NIGERIAN FARM SETTLEMENTS AND SCHOOL LEAVERS' FARMS - - PROFITABILITY, RESOURCE USE AND SOCIAL- PSYCHOLOGICAL CONSIDERATIONS Thesis for the Degree of Ph. D. MICHIGAN STATE UNIVERSITY DUPE OLATUNBOSUN 1967 THESIS ‘.‘.“ LIO§'\ fin" -4 I k r Michigan Sm: University This is to certify that the thesis entitled Nigerian Farm Settlements and School Leavers Farms -- Profitability, Resource Use and Social Psychological Considerations presented by Dupe Olatunbosun has been accepted towards fulfillment of the requirements for Ph.D degree in Agricultural Economics Majoréa‘ r essor Date November 17, 1967 0-169 Imome 0v '0“ O "'3' '0‘ “M V” I I.-.” uuo‘u’ IT. mm 4M1: ABSTRACT NIGERIAN FARM SETTLEMENTS AND SCHOOL LEAVERS' FARMS -- PROFITABILITY, RESOURCE USE AND SOCIAL-PSYCHOLOGICAL CONSIDERATIONS by Dupe Olatunbosun Modified Israeli Moshav farm settlements were established in Western Nigeria in l959 to increase agricultural productivity and absorb unemployedschoolleavers. Subsequently, the Midwestern Nigeria came into being in I963, continued the farm settlements, and in addition established-in 196A a less capital intensive scheme than the farm settlements--the school leavers' farms. However, serious questions have been raised concerning the performance of these two types of farm organizations. This study was undertaken to evaluate the performance of these farm organi- zations and make recommendations which might be helpful to the government in improving_the present Operations of these farm organizations and in preparing thenext devel0pment plan; The objectives of this study are to (l) analyze social- psychological characteristics and the organization of farmers in the farm settlements and school leavers' farms in Western and Midwestern Nigeria, (2) analyze the performance of the farms settlements and school leavers' farms, and (3) make recommendations Dupe Olatunbosun »which might lead to high rates of return on the investment in farm settlements and school leavers' farms and which might induce direct investment in agricultural production. A sample-of 180 farmers was interviewed from four farm settlements and two school leavers' farms in Western and Midwestern Nigeria in late I966 to analyze social-psychological characteristics of the farmers. E statistic was used to test mean differences between responses from social-psychological variables among the different farm organizations. Input- output information on food crop production were obtained and multiple regression technique was used to determine the relationships of economic and social-psychological variables on gross-margins per two acres of food crOps per farmer. Expected costs and direct benefits from investments in tree craps, cocoa, rubber and oilpalm were estimated for each typeof farm organization over a 33-year cycle under alternative technical and price assumptions. Expected rates of return to producers and to Nigeria on investment in tree -cr0ps over a 33-year cycle were computed first, when total costs include direct costs and social-overhead costs, and then, when total costs do not include social-overhead costs. Dupe Olatunbosun The analysis of social-psychological variables indicated that farmers in the farm settlements viewed their roles as government employees, they have low morale, and they are pessimistic about the future of the scheme; while the farmers in the school leavers' farms view their roles as private farmers, they have high morale, and they are Optimistic about the future. Multiple regression analysis of food crop production indicated that food cr0p prOduction is more profitable in the school leavers' farms than in the farm settlements. Estimated rates of return to producers and to Nigeria on investment in tree crop range from - ll0% to less than 20% in the farm settlements and from l0% to 6h.5% in the school leavers' farms. Since farm settlements yield expected low returns and also carry small indirect benefits, they are viewed as economically unsound. Investments in school leavers' farms are profitable government investments even if indirect benefits are not considered. The author submits that the government should not expand the farm settlement scheme as presently organized. Modifications Dupe Olatunbosun in the present settlements include the determination of each farmer's property and indebtedness thereon, a greater role for farmers in decision-making, a reduction in government personnel attached to farm settlements, the elimination or reorganization of farm institutes and the formation of multi- purpose c00perative societies. It is suggested that external agencies should consider supporting through loans the expansion of modified farm settlements and school leavers' farms. It is also suggested that a new type of credit institution be established in Western and Midwestern Nigeria which will offer farmers loans which will be guaranteed by government. A further suggestion is that needed research be conducted on economics of food crop production in Nigeria and on rates of return on invest- Inent in alternative farm organizations such as nucleus plantations, government plantations-and other types of small- holder schemes . NIGERIAN FARM SETTLEMENTS AND SCHOOL LEAVERS' FARMS -- PROFITABILITY, RESOURCE USE AND SOCIAL-PSYCHOLOGICAL CONSIDERATIONS BY Dupe Olatunbosun A THESIS . Submitted to Michi an State University in partial fulgillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Agricultural Economics I967 ACKNOWLEDGMENTS I wish to express my deep gratitude and appreciation to my Major Professor, Dr. Glenn L. Johnson who served as Chairman of I my Guidance and Thesis Committees and who has offered intellectual stimulation and encouragement at all stages of my graduate program. Professor Johnson's willingness to assist me on numerous problems has made my graduate program at Michigan State University an especially memorable experience. 5ll also wish to extend my gratitude to Dr. Jack Wakeley of the'PsychOiogy Department for his unstinting efforts in introducing ine toithe field of psychology and for his help in advising me on the social-psychological dimension of my dissertation research. Gratitude is also conveyed to Doctors Harold Wein, Orion Direy: .and Thomas Saving who were members of my Guidance Committee. Special recognition is due Dr. Carl K. Eicher, who served cuminy Thesis Committee, for his constructive guidance and I 'valuable assistance throughout the writing of this thesis, and 53159 Dr.George Dike for his helpful suggestions while.serving' on my Thesis 'Con'mit‘tee. Doctorstugene Jacobson, John Jordan, Richard Heifner, Carl Leidholm, Lees Manderscheid and colleague Gary Seevers were fuelpful to me at different stages in the development and writing Ofrlfly thesis, and I am grateful for-their counsel. My dream df following formal course work in the United States with dissertation research on an important Nigerian problem was realized only through the full support and cOOperation of the MiniStries of Agriculture and Natural Resources in Western and< Midwestern Nigeria, the Community Development Division of the' Ministry of Trade and Industry in MidweStern Nigeria, the Nigerian Institute of Social and Economic Research in lbadan, theUniversity of lfe, and CSNRD/USAID. I am appreciative of USAID-Nigeria financial aSsistance during the first part of my graduate study. Also, I am deeply grateful to the USAID sponsored Consortium for the Study of Nigerian Rural DeVelopment which provided financial assistance for my field researCh in Nigeria and subsequent data analysis and ‘writing at Michigan State UniVersity.» Finally, I cannot fully express my gratitude to my loving wife» Funke, for her encouragement, patienCe, understanding, and untiring assistance throughout my graduate program. TO MY WIFE FUNKE TABLE OF CONTENTS Acknowledgments. . . List of Tables . . . . . . . . . . . . . . . List of Diagrams . . CHAPTER I} Introduction . The Problem . Objectives. . . . . . . . . . . . . . . . CHAPTER II: Colonial Agricultural Policy and Sources of Growth in the Agricultural Sector from I900 to Independence in I960. Colonial Agricultural Policy: l900-l960. Governmental Activities in Agriculture. Major Sources of Growth: I900-l960 . Growth of Export Crops: l900-l960. Introduction of the Moshav Farm Settlements in Western Nigeria . . . . . . . . Summary . CHAPTER III: Method of Analysis . Introduction. . . . . Analyses for the Farm Settlements and the School Leavers' Farms and Farmers. Social- -Psychological analysis of the farmers. . . . . . . . . . . . . Page II 20 22 30 hi 43 #3 AA AA Gross-Margin analysis of food cr0p production . . . . . . . . . . . Internal rates of return on investment in tree crops . Data Collection . Sources of data. The questionnaire. Pre-test . Training and interviewers. Interviews . Sampling method. . . . . . . . . . Summary I. . . . .. . . . .. . . . CHAPTER IV: Social-Psychological Characteristics of the Farmers in the Farm Settlements and the School Leavers' Farms in I966 . Introduction. The Concept of Organizational Performance . Method of Analysis. Results and Discussions Operation of the Farm Settlements Operation of the School Leavers' Farms. Sumary . vi Page 56 58 6O 6O 6] 62 62 63 63 6h 65 65 65 67 78 9O 95 96 CHAPTER V: Food CrOp Production - Social-Psychological Aspects, Resource Use and Profitability. Introduction. Input-Ontput Survey . Analytical Techniques Summary . CHAPTER VI: Potential Internal Rates of Return on Investment in Tree CrOp Production in the Farm Settlements and the School Leavers' Farms . Introduction. Sources of Data . Product Price Assumptions Technical Assumptions: Yields per acre . Cost Assumptions. Method of Analysis. Results Summary . CHAPTER VII: Summary, Conclusions and Recommendations Introduction. _ Summary and Conclusions . Recommendations Discontinue new investment in the farm settlement scheme as presently organized . Modifications in the farm settlement . vii Page 98 98 99 lOl l30 133 133 13L. 135 139 MS 151+ :59 173 171+ 17L. 17A 183 l83 18h Modifications in farms. Implications for Modifications in Implications for Need for further BIBLIOGRAPHY . APPENDICES’. the School leavers' external assistance agencies. credit systems. future planners in Nigeria. research. viii Page 193 19A 19A 195 I96 I97 205 Table 3-A 3-B LIST OF TABLES Estimates of Mid- Year Population of Nigeria from I952- I965 . . . . . . . . . . Active Population Employed in Agriculture, I952- 53. . . . . . . . . . . . . . Exports of Certain Commodities from Nigeria, l899- l95l Statistics Relating to the Marketing of Some Nigerian Exports, l9h2- 52 . Value of Cocoa Exports from Nigeria Compared with Value of Total Exports and Imports, I93h- 52. Export Duties on Cocoa Related to Cocoa Exports and Nigerian Government Revenue, I93h- 52. Distribution of Responses from Three Social- Psychological Variables in the Farm Settlements and School Leavers' Farms in I966 . Distribution of ReSponses--"Discriminating" Social-Psychological Variables Results of E’Statistics on Attitudinal Variables in the Farm Settlement and School Leavers' Farms in I966 . Attitudinal Variables: Distribution of Total Scores Per Farm Organization . . . . . . Farm Settlers Houses-~Midwest. Number of Farmers Interviewed in Each Farm Organization . Page l0 l7 25 28 29 7] 72 79 85 93 I02 Table 9-8 9-C IO ll l2 l3 Ih I5 l6 I7 18 I9 20 2i Mean Values of All Inputs Used Per Farmer in Each Farm Organization in l965-I966 . Simple Correlations. Regression Results for Gross-Margin Analysis of Food CrOp Production in All the Six Farm Organizations . . . . . . . . Relative Shiftsin Gross-Margin (in units) Due to Differences in Organizational Patterns in the Different Farm Organizations. Regression Results for Gross-Margin Analysis of Food CrOp Production in Each Farm Organization . Distribution of Gross-Margin Per Two-Acre in the Different Farm Organizations. Average Gross-Margin per Farmer in Each Farm Organization. . Components of the Differential Between World Cocoa Price and Returns to Nigeria . Cocoa: Calculation of Returns to Nigeria and to Producers Under Various Price Assumptions World Cocoa Prices by Major Buying Points, l957-66. . . . . . . . . . . . . . . OiiePalm: Calculation of Returns to Nigeria and to Producers Under Different Price Assumptions. Cocoa: Yield Assumptions Per Acre-Yields of Dry Cocoa Beans in Lbs. Per Acre . Rubber: Yield Assumptions Per Acre-Lbs. of Dry Rupper Per Acre. . . . . . . . . . . . Oil-Palm: Yield Assumptions Per Acre (lbs). Page I02 ll6 ll7 l20 l22 l27 128 l36 l37 l38 I40 lhl IAZ lh3 Table , , Page 22 Acreage Planted Up to December, I966 and Target Acreage Up to the End of the First DeveIOpment Plan l962/68 in Each Farm Organization . . . . . . . . . . Ih6 23 Average Equipment Requirements and Costs per Farm in Midwestern Nigeria . . . . . . . . . . ISO 2h Distances of Farm Organizations from Nearest Major Markets in Western and Midwestern Nigeria (miles). . . . . . . . . . . . . . . . I53 25 Estimated Rates of Return on Investment to Producers of Rubber and Oilpalm in Farm Settlements and School Leavers' Farms in Western and Midwestern Nigeria . . . . . . . . I63 26 Estimated Rates of Return on Investment to Nigeria from Rubber and Oilpalm Production from Farm Settlements and School Leavers' Farms in Western and Midwestern Nigeria. . . . l6h 27 Estimated Rates of Return on Investment in Cocoa Production in One Farm Settlement in Western Nigeria. . . . . . . . .,. . . . . . . I66 28 Estimated Rates of Return on Investment to Producers of Rubber and Oilpalm in Farm Settlements and School Leavers' Farms in Western and Midwestern Nigeria . . . . . . . . I67 29 Estimated Rates of Return on Investment to Nigeria from Rubber and Oilpalm Production in Farm Settlements and School Leavers' Farms in Western and Midwestern Nigeria. . . . . . . I69 30 Estimated Rates of Return on Investment in Cocoa Production in One Farm Settlement in Western Nigeria. . . . . . . . . . . . . . . . I7I 3| Estimated Minimum and Maximum Rates of Return on Investment in Tree Cr0ps in the Farm Settlements and School Leavers' Farms. . . . . I78 xi DIAGRAM l LIST OF DIAGRAMS Page Ladder: Responses from Attitudinal Variables on Level of Satisfaction. . . . 75 Comparison of the Six Farm Organizations with Respect to the Level of Satisfaction of the Farmers . . . . . . . 