2002; Sodeeq et. al., 2016) who
asserted that women are active in the cassava industry and that they are more
predominant in the processing and marketing than male folks who dominate the
production of cassava roots. This gave male farmers more access to finance than
female farmers. Most (47.33%) of the farmers in cassava value chain were youths
(21-40 years) with secondary education while 68.0% processors were middle aged
people (41-60 years) with most having primary education. The average ages of
the actors were 39years and 45years respectively. Similar result was reported
by Adewole and Omoye (2018).The implication of this finding is that majority of
the actors belong to youth and middle aged groups. This is an advantage since
they are supposed to be physically able and more mentally alert in learning new
technologies than the older actors. This is supported by FAO (2014) which
reported that older farmers are less likely to adopt new technologies needed to
sustainably increase agricultural productivity and ultimately feed the growing
world population while protecting the environment. These groups also had
highest access to finance in age (43.5% and 62.1%) and education (38.8% and
64.4%) categories of actors in cassava value chain. Moreover, most lived in
nuclear family system as more than half (50%) had family size of less than 5 but
the average family size was approximately 5. Composition and size of the family
have been regarded as one of the most important factors conditioning the level
of production and productivity of small-scale actors in cassava value chain
(Okoye et. al, 2004; Salau et. al., 2017). Hence, the relatively small family
size of the actors is an obvious disadvantage, since it may likely not enable
them to use family labour in order to reduce labour cost required in their
operations. This however didn’t debar them from having access to finance as
56.5% of farmers and 49.4% of processors with this household number had access.
Both actors were married with more than 5 years experience operating on small
scale in cassava value chain except farmers who were relatively new with less
than 5 years experience. Their small scale operation might be due to their
level of finance accessibility and this is reflected in their monthly mean
income of N46,000 and N106,000 respectively.
CONCLUSION
The problem of food shortage in the country was due to
high cost of input, scarcity of land and lack of finance to mention but few. In
spite of these, most actors in cassava value chain still tried to minimize cost
of production in attempt to maximize their profit. However, study had revealed
that profit increases as business size increases. From the results of this
study, it can be concluded that majority of actors in cassava value chain are
not new in the business, middle-aged and operates small scale business due to
lack of finance. They are thus limited
in their scope of operation and needed long-term finance during the rainy season than other
seasons for both working and fixed capital. More work is needed, however, to better understand the
demand for and use of financial products in agricultural households, and how
their total portfolio of financial services can be improved.
RECOMMENDATIONS
§ Finance should be made available at
the right time preferably rainy season for the actors in all the stages
of cassava value chain for more produce and Nigerian Agricultural Co-operative
Bank, Commercial Banks and various Community Bank, etc. have a great role to
play in this regard.
§ A minimum of N50,000.00 would be enough for
the actors to start up business on small scale while N200,000.00
could be
used to start up medium scale business.
§ Government should ensure that all the necessary cassava production and
processing equipments are made available at all times and if possible at
subsidized rates.
§ Government should ensure that farmers have access to long term loans to
boost the cassava production in the state and Nigeria at large. Moreover, the
form of finance (long term loan) should be targeted towards rainy season in
carrying out activities involved in cassava value chain.
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