We
treated the political institution
where the general concept of politicalin stitution and its participation in rural areas were discussed. In this article,
we will look at the rural economic institution. By the end of this article, you
should be able to explain the meaning of the economic institution and identify
the significance of economic institutions to the rural farmers.
The Meaning of the Economic Institution
The
economic institution in any culture is often concerned with the arrangement of
relationships between people for the sustained production, distribution and
consumption of goods and services within that culture or between it and another
culture (Mbiti 2003).
The
family as we have earlier discussed, is the basic economic unit in any society.
That is, it acts as the basic unit of production and consumption. As a society
advances and becomes more complex, specialization of functions often sets in to
the extent that the function of production and distribution of goods becomes
transferred to industrial and commercial firms.
The family however, still plays the important role of providing the labour or manpower for production and distribution within these organisations. The basic factors of production in any economy have been identified as land, labour, capital and entrepreneurship.
Karl (1992), however, holds that of all these, labour is the most crucial and that labour produces capital and entrepreneurship. In addition to labour, land is equally very important.
The Significance of economic Institutions to Rural Farmers
The
economic institution is one of the most significant dimensions of rural life.
The institution provides the need of the rural farmers in different ways
through provision of credit, provision of land, provision of labour, purchase
of equipment and supplies, and marketing of farm produce.
These needs are provided in rural communities where family farms predominate.
In this
situation, the initiatives of individual and family farmers are mobiliaed to
look for these services for their farm development.
The
foregoing economic services are often performed in rural areas through
established rural organisations such as:
1.
Cooperative societies performed through cooperative efforts of the rural
farmers.
2.
Government of privately established institutions serving the rural area like
rural banks, government parasternal organizations such as agro-service centers
where farming inputs such as improved seeds, fertilizers, chemicals, tractor
services are made available to farmers at subsidized rates, cooperation which
are established by the government to produce and market agricultural products,
marketing companies and commodity boards which are to purchase agricultural
commodities from producers and other large scale buyers (Akingbade 2003)
3.
The efforts of individual farmers who look for these services from other
individuals and groups.
We are now going to discuss
each service in more detail.
a) Provision of Farm Credit
Farm
credit is money provided to farmers to meet the cost of executing various
operations on their farm enterprises. The money is often spent on aspects such
as project farm planning, acquisition of land where it cannot be obtained, land
survey, labour, procurement of farm inputs and marketing. Credit is therefore
needed at all stages of agricultural production process. Credit is provided to
farmers in two ways.
First
is cash credit, which is money, loaned to farmers.
Second
is credit in kind, which consists of farm inputs like improved seeds,
agro-chemicals, fertilizers and herbicides, which are given to farmers to cover
a part of the loan granted to farms. Cash credit is often provided by the
Banks.
Agricultural
Credit Cooperation and Nigeria Agricultural Cooperative and Rural Development
Banks (NACRDB) in many States in Nigeria, give credit in both cash and kind to
farmers. Collateral security is however required at times.
b) Acquisition of Land
This
is the second manifestation of the significance of the economic institution in
the rural area. Acquisition of land for agricultural and other economic
purposes is of paramount importance.
The
system of land tenure in the world falls into two major parts:
i)
State ownership and control
ii)
Individual ownership and control.
The
former has developed largely in the communist countries; the latter is
predominant in other parts of the world (Njike 2000).
Under
the state ownership of land, allocation of this resource by groups and for
various purposes is usually done by the government.
Under
individual ownership, land acquisition is frequently through rent, lease,
borrowing or outright purchase of land.
c) The Land Use Degree
The
Ogun State of Nigeria Gazette 27 (1978) was one of the instruments which
published the decree. It stated that it was in the public interest that the
right of all Nigerians to the land of Nigeria be preserved by law.
In
addition, it was in the interest of the public that the rights of all Nigerians
to use and enjoy Nigerian land and its natural fruits in enough quantity to
sustain themselves and their families should be preserved.
The
right to allocate land to applicants and withdraw such land when necessary was
vested in the Governor of each state.
A
land use and allocation committee was set up in each state to advice the
Governor on the implementation of the decree. A land use advisory committee was
setup in each Local Government Area to advice on lands in rural areas (Jibowo
1992).
The
major criticism of the decree is that it allows the rich land developers to
acquire large areas of land in various parts of the country without paying much
money. The provision of the decree which limits the area of land which could be
acquired should be enforced and possibly reviewed to reduce the area further
which each person could acquire, so that land could be available for
prospective users.
d) Supply of Labour
Rural
labour supply for agricultural development in various parts of the world is
through these major sources such as human labour, farm animal sources, and use
of modern machines namely ploughs, harrows, harvesters mounted on tractors.
The
source of labour appears to be indicative of the level of development of each
nation. In the underdeveloped and developing parts of the World, which include
the major parts of Africa, Asia and Latin America, reliance is placed on human
labour to execute many farm operations in the rural areas. Land clearing,
cultivation, planting of crops, maintenance operations, harvesting and haulage
are carried out manually (Baldwin 1997).