87 Comparison of Farm Settlements and School Leavers' Farms with Respect to the Level - of Satisfaction of the Farmers. . . . . . c8 ' APPENDIX A LIST OF APPENDICES Quantity of Some Nigerian Agricultural Exports, I900- 60. Value of Some Nigerian Agricultural Exports, I900- 60. . . . . . Questionnaire . . . . . . . . . . . . Social-Overhead Costs (E) on Investment in Cocoa, Rubber and Oilpalm in the Difierent Farm Organizations. . . . . . ... . . . . Direct Costs (E) on Investment in Cocoa, Rubber and Oilpalm. . . . . . . . . . . . Total Potential Direct Benefits (L) to Producers on Investment in Cocoa, Rubber and Oilpalm in the Different Farm Organizations . . . . . . . . . . . . Total Potential Direct Benefits (L) to Nigeria on Investment in Cocoa, Rubber and Oilpalm in the Different Farm Organizations . . . . . . . . . . Mathematical Proof of the Equation for Internal Rate of Return Used in this Analysis. . . . . . . . . . . . xiii Page 205 ZIO 2I5 238 254 270 286 302 CHAPTER I INTRODUCTION The Problem Nigeria is an independent nation among the African countries. Her h3.6 millionpeOpledepend mainly on agriculture which is the mainstay of the country's economy. To obtain foreign exchange and feed her growing population, Nigeria needs to expand her production of food and export crops. Realizing the need for this expansion, in I959, the Western Nigerian government (which then included the present Midwestern region) assigned an important role to food and export crop production. The following extract from 3 I959 policy statement shows the importance which Western Nigerian government attached to this problem: ”Although progress is_being made in establishing' industry, in the foreseeab e future the greatest increase in the national wealth of Western Nigeria is likely to come from the optimum use of the land and its agricultural potentialities. Every effort will be made to promote and encourage the culti- vation of food crops, and the government will continue to promouavigorously the expansion of export crap production“; 1 To achieve this objective, the government set out proposals for establishing cooperative farm settlements in Western Nigeriasg/ L 1/ "Future Policy of the Ministry of Agriculture and Natural Resources." (Sessional paper, Ibadan: Ministry of Agriculture and Natural Resources, I959(, No. 9. P. I. .11! Ibid, p. 9. The farm settlements started in late I959. Pursuing the desire to increase agricultural production in Nigeria, in the first National DeveIOpment Plan, Nigeria gave t0p priority to programs- and policies to expand.food and export creps in particular through farm settlements, and during the I962-55 period, about 75 percent of government capital outlays in agriculture were allocated to farm settlements. This policy to increase agricultural production was continued when the MidweStern region was created in I963, and a year later, in l96h, the Community DeveIOpment Division of the Ministry of Trade and Industry in Midwestern Nigeria started another type of farm settlement--"School leavers' farms"--as a means of increasing food and export crop production in the region. In recognition of the potential contribution which these two forms of farm organizations (The farm settlements, and the school leavers' farms) can make towards the process of economic deveIOp- ment in the region if properly organized, the Economic Planning (hymnittee set up a subcommittee in February I965 in the Midwest to review and redefine the policies of these farm organizations and make reconinendations on their efficient management}! .2! The Subcommittee was headed by Dr. C. Oyolu of the University of Nigeria, Nsukka, and other members are Messers I. Amadi-Emina, W. J. Anukpe, and I. A. Eweka. This national objective to increase agricultural production was also supported by various international organizations. For exanple, in I965 the International Bank for Reconstruction and . Ikvelopment Report commented that Southern Nigeria should ‘ccncentrate on increasing export crop production--cocoa, rubber, and oilpalm through the expansiOn of smallholder schemes. Similarly, the recent FAO Report lists the Nigerian's need to provide an adequate food supply for the growing population and her need to provide agricultural export earnings.— h/ For this expansion to occur, investment from within Nigeria and external financial and managerial assistance will be necessary. The Western Nigerian government's recent draft nemorandum for the second National Development Plan, which places a very high priority on farm settlements and prOposes to spend £,776,26O on farm settlements in Western Nigeria from I968-69 to l972-73, is aimed at achieving this agricultural expansion.§/ However, serious questions have been raised concerning the perfiormance of the farm settlements and of alternative forms of fann organizations such as the school leavers' farms as means of fl/ FAO Report: ricultural Develogment in Nigeria: I965- I980, Rome, October I966, p. I9. -2/ "Second National Development Plan: I968 -69- I972- 73" Ministry of Agriculture and National Resources, (Ibadan: l967i. achieving this agricultural expansion and of obtaining high rates of return on investment in agriculture. It was therefore thought necessary to evaluate the performance of these different forms of farm organizations and make some recommendations which might belwelpful to the government in construCting the next development Iflan. Objectives . I. To analyze the social-psychological characteristics and the organization of the farmers in the farm settlements and the school leavers' farms in Western and Midwestern Nigeria. 2. To analyze the performance of farm settlements and the school leavers' farms from I959 to l966.é/ 3. To make recommendations which might (a) lead to high rates of return on investment in the farm settlements and school leavers' farms in Western and Midwestern Nigeria, and (b) which might induce direct investment in agricultural production. .6_/ The farmesettlements started in I959 while the School Leavers' farms started in l96l-I. I I I CHAPTER I | COLONIAL AGRICULTURAL POLICY AND SOURCES OF GROWTH IN THE AGRICULTURAL SECTOR FROM I900 TO INDEPENDENCE IN I960 The purpose of this chapter is to identify the major sources of grovith in the agricultural sector in Nigeria from I900 to I960. Attention w‘il'l'focus on colonial policies which have affected the organization and productivity. of Western Nigerian agriculture untH it became a self-governing region in.l957. In addition, the evolution of organizational patterns in agriculture during this period will be analyzed. Finally, the influence of the Western Nigerian governmental poIiCy from I959 on agricultural development will be discussed with emphasis on the establishment of the farm settlements, the integrated rural deveIOpment farms, and the school leavers' farms. ,Qflonial Agricultural Policy, I990-I960 The course of agricultural development in Nigeria was dictated by the objectives of colonial expansion in Africa mainly to m.) provide markets and raw materials for industries in the "mother .__— -m——--———~ “v-7.“— countries." These twin objectives were the motivating forces 'w___—__‘—./ behind many decisions of the colonial governments. Successive colonial administrators and agricultural experts devoted a greater Part of their time to persuading private farmers to produce crops 5 to be used in the ”mother country” and the government did not involve itself in directly productive activity in agriculture. Economic considerations that would improve trading fa ilities between Nigeria and the "mother country“ received top priority. By I909, the western railway which started in Lagos in l896 had reached Northern Nigeria. More money was invested in the communication system and in the building of more railway lines, roads, and water tranSport systems. The latter was to serve mainly a dual function: organzing an efficient administrative machinery, and enabling export crOps tobe shippedmore cheaply to overseas markets and incoming goods to be handled much more efficiently. I The foreign government in Southern Nigeria maintained a policy which aimed primarily at the deveIOpment of the agricultural resources of Southern Nigeria through the indigenous inhabitants, and modern plantation methods never gained a firm foothold in Southern Nigeriaul/ Although foreigners in Northern Nigeria suceessively claimed owerlordship to land by right of conquest, the cOIonial government maintained a policy of non-intervention in the traditional land tenure system in SoUthern Nigeria and left untouched the essential rights of the community of land. 1/ Sir High Clifford, as cited in W. K. Hancock, Survey of British Commonwealth Affairs II, ”Problems of Economic PoTicy, -, , on on: x or niversity Press). "'The land and Native Rights Proclamation of I9IO' was sharply criticized in Southern Nigeria as confiscatoryand as turning the private farmer who, r,under customary law,_enjoys land rent-free in perpetuity into a rent-paying, short-term lessee on a precarious tenure. In the same year, 'Native Lands Acquisition' was proclaimed in Southern Nigeria. This Proclamation forbids any foreigner from acauiring any interest or right in or over any Ian 5 within Southern Nigeria from a native except under an instrument which has received the approval in writing of the government. This, PrOcIamation, though with various amendments, remains one of the pillars of land legiSlation in Southern Nigeria.HZ Hence, rather than acquiring the ownership of the means of production, the foreigners who could have invested in direct production in agriculture, were contented with purchasing the ' output of the existing producers, because of the land policy.v The Colonial land policy of non-intervention in Southern Nigeria's ”laws of inheritance“ which restricted land to Nigerian farmers left direct productive processes in agriculture mainly hi the hands of the private farmer who still depends on his in'hnitive tools and traditional technique of ”rotational fallow.” While the increase in agricultural output is due mainly to the: private farmer, population continues to grow rapidly, creating .El H. A. Oluwasanmi, AgricUIture and’Nigeriag4Economic Develogmen‘t, (lbadan: Oxford University Pfess, T966), p.78. ee 3 so aws of the Colony and Protectorate of SOuthern Nigeria" (London: (I908), Vol. II, pp. I-88. the need for greater output to feed the growing population and to provide'much needed foreign exchange earnings. No attention was, however, paid to this growing population because the general public knew very little about the implications of population growth on the level of per capita income in the country. I Furthermore, only mere educated guesses were made about the size and rate of growth of Nigeria's pOpuIation.before I900. Oluwasanmi has noted, "Before I900 very little that is trustworthy is known of the Size and rate of growth of the population of what is now Nigeria or of any of its component parts, nor did our knowledge of Nigeria's population improve very appreciably with the establishment of 'Pax Britannica.'”1/ Serious questions have always existed concerning the accuracy of Nigerian census figures even after l9OO;5/ However, Table l, Nigerian census figures from l952-l965 shows, how great the need is to increase output of bOth food and export crops in Nigeria. The increaSe in population brought more people into agriculture. Table 2 shows that 78.2 percent of the active pOpulation in Nigeria was employed in agriculture In 1952-53. The increased demand for cultivable krmlbrought in soil mining and excessive fragmentation of holdings. 2! Ibid. pp. 60-61. .5/ Table l showing different population estimates in Nigeria even after I950 indicates one cannot'rely heavily on Nigerian census figures. Table I. Estimate? of Mid-Year P0pulation of Nigeria from I952 to I965 (in millions) Year_y Eke's Series Okigbo's Series 1952 30.80 53 30.10 .20 I953 3I 63 - 2 30.70 g, 1954 32.48 1:; 3 31.31 /;3 I955 33.36 ‘fic 7 31.94 .49 1956 34.26 3 32.58 ,, (i3 :6” 1957 35.I9 7; 2 33.23 [,C 1958 36.14 'q7 2 33.89 1,, I959 37.11 r20 3 34.58 ’y, I960 38.11 1.29 3 35.27 '7’ I96I 39.14 to: 5 35.98 '72 .962 40.20 [68 1 36.70 ‘72 I963 4I.28 L“ 3 37.43 ‘7y I964 42.39 I14 5 38.I8 ‘7é 1965 43.55 38.94 .1/ Source: ”Population of Nigeria: I952-I965" by I.é.U. Eke, , No. 2, Hue Nigerian Journal of Economic and Social Studies, Vol. Chily I966): P: 309 IO Table 2. Active PopulationEmployed in Agriculture, I952-53l/ Item North West East Lagos Nigeria Active Population ('000) 8.Il6 2,702 3,52l Ill IA,A9A Agricultural Population ('000) 5,945 2,339 3.043 7 11.334 Active Population in Agriculture (percent) 72.8 86.6 86,h h.5 78.2 1/ H. A. Oluwasanmi, Agriculture and Nigerian Economic Development, (lbadan: p. 65. Oxford Ufiiversity Press, I966), II The long period of fallow during which the soil regains its fertility through the.process of natural regneratIOn was drastically reduced, and the need to improve agricultural techniques and raise productivity per acre in agriculture was increased. Governmental Activities in Agriculture During the period I900-I960 of Colonial agricultural policy, there are three important decisions which influenced agricultural development in Nigeria: (I) the government began to encourage farmers to increase output per acre in I9IO, (2) government marketing boards were established in I9h7, and (3) the government became directly involved in productive processes in agriculture in I959. As the need to increase output became more important, the government directed its attention mainly to research and education rather than to productive processes in agriculture. The Department of Agriculture encouraged private farmers to raise output per acre by distribUting high yielding seed varieties and by teaching them better methods of cultivation. Between-I909 and l9l7, 5,h00 acres of rubber were planted in Midwestern Nigeria, and this had been attributed to the encouragement given by the Department of Agriculture to private farmers by distributing seedlings and providing advice on cultivation and processing.§/ 5! Kurt R. Anschel, ”Economic Aspects of Peasant Rubber Production in Midwestern Ni eria", (Unpublished Ph.D. Thesis, Michigan State University, I9657. p. 5 . l2 In I939, the Oil Palm Research Station was launched, and in l95l, the Cocoa Research Institute in Ghana was expanded to include Nigeria under a new name--West African Cocoa Research Institute (Ghana); in the same year, Oil Palm Research was expanded to become West African Oil Palm Research Institute (Nigeria). In addition, the West African Maize Research Unit (Nigeria), the West African Rice Research Institute (Sierra Leone) and six other West African Research Institutes were established. Welsch reported that nearly all governmental activity in the rice industry in Southern Nigeria has been directed into research and education.é/ I'FAO reports that the heavy spraying campaign of I958-59 in Nigeria and Ghana may have contributed as much as 75 percent to the IO0,000 ton increase of total African production in cocoa in I959-60, and perhaps as much as AO-SO percent to the 200,000 ton jump in ' I960-6i ."Z/ In addition to the establishment of these research Institutes in I957, the government began to teach the farmers proper rubber 6/ Delane Emil Welsch, "The Rice Industry in the Abakaliki Area of Eastern Ni eria, " (Unpublished Ph. D. Thesis, Michigan State University, 96A). 1/ FAO, ricultural Develo ment in Nigeria, I965- I980, (Rome:» October, 966), p. 5h. ee alSo “TheUynamics of Long- Term Agricultural DeveIOpment in Nigeria", by Carl K. Eicher, (Unpub ished paper presented at AnnUal Meeting of the American Fagm)Economic AssoCiation, Guelph, Ontario: August I3- l6, 9 7 '13 tapping and processing in Western Nigeria. In the same year, the government started the sale of fertilizers to farmers. The fertilizer scheme failed, however, because the cost of the fertilizer was too high for the limited financial resources of the private farmers and because the value of the fertilizer was not effectively demonstrated to the farmers. In contrast, the fertilizer scheme has been successful in Northern Nigerian mainly because the Northern Nigerian government subsidizes the fertilizer that is sold to private farmers. The amount sold to private farmers in Northern Nigeria increased from AI6 tons in I960 when it was sold for cash to I,8OO tons in I962, and in I96AQ65, it rose to about 9,000 tons.§/ In addition to encouraging the private farmers to increase their output per acre through the establishment of various Research Institutes, and by making seedlings, fertilizer and training available to them, the Western Regional Government .also encouraged the establishment of c00perative societies. Loans were made available to farmers through these single-purpose cxaoperative societies. 'The c00perative society-~a c00perative nuarketing society--appeared in the Western Region in l922 to hetlp the cocoa farmer obtain a fair price for his product. The Denaartment of Agriculture, however, did not organize the cocoa 19/ FAO,op. cit., p. I9A. 14 farmers into a c00perative society until I930. Even though in I932, Faulkner, then the Director of Agriculture, Moor Plantation, saw the need for legislation, the cooperative society ordinance was not enacted until l935r2/ The number of c00perative societies has since grown to over 900, each society performing a single function. The different societies include C00perative Credit, CoOperative- Thrift and Loan, Consumer C00perative, Cooperative-Farms, Crafts, and Industries COOperative, Marketing and Processing C00perative, and Housing-COOperative. The government utilizes these various cooperative societies mainly as agencies for distributing credit. Nigerian farmers have apparently seen little opportunity in participating in cooperatives and even in the western Region where the proportion of farmer member/- non-member is highest, the percentage membership was only 5.5% in I964.l_0/ The Cocoa Marketing Board, set up in I947 with the primary but doubtful objective of preventing short-term fluctuations in cocoa prices, has had considerable effect on cocoa producers in Western Nigeria. The groundnut, oilpalm, and cotton marketing boards set up in I9h9 have also had effects on the production of these commodities. .2/ Nu ent B. Jeffery and Grant B. Taplin, "Cooperatives in Nigeria", Syracuse University, l96l, Unpublished Report). See also John H. Heckman, USAID Consultant Report, No. C-AS on Cooperatives in Nigeria, (March, I965). .19! John H. Heckman, USAID Censultant, Report No. Cth5, Cooperatives in Nigeria, (March, I96A). I5 By prescribing producer prices annually, Marketing Boards have influenced the existing producers as well as the potential ones. They interferedeith price levels which would have helped to direct resources into the production of various commodities in accordance with changes in supply and demand conditions in the market. Anschel reported that because a substantial prOportion of the commercial value of oilpalm products was withheld from the producers, the producers directed their resources from oilpalm production to rubber which is not under the Marketing Board. II/ In I95l, the Marketing Boards controlled 69 percent by value of all Nigerian exports and 78 percent of all non-mineral exports.l§/ In all these exports, producer prices were generally kept between twoéfifths and three-fifths of world market prices. The groundnut producers often receive leSs, generally one-third to two-fifths.l§/ By paying producer prices far below commercial values, the Marketing Boards did not only make the crops under their control less attractive to potential producers compared to other crops or indeed to other forms of activity, but their action also had an adverse effect on the ability and the incentiVe LI, Kurt R. Anschel, ”Economic Aspects of Peasant Rubber Production in Midwestern Nigeria", (Unpublished Ph. D. Thesis, Michigan State University: l965) p. IZ/ Peter Bauer, West AfriCan Trade: A Study of Competition, OligOpoly, and MonOpoly in a ChangIngEconomy. (London: Routledge and Keagan Paul Ltd. i963), p'. 276. 12/ Ibid., p. 299. u A“. , . l6 to produce and to maintain or increase capacity. Peter Bauer wrote that the emergence of a substantial cash and exchange economy among the TIV pe0ple of Northern Nigeria was retarded because their main export product, Benniseed, came under the control of the groundnut Marketing Board.l&/ Table 3-A shows the export of certain commodities from Nigeria from I899-I9SI. The comparative stability in quantity of export crops.controlled by the Marketing Boards between I937 and l95l and the rapid expansion, in the same period, of hides and skins and timber not controlled by Marketing Boards indicate how the payment of comparatively low producer prices by Marketing Boards until l95l retarded the growth of those export crops subject to Marketing Board control. To a.producer, high prices are the greatest incentive to expand production and to maintain, improve, and extend productive capacity. The extensive powers of the Marketing Boards which enabled them to prescribe producer prices below commercial values of the export crops under their control have thus created a powerful deterent to agricultural development in Nigeria. In l9h9, the Nigerian government took an important step to demonstrate to private farmers modern techniques of production designed to increase agricultural output. In partnership with the Colonial Development Corporation, the government established fl/‘lbidu p. 299. l7 Table 3-A. Exports of Certain Commodities from Nigeria, l899-l95l* Item . I899- 1919-. I929— 1935- I95] . ._. I90l I92I I93I I937 (000 tons) Palm Oil IA 80 I29 ISO ISO Palm Kernels 52 I92 255 Bh6 3A7 Groundnuts -- us ISI <2u2'"" 'IuI*. Cocoa -- 20 53 9i l22 Cotton -- . h 6 II 15 Hides and Skins —- h 6 7 l4 Timber 27 29 3h hh 39u** * Peter BaUer,-West African Trade, (London: ROutledge and Kegan Paul, Ltd., I963), p. I95. ** Estimated from cubic feet. l8 The Niger" Agricultural Projectléj which was situated on,a virtually uninhabitedtract of fertile land near a small town calledMokwa.l§/. The Project had been.in5pired by the success of the Gezira Scheme in the Sudan, and the planners of the ’ Mokwa Scheme patterned the whole system after the Gezira SchemealZ/ , _ By I9SI, 78 families had been settled at Mokwa. This numberincreased to I35 families in I952, and by I953, 28 more families had been settled, thus bringing the total number of families settled to I63. By the end of I952, evidence showed that the program was failing. The inadequacy of technical experimentation and preliminary feasibility studies to test the adaptability of the Gezira Scheme in a different environ- ment brought the Mokwa Project into unanticipated technical difficulties.‘ Farm sizes were larger than the farmer and his . family could reasonably c0pe with. An acute labour shortage became an obvious problem. The machinery in which a lot of » money had been invested could not be used for ordinary farm s..— ‘15! K. D. 5. Baldwin The Niger H Agricultural Project, (Oxford: Basil Blackwelll, 1937. - ' lé/ The Nigerian Agricultural Project derived its more popular title--"Mokwa Scheme" from this small town. In the UnitedKingdom, it is knoWn as ”The Ground-nut Scheme”. .LZ/.Arthur Gajtskella, Gezira:. A Study of Development in the Sudan, (London: Faber and Faber, l959). l9 operations. The machines would remain idle for about 75 percent of the time while the farmer continued to use his cutlass and traditional hoefor most of the farm operations. Thus, even though I63 families had been settled out of a target of 22,000 and 9,652 acres already cleared, the project came to a. financial failure in I957 with a substantial loss of over‘ I500 , 000 . In l95h, three years before the Mokwa Scheme came to its unsuccessful end, Lewis cited the relatively high cost involved in the government's building settler's houses compared with the settler's building a similar house himself, the heavy capital investmentin machinery, schools, and roads as well as lack of adequate feasibility studies. .These are some of the problems which moSt deVeIOping countries often face In their land settlement schemesalgl . In brief, there can be little question that the colonial government which may have constituted an important source of. initiative and a dynamic element in promoting Nigerian agricul- tural economic development restricted its role to mainly that 1.8! .W:.";Ar-:.thurLewis, "Thoughts .. on Land.Settlement',',Journal of A ricultural EcOnomics, Vol. It, (June, l95h). Reprinted~ in Carl Eicher aha E. W. Witt (eds.). Agriculture in Economic 9 pp° ' ° *Development, (New York: McGraw-Hill, I 20. of trading and helping the indigenous pe0ple to deveIOp their natural resources through research and extension until l9h9.12/ Major Sources of Growth, I900-I960 . The trade-creating policy of the colonial government and Southern Nigerian land tenure policy prevented the use of modern techniques and skilled personnel by foreigners possessing large amounts of capital and who may possess technical know-how' to operate large-scale prodUction in agriculture. The private agriculture which has been part and parcel of the traditional economy continues to use primitive tools and unskilled labour, and the great bulk of the agricultural sector remains little touched by "nontraditional" techniques or innovations. Typically, a Nigerian farmer is engaged at one and the same time in production for export, production for internal trade, and production for home consumption. In fact, it is common‘ for all three types of production to take place at thesame time on the same plot of land. Because of a lack of training and}. large amounts of capital to invest in agriculture, the private 12/ J. S. Furnivall,”CoIonial Policy and Pratice“ (Cambridge, England: The University Press, I998), pp. 323-33h. Furnivall's materials show how very little attention was paid to local farmer production, as does also P. T. Bauer's "The Rubber Industry: A Study in Competition and Monopoly", (Cambridge: Harvard University Press, l9h8). 2I farmer remains a poor and an unskilled producer who employs backward methods of cultivation. ,Baldwin wrote that the low incomes of the producers are among the factors responsible for the low level of technology in underdeveIOped countries. Such producers tend to posseSs a high degree of risk aversion; i.e., they prefer a smaller expected (or average) income to a larger expected income if the range of possible outcomes is smaller in the former situation.29/ Anschel foundthat the private farmers in Midwestern Nigeria did the major expansion of rubber produCtion without specific governmental enceurage- ment, and because the private farmers who are the major- producers of rubber inNigeria lack the necessary capital and . technical know-how modern technology has not influenced practices much.Zl/- Even though productivity per acre or per man-hour scarcely changed because of the_technological backwardness of the economy, productivity per man increased thrOugh;increased utili- zation of available factor inputs-~in terms of surplUs land and indigenous capital resulting from responses to econOmic (39/ Robert E. Baldwin,-"Export Technology and Development From a Subsistence Level",.Economic Journal, Vol. LXXIII, (March, I963).,PP..80~92. - ' 21/ Kurt R. Anschel, Op. cit. 22 ineentives of attractive prices offered by the foreign traders., Anschel reported that the increase in rubber exports between I92] and I935 was due mainly to favorable price levels.—£/ Furthermore, in order to avoid the heavy penalties that were then beingimposed on tax defaulters together with theurge to meet the challenge of new economic Opportunities interms of acquiring new goods brought in by the foreign traders, the private farmer began to exert more effort to provide for his .desires and those of his family. The farmer now produced more than his_own normal requirements. He sold the surplus for money. Working in this way, the Nigerian private farmer has not Only been able to feed himself and his extended family, which in some cases in Nigeria may extend from the first to the twentieth cousin, but he has also been able to make substantial contributions towards the process of growth in the Nigerian economy. Growth of Export Crgg, goo—I960 _ The Nigerian private farmer has helped to increase the production of both food and export Crops.in Nigeria, and his export crops have been a major sour¢e of growth in the Nigerian 22/ Kurt R. Anschel, "Economic Aspects of Peasant Rubber Productions in Midwestern Ni eria", (Unpublished Ph.D. Thesis, Michigan State University: .965). . -. ' ' ‘ ‘23 economy. Between I900 and I960, the export volume rose more than sixteenfold. l95h estimates suggest that there were about a million acres planted in cocoa. Appendicies A and 8 show thequantity and value of certain commodities exported from Nigeria from I900 to I960. 'The increases in export production shown in these tables have been associated with small increases in capital input.22/ This presents a striking illustration of the potentialities for the improvement of productivity in private agriculture. ' .Galletti, Baldwin, and Dina reported that in the early I950's the wages paid by cocoa and rubber farmers In Nigeria compared well with those that-the government and town employers paid their workers. Zh/ In I962, Webster studied the origin and spread of cocoa farming in Western Nigeria and found that since cocoa was introduced to the farmers by the African church, the private farmers have played a significant role in increasing cocoa production in Western Nigeria.2§/ The private farmers 23/ Gerald K. Helleiner, Peasant A riculture Government, and Economic Growth in Nigeria, (Homewooa, Illinois: Richard IrwIn, T963), p. 85. . 