The
tools used include hoes and cutlasses which demand much human labour. Basket is
used for haulage of products from the farm. This involves carrying of products
on shoulder or heads. Transportation involves trekking on most occasions.
e) Acquisition of
Technological Equipment and Supplies
The
major essence of agricultural technology is the acquisition of equipment and
supplies for the improvement of agricultural enterprises. Technology is
appropriately described as the study, mastery, utilization and systematic
application to industrial arts of the knowledge of manufacturing methods
(Makanjuola, 1998).
Agricultural
technology may then be defined as the systematic study and application of the
knowledge of manufacturing methods to the development of agriculture.
Agricultural technology exists in many forms.
According
to Olayide (1990), agricultural technology falls into one or a combination of
many forms.
First
is tool-embodied technology, which is symbolised by many tools and machine such
as hammers, weeders, planters, stumping machines and sprayer.
Second
is process-embodied technology which is found as plans, formulae, blue-prints
and procedures embodied in the production and processing of farm goods and
services into final products.
Third
is process - oriented technology which assumes detailed knowledge of properties
of chemicals or physical elements and accumulated experience of sequence to
follow in production.
Fourth
is decision - oriented technology which encompassed practical knowledge used by
planners, technicians, engineers and producers in analyzing bodies of
information to determine the practical sequence which might be meaningfully
arrived at from such information.
Many
of the tools and equipment used by the small and large scale farmers belong to
the first form of technology as classified above.
The
technology chosen by the small farmers has to meet some basic requirements if
it is to be effective.
a) Technically Feasibility: It
should be able to increase productivity by employing its technical elements.
b) Social Acceptability: It
should be compatible with community structures norms, values and beliefs.
c) Economic Feasibility: It
should be characterized by profitability, compatibility with the existing
farming practices and systems, dependability and potential for risk minimization
d) Infrastructural
Compatibility: It should be capable of accommodation by
the existing level of the infrastructure.
e) Other Requirements: It
should have employment enhancing and generating potential. It should make
optimum use of basic production resources such as land, labour, water, capital
and entrepreneurship so as to maximize output.
The
farm inputs or supplies are land, labour and traditional capital investment
including off-farm purchased inputs like fertilizers, pesticides, herbicides,
improved seeds and seedlings.
Land
is the most important of these inputs. Much of the arable land in Nigeria (70%)
has not yet been put into cultivation.
However,
increased population pressure particularly in the cocoa growing area of the
southern states and the groundnut growing areas of the northern states, has led
to shortening of the fallow period and consequently lowers soil fertility.
f) Marketing of Farm
Produce: In more developed nations, marketing of agricultural
commodities is carried out largely by specialized marketing agencies. Examples
are food crops, livestock and dairy.
Some
individual farmers or groups of farmers engage in the production and marketing
aspects of agriculture.
In
many less developed countries, however, many farmers operate on a small scale.
They frequently combine both production and marketing of their farm
enterprises. Storage and transportation of agricultural enterprises are carried
out on the farm. Marketing is carried out at the wholesale and retail levels.
In
Nigeria storage is only for some months or short period. Some farmers use their
crops as collaterals for obtaining loans from traders. Food crops are stored in
pots, soil, jute bags, and rafters, hung above the fire place. Only a few
farmers use the steel or concrete silos provided by the government.
Transportation
of food crops in Nigeria is done mainly by head and Lorries. Rail and water
transportation are minimal. Water transportation is common in riverine areas of
the country. Transportation costs vary according to the means used.
Transportation
problems such as bad roads, irregularity and excessively high charge of Lorries
and other transport facilities prevent smooth transportation of agricultural
commodities from the farm or village to the markets.
Like
in many other less developed countries, marketing efficiency is low in Nigeria.
This
is because of many problems such as:
i)
Low level of technical efficiency in processing.
ii)
Constant price fluctuations.
iii)
Inadequate transportation and storage.
iv)
Poor market knowledge and information.
iiv)
Lack of standardized quality and quantity measures which prevents
responsiveness of marketing system to consumer direction and lower efficiency
of commodity pricing.
To improve marketing of agricultural commodities:
(i)
The government should establish storage, transportation and processing
facilities at low rate for farmers or by individuals or groups of farmers
themselves.
(ii)
Cooperative marketing by producers, traders and consumers should allow greater systematization
and standardization of marketing.
(iii)
Marketing education and information should be made available to all people
concerned with marketing so as to arrive at judicious marketing decisions.
Conclusion on Rural Economic Institutions: Meaning and
Significance of Economic Institutions to Rural Farmers
This
article discusses the economic institution which is one of the important
dimensions of rural life. By now you should be able to comprehend the general
concept of the topic.
This
article has explained the meaning of the economic institution as a concept. It
has also highlighted the importance of economic institutions to rural farmers.
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