2“/ R. Galletti, K. o. 5. Baldwin, and I. o. Dina, NIgerian Cogoa Farmers, (Oxford: Oxford UniverSIty Press, I956), pp. 2Il- 215. 25/ J. B. Webster, "Agege: Plantations and the African Church”, Conference Proceedings (Ibadan Nigerian Institute of Social and Economic Research: March, I962). 2h ‘have voluntarily invested their money, time, and energy to increase agriCultural output and they have beengresponsible mainly for the expansion of both food and expOrt crops which have been the major sourCes of growth in Nigerian economy since 1900. Table 3-8 shows the statistics relating to the marketing of selected Nigerian exports between I942 and I95l. The principal exports (about 70 percent) from Nigeria between l9h9 and l951 shown in Table IV indicate that the major sources of growth in the Nigerian economy were cocoa, palm kernels, palm oil, and groundnuts. Palm produce plays an important role in the private sector, both as a source of domestic food supplies and as a . source of an export crop. Between I900 and I950, exports of palm oil rose fourfold while exports of palm kernels rose from 85,000 tons in I900 to more than h00,000 tons in I950. ‘Palm produce exports rose in value from EI.S million in I900 to L28.7 millidn.in.l950. The total earnings from exports of palm oil and palm kernels were over E32 million in l9553nd stood at about tho million in I959. Together, palm oil and palm. kernels have accounted for.between l5.7% (I960) and 36.h%’(l949) of the total value of Nigerian exports in the postwar years. The importance of rubber to the Nigerian economy has also grown rapidly in recent years. In the late l950's and early I960's, rubber accounted for 6 to 8.5.percent of total Nigerian 25 Table 3-B.' Statistics Relating to the Marketing of Selected Nigerian Exports, l9h2- SI Itpt - 1942- 1943- 194k. 19h5- I9h6- l9h7--l9h8- I949- I950- em; #3 an A5 #6 #7 #8 49 50 SI . (T,OOU's'fOnsT Groundnuts ‘l08 I9# 228 30I 323 336 323 I88 I43 Palm . '- Kernels g 331 314 293 277 316 327 376 381 330 Palm 011 135 125 Ilh ‘101 126 139 161 ' 159 163 . Cocoa - .111 71 86 ' 103' 111 7A 109 ‘IOO 110' Peter Bauer, West African Trade ’A St d f C 0biq_poly and one o Econom , ________JL_JL_________Jl_Jl_______¥ Routledge and Kegan Paul, .Ltd. I963), pp. 397-lI07. 26 exports. Over 95 percent of Nigeria's total rubber output is today produced on small private plots.£é/ Anschel found that the personal initiative of Midwestern smallholders has been pthe main force behind the progress achieved in rubber production in Nigeria.21/ IRubber production has contributed towards Nigerian economic growth in terms of foreign exchange earnings, tax revenues, and income obtained from it. In I962, for example, rubber comprised seven percent of merchandise exports, and was fifth in importance_among Nigerian exports. Rubber is now Nigeria's fastest growing agricultural export, and its exports have doubled sincel955. Today, rubber is the Midwest's most important export industry, and over 80 percent of all Nigeria's rubber exports is produced in the Midwest.Z§/ A In the economy of Nigeria, particularly the Western Region, cocoa is outstanding. Whether related to the total of the exports or to the total of the imports even to the total national income which it helped to buy, cocoa has been important 26/ Peter Von Blanckenburg, "Rubber Farming in Benin Area, A study of Some SOcio- Economic Factors Influencing Rubber. Production”, Preliminary Repbrt, .(lbadan: Nigerian Institute of Social and Economic Research). 27/ Kurt R. Anschel, Op. p. 69. 6.Z§/ “Midwestern Nigeria”, New York Times, January 20, I96h, p. 3. . 27 in the country's economy since the I920's. In I950-SI, the value of cocoa production was 2.2 percent of the total estimated national income.£2/ It provided almost 6.5 percent of the total estimated Western Region income. Tables 3-C and 3-0 from Galletti, Baldwin, and Dina show that in relation to Nigeria's trade, cocoa has become more important since World Ware II.29/ Table 3-C shows that even before the war, cocoa exports were enough to pay for more than a fifth of the country's imports. During I9h9-52, the Cocoa Marketing Board was built up by reserves from the annual surpluses, which amounted to over E7 million in l9h9-50 and over LIS million in I950-SI. These sums made available for development and research contributed significantly to the economy of Western Nigeria. Of all the export crops, cocoa can most truly be said to be the life bloociof Western Nigeria which is the second largest producer of cocoa in the world. In summary, during I900-I960 period, the private farmer was the dominant factor in agricultural production in Nigeria. 32/ Prest and Stewart, The National Income of Nigeria, I950-51 (London: HMSO, 1953). pp. 27-61. .29/ R. Galletti, K. D. 5. Baldwin, and I. o. Dina,. NigegéavlCOCoa Farmers, (Oxford:' Oxford University Press, I956). pp. - . ' . 28 Table 3-C. Value of Cocoa Exports From Nigeria Com ared With Value Of Total Exports and Imports, I93 -52 Merchandise Trade Cocoa Exports as Period Cocoa Percentage of Imports ’Exports Exports Imports Exports (L000)’ (L000) ’(EUOO) l93h-38 h7,255 6h,703 l0,095 2I.3 I5.6 l939-h3 h3.6h9 65.532 7.713 17.7 111.8 l9hh-48 I23,738 l66,682 35,796 29.0 2I.5 l9h9-52 3l7.78l hll,6h8 93,728 29.5 22.8 Source: Nigeria Digest of Statistics, (I953) and reproduced from Galletti, Baldwin, and Dina, op. cit. 29. Table 3-D. Export Duties on Cocoa Related to CocOa Exports and .Nigerian Government Revenue ' ‘CocoaDutigs - Central Percentage of Period "__Cocoa Exports Gov't. Export anntity value Revenue Total Value. Revenue Per Ton_ ('000 tons) (E000) (£00073 (E000) ‘T” (L), l93h-38 ##7.0 l0,095 29,hh6 52l I 5.2 I.8 I.I7 1939-63 655.6 7.713 36.206 683 8.9 1.9 1.50 I94h-h8 469.5 35.796 - 68,796 1,166 3.3 1.7 2.58 1949-52 639.7. 93.728 137,697 12,288 13.1 8.9 27.95 fiw Source: Nigeria Digest of.Statistics, (I953) and reproduced from Galletti, Baldwin, and Dina, Ibid. 30 By employing additional labour and land inputs, the farmer increased export cr0p production. Between l9l9 and I959, Nigerian exports altogether rose 955 percent,il/ and income from export production of the private farmer still constitutes the most important source of revenue for the public sector's development effort in Nigeria. Introduction of the Moshav Farm Settlements in Western Nigeria The Western Nigerian Government policy of I959 gave priority to programs that would increase agricultural production in Western Nigeria and a land settlement scheme was chosen as one w N \ approach towards achieving increase in agricultural production. Moshav,§i/ the small landowners c00perative settlement, is one of the two basic types of land settlement schemes in the cooperative agricultural sector of Israel, the other being the, .il/ P. Lamartine-Yates, "Forty Years of Foreign Trade”. (London: Allen and Unwin, I958), p. 238. Compare also M. Harwitz, "Subsaharan Africa as a Growing Economic System", in Herskovits and Harwitz, (eds.), Economic Transition in Africa, (Evanston, Illinois: NorthwesternUniversity Press, 1964). 25/"Future Policy of the Ministry of Agriculture.and Natural Resources", (lbadan: I959), p. I2. 22! Moshav is Israel's "small-holder” village. It was designed to combine individual initiative and responsibility with a c00perative approach to the problems of farm purchasing,_ marketing, and credit. While each family retains its individuality, the cooperative techniques allow a more efficient farming and - community service system. " ’31 kibbutz where both production and consumption are organized collectively. Production and consumption decisions in the Moshav are basically the responsibility of the individual farmer and his family, while purchasing, selling, and other services are generally handled cooperatively. The Moshav was purposely chosen by the national authorities in Israel as the principal inStrument for the mass absorption of postwar immigration in the agricultural sector. The Moshav Scheme, based on a multipurpose cooperative system, has been very successful in Israel. It is responsible for 50 percent of the agricultural output of Israel.2&/ In Nigeria, however, the Mokwa Scheme was a financial failure. The private farmers still continue to employ their traditional techniques which have changed little for centuries. IAgriculturaI output has not increased Substantially, and Innemployment figures continue to rise. Thus, faced with the Imeed to increase agricultural output, and against the background (If wide-scale unemployment, especially of the primary six, scflwool leavers, many United Nations experts as well as some é_/ M. I. Klayman, "The Transferabilitg of the Israeli Moshav for the Agricultural Development of ther Countries". (ArI Unpublished Paper, April 7, I967) . a t a i 32 Nigerian leaders thought it reasonable to apply the experience of Israeli Moshav to Western Nigeria.22/ In I959, Chief Akin Deko, then Minister of Agriculture in the West, traveled to Israel to_study the MOShav for possible adOption in Western Nigeria. Encouraged by the potential productivity of the Moshav form of organization, Chief Akin Deko, on his return - from Israel, proposed the implementation of a modified Israeli Moshav land settlement scheme to Western Nigeria.2§/ He saw in this scheme the answer to many of the problems that plague Nigerian agriculture. One of these, illiteraCy, was reduced in I955 by the introduction of universal free primary education, but this added many new obstacles. In the Western region, about l08,000 school leavers were turned out every year while barely 50 percentof these gained admission into other schools for further education, or find useful employment; this meant over 50,000 young people per year who had no place to go 35IE. Krenin, "The Introduction of Israel's Land Settlement Plan to Ni eria", Journal of Farm Economics, Vol. #5, No. 3 (Augu st 1923). PP 535- E6. ' Schickele, formerly of the FAQ for example, considers the Gezira Scheme in the Sudan and the Israeli Moshav as the systems offering the best solutions to the organization of agricultural production in Africa. 2Q] Yalan 5., Planning of Agricultural Settlements in Israel, I960. See also Government of Western Nigeria, "Future Policy of the Ministry of Agriculture and Natural Resources", (lbadan: Government Printer, I95 I, pp. 8- I6. 33 but the city to look for work. Unemployment rose. In a country where popUlation was growing at the rate of I.l to l.h million per annumrll/ a serious problem of unemployment existed. The (government felt there was a need for new farming techniques, a need for larger holdings and larger yields per acre. To Chief Akin Deko, the Moshav scheme was the answer to these problems. The project was entrusted to an FAO team headed by an Israeli planner.§§/ The plan they pr0posed was that there should be I3 farm settlements of the nuclear type built between I960-69, and at least one in each province. Due to political pressures, however, the government decided instead to establish 25 individual Moshavim (singular for Moshav) scattered through- out the region so that there would be at least one in each district. Each settlement was to have at least l,500 acres and be able to support 50 settlers with provisions to increase to 5,000-6,000 acres and support 200 manbers, which is the minimal amount that can be supported by the modern facilities 3_7./-FA0, Agricultural Development in NigeriaLlj6S-l980. §§j In addition to its head, the team consisted of a farm management economist (Indian), and education and extension expert (Scottish), a livestock expert (Australian), an. agricultural engineer (British), and a veterinarian (British). 3h that the settlement should have. The settlers were to come from an area within 30 miles of the settlement and have at least a primary VI education. There were to be two perennial crops from the following: cocoa, oil-palm, rubber, coconut, citrus, or kola dependingon the Suitability of the soil. 0n the permanent tree crop settlement there would be I6-l8 acres of tree crops and from one to three acres for arable cr0ps and the settler's house. On the arable cr0p settlement, each settler would have about 70 acres in corn, grass, and other crOps. Poultry and other livestock were to be encouraged. The land was to be obtained from the Obas, Chiefs, and Bales in the communities chosen. If this could not be done voluntarily, it would be acquired by compulsory acquisition.22/ The settlers were to be trained at Farm Institutes where they were to learn all they needed to be good farmers. Courses in animal and crop husbandry, farm management, general science, etc., were to be offered. .During this time, the settlers were to be treated just as any other school boys in dormitories having common dining rooms. Upon completion of their two years at thelnstitutes, they were to be sent to a farm settlement of‘ thei r. home areafi-Qf 12/"Future Policy of the Ministry of Agriculture and Natural Resources", (lbadan: GoVernment'Printer, I959), p. l2. 59/"Farm Settlement Schemes in Nigeria“, Nigeria Trade .kMJrnal, (Lagos: January, I962). 35 When the settlers arrived on the settlement, they were to begin as settler labour, and stay in this category receiving a subsistence allowance of about L3 a month until their crops began to produce. A record is kept of how much is received since this amount will have to be paid back.later. When the crOps are about seven years old, they are in full production and the settler is.to start paying off the debt for his house, for establishing and maintaining his holding as well as money spent on him for subsistence allowance. The cost per settler was estimated at £3,600 or $10,000. The farm settlement scheme has the following objectives: b, (I) To bring about rural progress. (2) To make farming efficient, lucrative and attractive to the hundreds of thousands of primary six school leavers who shun the type of village life they know and drift to the cities in search of amusements and.white-collar jobs.fll/l (3) To demonstrate that by careful planning, farms can be established and Operated by young, educated farmers with .flliArchibald Callaway, "School Leavers and the Developing Econonw'of Nigeria”, The Nigerian Political Scene, R.0. Tilman and T. Cole (eds.), (Durham: ’Duke University Press, l962), pp. 220-238. 36 reasonable assistance in the form of advice and loans from the government or other sources, which will provide a comfortable standard of living for the owners comparable to or higher than that gained by persons of their own status in other forms of employment. (A) To mitigate against an unfavorable land tenure system that contains no legal boundaries and in which the lack of security of tenure deprives the farmers of an asset against which to raise loans and of an incentive to invest in long- term improvements. (5) To partially solve the unemployment of the school leavers who cannot all be absorbed by higher institutions or by industries. By I967, it was estimated that there would be as many as 700,000 unemployed school leavers in Western Nigeriauil/ (6) To act "as models for others to copy" and serve as ”another extension method with a view to accelerating agricultural development in the region."fli/ The following quotation from the Western Nigerian Government policy statement of I959 serves to illustrate the value attached to this objective: 52! "Ni eria Works It Out”, The Economist, (London: July 7, I962), p. , VT «51/ Ministry of Agricultural and Natural ResourCes, Land ‘Settlement Scheme--Farm Settlement, Paragraph Ih, (lbadan: Government Printer, June, . ‘ 37 "Demonstrations on government farms rarely appeal to the farmer: the results being often attributed to some special factor provided by government which is beyond the reach of the ordinary farmer. Under the proposed scheme, the farmer himself will, under direction, be applying new techniques to his own plot of land. All aspects of the experiment will be known and Open to him. He will thus be trying out and verif ing for himself the effects of new techniques. He wi I no longer attribute the success to hidden factors or to causes beyond his means. As a result, gossip, interest and enthusiasm regarding these new techniques that have yielded so much success will spread from the cooperative farm settlements to neighboring private farms. This aspect of the cooperative farming scheme will in itself be a revolu- tion in agricultural methods.”__/ With these stated objectives, the Western Nigerian government launched a modified Israeli Moshav land settlement scheme in I959. Hitherto, Western Nigeria had had no experience of a multi-purpose type of COOperative system. The c00perative societies in existence performed single functions, and the government looked upon them as agencies for distributing credit. The main objective of the farm settlement scheme was to organize the farmers into multi-purpose coOperative societies which would .flfl/"Future Policy of the Ministry of Agriculture and Natural Resources", (Ibadan: Government of Western Nigeria, I959). p. 5. See also E. Krenin, "The Introduction of Israel's leand Settlement Plan to Nigeria”, Journal of Farm Economics, ‘Vol. #5, No. 3, (August, I963). PP. 535-h6. P 38 assume the responsibilities of marketing, purchasing, super- vising, auditing, and ultimately, the whole function of business organization and the provision of technical advice and finance. However, the real distinction between the multi-purpose c00perative society of the Israeli Moshav type and the single-purpose co0perative society already in existence in Western Nigeria appears not to have been properly understood. Hence the multi-purpose co0perative movement, an essential aspect of the farm settlement scheme and the driving force behind the success of Israeli Moshav which is the inspiration for launching the scheme in Western Nigeria, was never introduced. Criticisms of the farm settlement's costs led to consider- able downward revisions in the Western Region. In I96h, a new type of form of farm organization, the "integrated rural deveIOpment" scheme was inaugurated at a proposed cost of only :2300 per settler.fl§/ The scheme was under the Ministry of Economic Planning in Western Region. It is essentially the :same as the farm settlement scheme, but the settlers do not receive formal training in the Farm Institutes, the acreage 5% Western Region Official Document, No. 8, (I963), pp. l- . ‘ 39 per farmer is less relative to that of the farm settlement scheme, and the government does not undertake to build individual houses for the settlers.5é/ Also in I964, the Community DeveIOpment Division of the Midwestern Nigerian Ministry of Economic Planning started another form of farm organization, "the school leavers' farm”. The I'school leavers' farms” is a peripheral type of settlement in that it takes place in and around an existing village. This is in contrast to the nuclear type of farm settlement where the settlement takes place In a new area where a new village has to be established. The ”school leavers! farms" are set up in a small, compact rural community consisting of a few participating villages. The villages give a piece of land, free of all charges, as their contribution to the project. This is again in contrast to the farm settlement scheme where thousands of pounds are . paid by the government for land acquisition and crop compensation. The suitability of the land is determined by the staff of the Idinistry of Agriculture on behalf of the Community_DeveIOpment .flé/The "integrated rural development" scheme has now been transfered to the Ministry of Agriculture and Natural Resources in the West. Also, government now plans to build houses for the settlers. #0 Division. In return, the Community Development officials working in co0peration with therepresentatives of the villages select #0 school leavers from the villages. Here again, one needs to contrast this selection approach with that of the farm settlement scheme where only the officials of the Ministry concerned select the boys to go to the farm settlements. The land is shared among the boys so that each gets a holding I of IS acres. The farmers are trained on-the-job and are guided, with the assistance of the agricultural extension staff in the area by a Rural DeveIOpment Organizer who himself has been trained for the job. The on-the-job training approach of the "school leavers' farms'I contrasts with the formal training for two years at the Farm Institutes in the farm settlement scheme. Unlike the farm settlement scheme, no houses are built for the farmers in the "school leavers' farms". Instead, they live in their community and go back and forth from their community to their farms which are usually between two to four miles from their homes. The farmers assume responsibility for establishing and maintaining their farms when they join the the Scheme. The Community DeveIOpment Division provides a small loan on a short-term basis for the boys to purchase seeds, fertilizer, Al and tools. In order to enlist continuous community support and goodwill, the project is overseen by a "Block Council" consisting of the elders and other village representatives. Summary Export agriculture was the mainspring of development in Nigeria from I900-I960. Unlike the Belgian Congo and the~ Dutch Indies where European capital and enterpreneurship played a significant role in direct production inagriculture, in Nigeria, the private indigenous farmer was the dominant factor ’in agricultural production. 'The major source of growth was from opening new land and using more labour by foregoing leisure to produce cocoa, rubber, oilpalm, groundnuts and cotton which haVe been the main sources of Nigeria's revenue. Although the colonial government restricted its role mainly to that of trading, substantial increases in output from cocoa, rubber, and oilpalm have been attributed to its research and extension programs. Finally, the Iaissez-faire system was partially modified when marketing boards were introduced in l9h9 to control the foreign sale of all major export crOps in Nigeria except rubber. As Nicholls pointed out, it is important to examine the economic histroy of a country carefully before planning future #2 emonomic developmentufll/ In the same way, it is hOped that the analysis of Nigeria's past development given in this chapter will enable future planners to gain from past experience and provide them with a benchmark with which to assess future devel0pment. fl/william H. Nicholls, "The Place of Agriculture in Economic DeveIOpment", Agriculture in Economic 'DeVelgpm'e'nt, CarIIEIEZer and L. W. Witt ($5.), (‘Newwor‘kr IMcGraw-HilT, 193%), pp. - . CHAPTER III METHOD OF ANALYSIS A. Introduction Farm settlements and school leavers' farms are different forms of farm organizations with the same primary objective of increasing agricultural productivity in Western and Midwestern Nigeria. To compare the performance of agri- cultural production in these different forms of farm organizations, data were collected in Nigeria in late I966 and early I967 on (I) social-psychological characteristics of the farmers, (2) food crop production, and (3) tree crop production. The purpose of this chapter is to present the analytical framework and a brief discussion of data collection in order to outline how the performance of agricultural production in the different forms of farm organizations will be evaluated. Chapter four is devoted to the social-psychological characteristics of the farmers. In Chapter four, how different management practices can affect the social- psychcflogical characteristics of each farmer and their conse- quences on organizational effectiveness are analyzed. Chapter five its concerned with gross-margin analysis of food crOp 43 Ah production. The efficiency of food crOp production in the different types of farm organizations is evaluated in this (chapter. Finally, In Chapter six, the internal rate of return on investment in tree crOp production is used as a measure bf efficiency of tree crOp production in the different forms of farm organizations. B. Analyses for the Farm-Settlements' and School Leavers' Farms anlearmers I. Social-Psychological Analysis of the Farmers The social-psychological variables discussed in this section are those whiCh have been selected to provide tinformation about the general disposition and morale of farmers.in the different farm organizations. a. Attitude Toward Change: There is need for an individual to change in terms of his values, motiviations and orientation: to his life situations. McClelland contends ‘that high need achievement which is indicative of an individual's desire fOr occupational excellence is associated with his more rap i d economic deve I 0pmen t .l/ 1! David McClelland, National Character and Economic Growth “1 Turkey and Iran,.in Lucion W. Pye (edT), communication and 'Folitflcal DevelOpment, (Princeton:‘ PrInCetOn University Press, I963). Iflar a comparlson of achievement metivatlon among ma'Or tribal roupings. in Nigeria see Robert Levine, Dreams and eeds, chievement Motivation in Nigeria, (Chicago: University of ” Chicago Press, I966). AS ‘Fundamental changes are required in the cognitive processes of the individual, especially in respeCt to those which serve to hamper the acceptance Of newideas. b. Satisfaction: The degree to which an individual's expectations are fulfilled by his actualities is an.important measure of the individual's level of satisfaction. Lerner,3£ in I958, measured satisfaction by posing a direct question asking thedegree to which his Middle Eastrespondents were satisfied with their level of living. A similar question has been used as a measure of satisfaction by Stickleyi/ with Columbian farmers. In this study, as explained in the questionnaire in the Appendix, a ladder scale is used to measure the level of satisfaction of the farmers. To the extent thatliving conditions five years ago are rated more highly by the farmer than present conditions, dissatisfaction would result. In 3! Daniel Lerner, The Passin of Traditional Societ : Modernizing the Middle East, (New Yorkz'Free'Press, l958), .1/ Thomas S. Stickley, Socio-economic Correlates of Levels of Livin Amon Farmers in’Three COlumbian’NeT*hbor- hoods, (UnpuElished M.S. lhesis, Columbus: Ohio State University, l96h). A6 addition to being able to note the “direction” of responses, one is able to assign magnitude to the difference. Conversely, when present conditions are'rated higher than past conditions, satisfaction is likely to be the result. To the extent that a farmer feels he is making some progress, a certain degree of satisfaction should result. c. Fatalism: Fatalism was defined by Arensberg and Niehofffl/ as the belief thatathe‘events.inxonels life are pre- ordained and little can be done to alter such events. Rogers defined fatalism as "a passive view of the world implying the feeling that an individual's efforts cannot determine his I future.”§/ Fatalism reflects a negative view of reality and is often invoked to explain misfortunes. Niehoff and Anderson suggest three types of fatalism: l. Supernatural, including (a) theological patterns of belief that stem from the theology of the traditional culture; and (b) magical patterns of supernatural belief which stress the manipulation of everyday affairs rather than. ethical, cosmological, or theological concepts. 5*! Conrad M. Arensberg and Arthur M. Niehoff, Introducin Scxzial Change (Chicago: A dine Publishing Company, I965). i/ Everett M. Rogers. ”Motivations, Values and Attitudes of Subsistence Farmers: Towards a Subculture of Peasantry.” Papertwesented at the Agricultural DeveIOpment Council's Conference on: Subsistence .and Peasant Economics, (Honolulu, Hawaii: —. Eastikst'Center,:UniVersity of“Hawaii, l965).'. .47 2. .Situational‘apathy which arises from a real understanding of limited possibilities for (improvement, usually economic in nature. 3. Project negativism, which is apathy toward de veIOpment projects based on previOus .projectvfailures. 6/ d. PreferenCe for Risk-Taking:g The concepts of risk and ” uncertainty within the context of economic decision-making: were originally formulated by Knight. Knight made the distinction between three stages of knowledge. _First, under static situations when there is perfect knowledge and fore- there is certainty about knowledge. Within the less sight, that is, when the‘ certain situation of dynamics, however, static assumptions of perfect knowledge and foresight are relaxed, there are two knowledge situations: a situation in vfllich the knowledge of probability distribution is complete enough to set up insurance schemes (risk) and a situation in which knowledge of probability distribution is not complete enough to set up insurance schemes (uncertainty). 1’ Hardy 6/ Arthur H. Niehoff and Arnold J. Anderson, Peasant Fat l ism and Socio- -economic Innovation, (Washington: uman Resources, Research Office, George Washington University, l965). -' JZ/ Frank H. Knight Risk, Uncertainty and Profit, (New York: Houghton Miflinn l92l), pp. 2 , . I on AB maintained that it appears probable that the cases of risk (statistical probability) and the cases of true uncertainty differ only in the amount of information an individual has to deal with the cases he has on hand, the length of time. necessary to accumulate a length of cases big enough to establish a statistical frequency and the fineness of the classification the individual is usingug/ Pointing out the nature of previous other distinctions between risk and uncertainty, Hart wrote some had written that ”The difference between risk ‘ and uncertainty is that a probability distribution exists in the case of risk, while a probability distribution of probability distributions exists in the case of uncertainty.2/ Hart pointed out, however, that in the case of uncertainty, it would be possible to obtain a single probability distribu- tion from the series of probability distributions, but this would be unprofitable under certain conditions. §j C. 0. Hardy Risk and Risk Bearin , (Chicago:~ University of Chicago Press, I923). p. Sh. See aTSOSA’ tudy of Managerial Processes of Midwestern Farmers, Glenn L. Johnson, et. g1. (eds.) *(Ames, IoWa: "Thellowa StateTUniverSity Press, I96IT: pp. hl¢54. 2! A. G. Hart, ”Risk, Uncertainty, and the Unprofitability of Compounding Probabilities", Readings in the Theory of Income Distribution, (Philadelphia: 'ThehBlakeston Company, 1946). PP.§h7-S7. A9 The distinction between risk and uncertainty was brought out clearly by Johnson and colleagues who divided the knowledge situation into five categories: (I) subjective certainty, in which a manager regards his information as so good that he does not need to take precautions against being wrong; (2) risk in which Specifications for a choice or an estimate are met, that is, a situation in which the manager regards his present knowledge as adequate for making decisions and in which the cost of additional knowledge is exactly equal to its value. Risk may exist with respect to either positive or negative decisions; (3) inaction,in which specifications for a choice are not met but in which the individual is neither willing to act nor to learn because the cost of additional knowledge is greater than its value; (A) forced actions,in which specifications for a choice are not met but the individual is forced to act by an outSide force; (5) learning,in which specifications for a choice are not met but the individual is willing to learn because the cost of additional information is less than its.value. Forced learning may be regarded as the sixth category of knowledge situation. This is a situation in which an individual thinks he knows enough to make a decision but an outside force compels him to learn more.lQ/ .19/ Glenn L. Johnson and Curtis F. Lard, "Knowledge Situations", A Study of Managerial Processes of Midwestern Farmers, Glenn L. Johnson 2;. al. (eds.), (Ames, Iowa:. The owa tate University Press, lgbl), pp. AILSA.K. 50 While In both risk and uncertainty the occurrence of a ‘given outcome is not known, in risk situations, the probability of each alternative is known. In risk situations, when an individual insures, he prefers to take a certain small loss in his Income in preference to the small chance of a large loss. ,This is because the utility of expected income of the individual is greater than the expected utility. When an individual gambles, the utility.of the expected income is less than the expected utility. People with a high degree of achievement motivation often fall almost uniformly in between wild Speculative gamble and conservative approach towards risk. Such people like to incur a moderate degree of risk which is big enough to offer some excitement and the h0pe of a worthwhile gain, but not so big that their own efforts would have less of an influence on the outcome than sheer luck. The extremes of risk-taking are likely to be favored by persons whose achievement drives are rather weak. Some of them will choose the big risk, apparently because the outcome is so far beyond their power to influence that there is no reason to feel any sense of personal responsibility for what happens. They can chalk their losses up to hard luck and credit their gains to their shrewdness. Others may habitually choose tiny SI risks where the gains are small but secure, perhaps because 'their exposure to blame for things that go wrong is very small indeed.ll/ In a highly centralized administrative system where workers merely take instructions and in which workers have very little knowledge about the organization of the productive activities, individual decision-making among the workers is generally poorly handled. They do not generally pOssess enough information to evaluate the cost and the value of additional information. Because such workers live in a situation of uncertainty in which knowledge of probability diStribution is not complete enough to make reasonable decisions, they lack the ability to know when it is wise to take risk. When they make decisions, they often choose the wild speculative gamble or take a conservative approach towards risk. Such individuals generallymiss their high profit points as they often fail to take a chance of a worthwhile gain and often fail to avoid a probable loss. In an organizationwhere there is more reliance on individual workers and where workers have knowledge of the 11! For more discussions on risk-taking, see Arnold J. To nbee, A Study 9f History, (New York: Oxford UniverSity Press, I9K7). PP. lhO-l60. . 52 organization of their productive activities, decision-making is generally properly handled by the workers. Because-these workers live in a situation in which the knowledge Of probability distribution is complete enough to make reasonable decisions, they are able to evaluate the cost and the value of an additional information to know when it is wise to take risk. ‘Such workers often fall within wild speculative gamble and conservative approach towards risk. They generally Operate close to their high profit points, taking moderate degree of risk which will enable them to take an Opportunity of a worthwhile gain and to avoid a probable loss. e.» Feeling of Powerlessness: The feeling Of powerlessness is the perception that an individual's own behavior cannot effect the outcomes he desires. It is closely synonymous with helplessness. Most persons in less develOped countries have generally been found to possess low levels Of political efficacy, to distrust their government, and to feel helpless in influencing decisions because their Opinions are hardly ever sought.12/ One Of the central themes Of most community 13/ Arthur H. Niehoff, $2, cit. Niehoff discusses the 0 P effect of having a feeling owerlessness among his Middle East respondents. 53 develOpment programs is that villagers, by working together with appropriate technical assistance and government financial support, can successfully solve many of their local problems. The prevalent feeling of powerlessness among these villagers could act as a powerful deterrent to these self-help programs of community development. f. Group Loyalty: Since the work group is one in which peOple are particularly eager to achieve and maintain a sense of personal worth, most persons are highly motivated to behave in ways consistent with the goals and values of their work group in order to Obtain recognition, support, security and favorable reactions from this group. It is likely, therefore, that management will make the full use Of the potential capacities of its human resources when each person in an organization is a member of one or more effectively functioning work groups that have a high degree of group loyalty, effective skills of interaction, and high performance goals. Mann demonstrated that increased Use of group meetings dealing with attitudes, perceptions, communication, and motivation of workers improved the performance of workers in a number of agricultural establ ishments.l—3L/ Since the power of group motivational .léj F. C. Mann, "Studying and Creating Change: A Means to Understanding SOClai 0I’ganizations". (New'tYork': Industrial Research Association, I957), pp. lll6-l67. n.- 54 forces can be used both to the advantage and disadvantage of organizational goals, attempts can be made to focus these forces on achieving organizational Objectives.l&/ 9. Level of Participation: It is usual for any organization to produce goods and services to meet the current needs of its pOpulation, as well as those wants represented by the rising level of expectations. This requires organi- zational productivity. Yet, it would seem to be a well- established principle that the productivity of any organization has a relationship to the extent to which the individuals in the total work force have the incentive to produce. Giving aiworker an Opportunity to participate in the decisions whiCh affect him is one such incentive. Wickert, for example, studied employee turnover and feelings of ego-invOlvement in the day-to-day Operations of telephone Operators and female service representatives in the Michigan Bell Telephone Company. The principal finding was that those who stayed with the (xxnpany had a greater feeling of inVOlvement.in the day-to-day Operations of the company than those who leftali/i'-This desire 15/ Robert L. Kahn, ”The Prediction of Productivity". Journal of Social Issues, l2: hl-59 (I956), p. Ah. lé/ F. R. Wickert, “Turnover and Employee's Feeling Of Ego-Involvement", Personnel Psychology, pp. l85-l97. 55 for feeling of involvement is not peculiar to industrial situations nor to persons in the develOped countries Of the world; it is common in farming situations both in the developed and in the less-developed nations. Rice, for instance, found that the steady state of output in an Indian farming estate was markedly and significantly higher after the farmers reorganized the work themselves. Also, the amount of wastage and damage was considerably reduced.léi The appropriate extent to which management allows its workers' participation is very crucial. An Optimal rather than a maximal level Of participation of the worker in decision-making will likely be more desirable. The main Objective is to allow a two-way communication for efficient performance. h. Techniques of Analysis: Tabular analysis was used to compare the social-pscyhological characteristics of the farmers in the different farm organizations. With respect to the attitudinal variables designed to measure the level of satis- faction Of the farmers, tests of significance were performed 19/ R. K. Rice, Productivity and Social Organization, (London: Tavistock PubTication, I958)? 56 to determine whether there is any significant difference among the different farm organizations with respect to general disposition and morale of the farmers. 2.. GrosseMargin Analysis of FOod CrOp Production Now that the social-psychological variables which are used to measure the general disposition and morale of the farmers in Chapter four have been examined, let us discuss gross-margin analysis which will be used to measure the efficiency of food crOp production in Chapter five. a. Definition Of gross-margin: Gross margin is defined as the return to the farmer for all factors of pro- duction (land, labor, capital and management) which he employs. It is also the net accounting profit plus home consumption. Arithmetically, Gross-margin - (Total Sales plus home consumption) minus (Total Variable Costs of Production). Gross-margin per two acres of food crOps per farmer is used as a measure of efficiency of food crop production in this study. b. Techniques of Analysis: Multiple regression techniques are used to analyze the factors affecting the gross-margin of the farmers. The type of regression model which is used for this analysis is as follows: 57 Gneboi E bixitg bixi + 2 bix; I“ u’ i:l izh i=7 Where:. GM = gross margin per two acres of food crOps. X], X2, X3 : economic variables 6 Xu, ..... X6 = Dummy variables representing social-psychological variables. X7,....,X]2 = Dummy variables representing types Of farm organizations. U = The unexplained Residual. X] : Hired labor, X2 e Tools, X3 3 Other costs, Xg ; Preference for risk-taking,-X5-m Feeling of powerlessness, X6 : Level of participation, X7 . Ilora farm settlement, X8 : Imariwo farm settlement, X9 : Okitipupa farm settlement, X10 : Mbirl farm settlement, X11,;-Igieduma school leavers' farm, X12 : Ushie school leavers' farm. The multiple-regression technique considers the relation- ship of each independent variable (I) to the dependent variable, and (2) to each other independent variable, in explaining the variation in the dependent variable. Thus, multiple regression allows the researcher to determine the separate effects of the independent variables upon the dependent variable. Multiple regression analysis is recommended by Ward because it "not only 58 reduces the dangers inherent in piece-meal research but also facilitates the investigation Of broad problems never before considered researchable.”ll/ 3. Internal Rates of Return on Investments in Tree CrOps Having discussed the analysis of food crOp production in these farm organizations, let us focus on how to analyze efficiency of tree crop production in these organizations. Analysis of investment choices can be partially made on the basis of the expected rate of return on investment. In both the Farm Settlements and the School Leavers' Farms investments in tree crops -- cocoa, rubber and oilpalm -- are important. To analyze the efficiency of tree crop production in these different farm organizations, internal rates of return on investment in tree crOps are calculated. a. Definition of Internal rate of return: “The 'yield' Of a project is its internal rate of return, i.e., the rate of discount which makes the present value of the project's receipt stream equal to the present value of its cost stream; in other words, the rate of discount which makes the present worth zero." .ll/ J. H. Ward Jr., Multiple linear regression models, in H. Borke (ed.), Computer Applications in the Behavioral Science, (Englewood Cliffs, N.J}: lgbZ), p. 206. 59 Mathematically, the internal rate of return is given by: bi-cz b2-C3 - ' bn l§/ OI-le—lf—Z"! "'9‘ fl (ltr) (Irr) (Ior) where: c1, c2, C3, . . .,cn : series of prospective costs in years I, 2, 3, ..., n b}, b2, b3, . . ., bn : series of prospective returns in years I, 2, 3, ..., n r : internal rate of return. b. Technique of Analysis: Tabular analysis is used to show the variations in the social-Overhead costs among the different forms of farm organizations. In this study, social-overhead costs are not directly involved in the productive process. Such costs include costs of housing, costs of formal training Of the participants, personnel and administrative expenses, costs of establishing water supply and light and medical supplies. V Internal rates of return on investment in tree crOp production to farmers and to the government are calculated lg/ This equation eliminates the assumption that both costs and returns occur at the same time. A situation-which could give rise to meaningless results as explained in chapter six of this thesis. 60 first,without including the social-overhead costs and secondly, with the social-overhead costs and compared with different discount rates. The difference between the two internal rates of return indicates the change in the profit- ability Of the project due to social-overhead costs. It thus helps to assess the magnitude of indirect benefits which the form of organization employed will need to generate to justify the inveStment in social-overhead costs. The internal rate of return to the private farmer is calculated using producer prices. The internal rate of return to the economy as a whole is calculated using world market prices. This is to provide information On the profitability of invest- ment in tree crOp: productiOn from the point of view of both private and public investment. Finally, the following section is devoted to a brief discussion of the sourses of data and method of data collection used in this study. C. Data CollectiOn I. Sources of Data TO measure the performance Of these different forms of farm organizations, primary datawere collected in Nigeria. The data on social-overhead cOsts were obtained from the records in the farm settlements and the school leavers' farms and from the Official records at the headquarters Of these farm organizations. 6i In order to Obtain information on the social-psychological characteristics of the farmers and on the efficiency of food crop production, a questionnaire format was used to interview IBO participants in the farm settlements and the school leavers' farms. With respect to internal rates of return On tree crOp production, data used were Obtained from the farm-organizations and from assumptions of yields, and product prices. On the cost side, data used are based on actual expenditures on tree crOp production in the farm settlements and school leaver farms up to I966. These data were collected from the farm records and from the Official records at the headquarters of the farm organizations. FAO cost assumptions on farm settlements were then used from I967 to the end of the economic life of the tree crOps. To Obtain data on direct benefits from the tree crops, the yearly receipts to the tree crops were obtained on an ex ante basis and they show what a potential buyer could pay given various assumptions-Of yields and product prices. 2. The Questionnaire (see Appendix C) The first part Of the questionnaire is concerned with the social-psychological characteristics of the farmers. It attempts to elicit the form of management practices in each .n '62 organization. In addition, it is intended to provide personal information about age, edUcation, marital status, number of children, and religiOn. The second part of the questionnaire is designed to provide information on food crOp production; such information includes total variable costs of production, number of acres Of food crOp, types of crops, total sales, and value Of food crops produced on the farm that were either stored for further use or consumed at home. 3. Pre-test Forty-four farmers were selected randomly from one farm settlement and one school leavers' farm to pre-test the questionnaire. After analyzing the results of the pre-test, the questionnaire was modified. The farm settlement and the school leavers' farms from-where farmers were chosen for pre-tests were eliminated from the main survey for this study to avoid bias in the responSes. 4. Training the Interviewers Although the six interviewers selected OUt Of a total number of thirty had research experience in the Nigerian Institute Of Social and Economic Research at lbadan, all interviewers were given special training on how to conduct interviews. 63 5. Interviews: l80 participants were interviewed from the farm settlemehts and the school leavers' farms. The six inter- viewers and the researcher interviewed from one place to the other, spending two days in each farm organization. At the end of each day's work, the data were checked in case there might be need to go back for-a recount. 6. Sampling Method: In selecting a representative sample among the Farm Settlements and the School Leavers' Farms, important consi- deration was given to tree crOp production which forms the major investment in these farm organizations. Two farm organizations with rubber-Oilpalm production were selected from each of these two forms Of farm organizations. Since cocoa is an important crOp in Western Nigeria, one farm organization with cocoa as its main crop was chosen from Western Nigeria. In using these criteria, careful consideration was given to factors such as soil and weather conditions in order that permissible generalizations could be made about such factors. IBO farmers interviewed were selected randomly from the lists of names Obtained from the headquarters of the different farm organizations. 64 D. Sumary . In this chapter, the methodOlogy which is used in three subsequent chapters (four, five and six) to analyze the performance of agricultural production in the farm settle- ments and the school leavers' farms has been presented. Let us now turn to the analysis of the social-psychological characteristics of the farmers which ispresented in chapter four Of this study. CHAPTER IV SOCIAL-PSYCHOLOGICAL CHARACTERISTICS OF THE FARMERS IN THE FARM SETTLEMENTS AND THE SCHOOL LEAVERS'FARMS IN I966 Introduction This chapter is concerned with the analysis Of the social- psychological characteristics of the farmers in the different farm organizations. Attention focuses on how management practices in the farm settlements and the school leavers' farms can affect the general dispositions and morale of the farmers. The effect of such management practices on organizational performance is analyzed. The Concept of Organizational Performance An organization such as a farm settlement or a school leaver's farm can be viewed as a system. The management practices in an organization impose or specify certain activities and interactions for the peOple involved in the organization. Organizational performance is defined as the capacity of that organization to survive, adapt, maintain itself, and grow, regardless of the particular functions it fulfills. In his definition of organizational performance, Bennis notes that: 65 66 "If we view organizations as adaptive, problem- solving, organic structures, then inferences about performance have to be made....on the basis Of the processes through which the organization approaches problems. In other words, no single measurement of organizational efficiency een provide valid indications Of organizational health.W_ There are various management practices which will make one organization more effective than the other in developing and using normative and non-normative concepts to define and solve problems. Such management practices change the inputs, affect the timing and the application of the inputs. Giving the workers an Opportunity to participate in decisions about their own welfare and working circumstances is one management practice which can make one organization more effective than the other. Any organization which expects its members to be committed, flexible, and in good communication with one another for the sake of overall organizational performance, is in effect asking them to be morally involved in the organization and to be committed to organizational goals. If the organization expects them to be involved to this degree, the organization l! W. G. Bennis, "Toward a 'truly' Scientific Management, the Concept of Organizational Health”. General Systems Yearbook, (l962), 7, pp. 269-282. 67 must for its part, through its management practices, provide rewards and conditions consistent with such involvement. It cannot merely pay more money to obtain commitment, creativity, and flexibility; there must be the possibility of obtaining non-monetary rewards such as autonomy, genuine responsibility, a feeling of ownership, Opportunities for challenge and for psychological growth. Method of Analysis: . The social-psychological variables employed in this study are those which.have been defined in chapter three. To obtain information On the social-psychological characteristics of the farmers, IBO farmers were interviewed from four farm settle- ments and two school leavers' farms using a questionnaire format designed for this purpose. (See Appendix). The questionnaire was precoded to facilitate analysis.» From the lists of names Obtained from the respective head- quarters of these six farm settlement organizations, thirty farmers were selected randomly from each of the six farm organizations. The six enumerators and the researcher travelled. from one farm Organization to another interviewing the farmers individually, sometimes on their farms, and sometimes in their homes. About two to three days were Spent in each farm 68 organization to finish the interviews. Each enumerator was assigned a number which he retained throughout the period of the survey. The enumerator wrote this number on the tOp of each questionnaire he used. This was to facilitate checking in case of errors. Each enumerator was assigned a certain number of farmers whom he interviewed in each farm organization surveyed. The enumerator then paid visits to the farms and houses of these farmers until he interviewed all of them. Fortunately, due to the COOperation of the farmers, all those chosen randomly were interviewed; thus, there was no need for substitution. Apart from taking part in interviewing the farmers, the researcher discussed the organization Of the farmers with the officers on the farms and alSO supervised the enumerators. At the end of each day's work, all the questionnaires used were checked to determine if it was necessary to return to the field to verify or Obtain further information. After checking, the codes marked by the enumerators as responses given by the farmers were recorded in their appropriate columns. The same prOcedure was carried out in all the six farm organizations surveyed. . When all the I80 farmers selected had been interviewed, the responses which were recorded in their apprOpriate columns were, first, scored on a special scoring sheet; they were then I 69 transferred to punched cards. Punched cards were used for analysis purposes in order that the data could be analyzed by the CDC 3600 computer at Michigan State University. Two frequency column count programs designated as FCC I and FCC II were usedag/ These programs were utilized in tabulating the frequency distributions for every variable used. This proved to be a very useful step in analyzing the social-psychological characteristics of the participants and in gaining a "clinical feel“ of the data. .The items in the questionnaire were coded in such a way that higher scores in each item represents favorability of response while lower scores represents unfavorability of response within the context of this study. On this basis, the total score by each farmer on each variable was obtained. This enabled a classification to be made between the number of favorable responses and those of unfavorable responses. This analysis proved to be useful in identifying those variables vfllich did not ”discriminate" among the farmers irrespective of their form of farm organizations. Variables in which over -2/ J. Clark, Manual of Computer Programs. Research ‘Services, Department of Communication, Michigan State University, l96h (mimeo). 70l 90 percent of all the farmers gave the same type of response were classified as ”non-disciminating” variables. Table A shows the distribution of reSponses_Of the “non-discriminating" variables between the farm organizations. A total score of more than 50 percent on each variable by a farmer was regarded as a favorable response in that variable, and a total score of less than 50 percent as Unfavorable. Table 5 shows the distribution of responses from those' variables which ”discriminate” amOng the farmers with respect to the form of farm organizations to which they belong. To determine unfavorable preferences for risk-taking, the farmers who preferred either wild speculative gambling or no risk-taking at all were regarded as having unfavorable preference for risk-taking. The farmers who fell between these two extremes of risk-taking, i.e., those who preferred to incur a moderate degree of risk, were regarded as those who had favorable preference for risk-taking (see Appendix C Questionnaire, NO. l8). With respect to the variable on feeling of powerlessness, any farmer who had a score which is greater than 50 percent of the total score in the items on the variable was regarded as one who had no feeling of powerlessness--this was regarded as a favorable reSponse. An unfavorable response, means that o.o . o.oo_ . >u_n>ou oaoto c.m a.am umcnco motnzoe uoau_uo< m.m _._m Em__mumu Omcommox Omcoomom O_nmco>mmMD 0—mmco>mu weenm_cm> .c mmmCOQmOm —mu0._. $0 CO_HDQ_LUW_D QUMHCGULQm .m 0 0m N mu . m~ _ - o c on N mN mN N m 0 an m mm ww : a .o om _ mm . mm _ m 0 0m N. mm mu m ~ 0 om o Om mu 7 m _ xu_m>ob IMO—ONO; , omcmso , Omcmzu II QSOcu mo oaocu mo mucmzoO motozoO mmocOcmzmc: mmoc0cm3<. OO:u_uu< oo:u_uu< Op:u_uu< OO:u_uu< mco_um~_cmmco mOucoaom Immucoaom Obnmto>mmcai OHQWLO>OL O_um__m~mmicoz, Ohuwc_MumuI Ecmu omcmcu >wwm>ouIa30ch mpcmZOP op:u_uun Em_bmumn 0mm. c_ mELmu .mco>m04 _oo;om pcm mucoso_uuom Econ ozu c_ mo_nm_em> .mo_mo_o;o>mai_m_OOm mots» EOLm memcoamom mo embasz mo co_u:n_cum_o .< .: o_nmp 71 .:-~ 9...: 2K mm.m No.0m mm.m No.0m mm.mm No... no... mm.mm mEcmm co>mog _oo;Om Nm.mm mm.m mm.mm N_.: oo.m_ .oo.mm mm.ow m_.m_ mucos Io_uuom Econ mco mcoczo co_umm co_umm mmocmmo_ mmocmmo_ coco ooco Iconmq m< mm I_O_ucmm to I_O_ucm¢ mo ILOBOQ mo IcOZO¢ mo ILOmOco IcomOcm ucoaomiucoamm po>ou ZOAI Ipo>ouicu_:, mc__oom oz ace—own. LOOm momw m;O_umN . I I_cmmco o_;mLOc3o co_uma_u_ucmm mmocmmo_c030m mc_xmhixm_m to no mo mo ucooom po>oa mc__oou OOCOcomOLnI m can m ..Ou_ .mEcmm LO>OOJ _Oo;wm ocm .o>onm : Ocm .m .N ._ ..O._ .mucoeo_uu0m Econ COOZuOm mo_nm_cm> :mc_umc_E_LOm_o: EoLu mOmcoomom mo co_u:n_cum_o ommucOOcom .m _ mN _. mN NN m m RN 0 _ mN _ mN 0N : : 0N m. mN _ mm _ : cN , MN N .: mN _ mN _ m :N :N o m mN _ mN N N mN , NN m N mN . mN _ m :N MN N _ mco mcoczo co_umm. co_umalr mmocmmo_ mmocmmo_ 00:0 00:0 Iconmu mm mm i_o_ucmm mo I_O_ucmm mo Icozom mo Icozom to .tcomOcm ILOmOcm ucoaom uuoamm _o>mu sou ho>ogzmwm mc__oom ozI mc__oou coo; moonn mco~mmu . I_:m co a_:mcoczo co_uma_o_ucmm mmocmmo_c030m mc_xmhixm_¢ pimm mo - mo no mo acoaom po>mg manpoom OOCOEOmOLA mom. c_ mecmu .mco>m04 _oozom Ocm mucosa—uuom Econ Ono c_ mo_nm_cm> .mo_mo_O;O>mo-_m_OOm :mc_umc_e_cum_o: .. mmmcoomom co co_u:n_cum_o .4 .m m_nmp 72 -- 73 a feeling of powerlessness is recorded when a farmer scores below 50 percent of the totalscore (see Questionnaire, NO. 20). The level of participation of a farmer in an organization was determined by asking whether he hired the laborers who work on his farm himself or someone hired them for him, whether he in fact knew how much the laborers earned daily for working on his farm. The farmer was also asked whether he knew how much he owed the government for the farm and the house he owned. He was also asked whether he sold the products from his farm himself or whether the government undertook that responsibility for him. Finally, the farmer was asked if the resident officers on the farm Often sought his opinion in matters concerning the operations of his farm. A score Of less than 50 percent in all the questions on this variable was regarded as a low level Of participation Of the farmer, and this meant an unfavorable response. To determine whether the farmers had a feeling of ownership and a sense of commitment in the organization, they were asked questions to determine if they regarded themselves as owner- operators of the farms, or as laborers working for the government. (See Questionnaire NO. 25). The score_for each farmer in these questions was used to determine whether he regarded himself as an owner-Operator or as a government laborer. A score 7A of more than 50 percent of the total score in this variable was regarded as a favorable response, and this meant that the farmer regarded himself as a government laborer (Questionnaire NO. 25). To determine if a farmer thought he had made some progress since he started in the farm organization, and also to determine whether the farmer thought he would continue to make progress should he remain in the organization, four additional questions were asked to know hOw satisfied the farmer is (a) with his level of living, (b) with the organization, (c) with his personal security, and (d) with his income. In each of these four predictors, the farmer's idea of his past, his present, and his future conditions was compared (Questionnaire NO. l7). In this analysis, importance is attached to the direction and magnitude of change between one time period and another (see Diagram I). In order to determine whether there was any difference in the direction and magnitude of change in the attitude of the farmers between the different farm organization, it was necessary to show that all the farmers rated their level of satisfaction equally when they first started in the farm organizations. On this basis, it was possible to discover that all the farmers were the same when they first started in the DIAGRAM‘I -LADDER: RESPONSES FROM ATTITUDINAL VARIABLES ON LEVEL OF SATISFACTION School Leaver Farmsg_ LFarm-settlements Future --------------- d- 8 Present ---------------- - 7 past ........... . ....... 4- 5 J ------------------- Past 3 J ---------------- Present l 4 ---------------- Future 75 76 farm organizations, but a few years later, i.e., at the time of this study, there were significant differences between these farm organizationswith respect to the attitude of the farmers. Furthermore, it was possible to find out whether the differences would increase or decrease in the future. .5 statistic was used for this analysis. The responses from all the social-psychological variables were tabulated to analyze the social-psychological charac- teristics of the farmers in the six farm organizations. Comparative analysis was facilitated because an equal sample size of thirty farmers from each farm organization was chosen. The variables which did not "discriminate“ between the farm organizations, i.e., the variables in which over 90 percent of the farmers interviewed gave the same response, were analyzed first. Then the variables in which there were differences in responses between the farm organizations were analyzed. Because the reCorded differences between the farm organizations were highly significant, testing for statistical significance was unnecessary since it was not likely to improve results. However, with respect to the responses from the atti- tudinall variable designed to measure the level of satisfaction of the farmers, 5 statistic was used to test the following three hypotheses: 77 (I) That all the farmers rated the farm organizations and their Own level of satisfaction differently when they first began their career in these farm organizations. (2) That all the farmers rated the farm organizations and their own level of satisfaction differently at the time this study was carried out--i.e., at least two years after the farmers had been in the farm organizations. (3) That all the farmers rated the farm organization and their own level of satisfaction differently with respect to the future. Even though differences between two means are usually tested by the t_statistic, for convenience of computer programming, and because differences between more than two means are being tested, f_statistic was used to test mean differences between the responses in the farm organizations. Comparisons of E_and .E statistics have shown thatthe results are the SBMEui/ If an .5 between group means was significant, inspection Of the size of the means indicated which one was the.highest and conse- Iquently the main contributor to the differences reflected in the §_ratio. A significant overall §_Ieads to non-rejection of the hypothesis being tested. In this study, a significant Ievefl of 0.0l in any of the three hypotheses was chosen to mean rumw-rejection of that particular hypothesis. A significant level 2! A. L. Edwards, Ex rimental Desi n in Ps cholo ical Research, (New York: Holt, Rinehart ana Winston, , i935i, p. IA6. 78 greater than 0.0l in any hypothesis therefore means a rejection of that hypotheSis, and this means that the farmers rated the organizations and their own level of satisfaction equally at the time corresponding to that of the hypothesis being rejected. A larger E ratio in one of the two instances when the farmers rated the organizations and their own level of satisfaction differently, i.e., when the null hypothesis was accepted, was chosen to indicate that the farmers are more different in this rating relative to that with small 5 ratio (see Table 6). .5 statistic was used to test these three hypotheses within each farm organization and then with all the six farm organizations together. The behavior'of the responses tabulated and the results of the statistical analysis were used to obtain a meaningful explanation of the general disposition and morale of the farmers in the different farm organizations. Results and Discussions Table A shows the distribution of responses from three social-psychological variables--Fatalism, Attitude towards change, and Group loyalty. The distribution of these responses does not follow any specific pattern that shows any differences between the farm organizations. Among all the farmers interviewed, 79~ Table 6. Results of.fi Statistics on Attitudinal Variables in the Farm Settlement and School Leavers' Farms in I966 A. E Statistic -4 Satisfaction With LeVel of Living .1 Time . Significant Levels . £_Ratios Past - 0.82, 0.A8 Present - 0.0l‘ l89.AO Future 0.0l . ' _ 398.97 B. E_Statistic -- Satisfaction With Organization Time ; Significant Levels E Ratios Past 0.56 l.l9 Present ‘ 0.0l l57.56 Future 0.01 ' 375.09 C. ‘E Statistic -- Satisfaction With Personal Security . ,— Time Significant Levels 5 Ratios Past 0.3l l.63 Present 0.0l l58.99 Future , 0.0l 320.66 D. _F_ Statistic -- Satisfactioanith Income Time Significant LeVels E_Ratios Past 0.uu ‘ I.6A Present 0.0l lA6.29 Future , . 40.0! . 358.56 F7 ‘w— ' T‘r" v " . '- 80 9A.A percent have favorable attitudes toward change and appear receptive to new ideas which will increase their yields and improve their standard of living. Out of all the farmers interviewed, only 8.9 percent are fatalistic; the remaining 9l.l pericent are not fatalistic. This also indicates that the farmers, irrespective of the form of farm organization to which they belong, are likely to be responsive to economic incentivesufl/ All the farmers interviewed in the farm organizations replied that they held meetings with fellow farmers in their farm organizations to discuss the general running of the organizations- Although the farmers in the farm settlement form of farm organization reported more meetings per annum on the averagemore than the farmers in the school leavers' farms form of farm organization, all the farmers had a sense of group loyalty. A They all reported willingness to conform to the rules and regulations of their "informal organizations". ,. In these "infknwnal organizations" fines are Often imposed for non-conformity to the rules and regulations. .l'l/ Arthur H. Niehoff and 'Arnold J. Anderson, Peasant Fatalisun and Socio-economlc Innovation. (Chicago: HUman Resources Research Ice, eorge as Ington nverSIty, l965). 8i Even though there are no significant differences between the farm organizations with respect to the responses from group loyalty, discussions with the farmers revealed that the “hformal organizations” have different objectives in different farm organizations. In the farm settlement form of farm organization, it appears that the power of the ”informal organizations“ is being used to destroy the objective Of the entire organization. In their group meetings, the farmers often planned to sabotage the goal of the organization. The researcher accompanied Dr. C. Oyolu of the University of Nigeria, Nsukka, and two government officials of the Mid West Ministry of Agriculture to one farm settlement late in I966. There the farmers told us that they decided in their last meeting to place their grievances before us. They also told us that they often meet to decide on what actions to take in the organization regardless of the instructions given to them by the resident officers in the organization. The farmers appeared to have unfavorable attitudes toward the farm settlement scheme, and this appears to explain why their group loyalty has an adverse effect on organizational performance. There is substantial evidence, both from Operating experience and from the more precise measurement obtained in 82 research projects, that work groups can have goals which will influence performance either favorably or adverSely. In l93l, in the famous Western Electric Study, Mayo found that the goals of the "informal organization” in Western Electric Often tended to restrict production, to increase absence, and in other ways to run counter to the general Objectives of the organization.§/ In I938, Whitehead found similar results in an agricultural 6/ enterprisea— Similar private discussions held with the farmers in the school leavers' farms revealed that these farmers have favorable - attitudes toward the scheme. They have used their group loyalty toward the progress of the scheme. These farmers Often work together during the peak periods, and Often choose who among’ them will work In fellow farmers' plots in case of illness. The studies of the Tavistock Institute in England on the human factors affecting the productivity of coal miners provide evidence as to the importance of the work groupal/ Table 5 (A) shows that the six farm organizations can be classified into two forms of farm organizations on the basis §/E. Ma O, The Human Problems In Organizations. (New York: ~Viking, l93l . . é/T. W. Whitehead, The Industrial Worker, (Cambridge, Massachusetts: Harvard University, I939). Z/E. L. Trist and K. W. Bamforth, Some Social and Psy- chological Consequences of the Congwall Method of Coal-getting. Human Relations, (l96l), A (I), pp. 3-38. a I .\o 83. of the specific pattern taken by the distribution of responses in preference for risk-taking, feeling of powerlessness, level of participation, and report of ownership." Farm organizations one through four actually belong to the farm settlement form of farm organization, while farm organizations five and six belong to the schoOl leavers' farms form of farm organization. In Table 5 (B), the percentage distribution of respOnses between these two forms of farm organizations is compared. Table 5 (8) also shows that the farmers in the school leavers' farms gave favorable responses in these four social-psychological variables while the farmers in the farm settlements gave unfavorable responses in these four variables. Tables 6 A, B, C, and 0 show the results of E_statistics for the three hypotheses already stated In the section on the method Of analysis earlier in this chapter. These results Show that one cannot accept the first hypothesis, but the second and third hypotheses can be accepted. Rejecting the first hypothesis therefore means that there are no significant differences among the farmers in all the farm organizations in their levels of satisfaction ratings when they first started in the farm organizations. By accepting the secOnd and third hypotheses, there seem to be significant differences among the farmers in how they rated their levels Of satisfaction with respect to the present and the future. t c 8A ‘ Table 7 shows the percentage distribution of responses in the four predictors measuring the level of satisfaction of the farmers. The specific pattern of this distribution shows that the farmers responded in the same way to all the four predictors. The inference from this is that the farmers believe that any progress they can make with respect to their level of living, their income, or with respect to their state of personal security is synonymous with the success of their respective farm organizations. The fact that there is no significant difference in the patterns Of response from these four predictors provides an Opportunity to give a* unitary interpretation to them in analyzing the direction and the degree of change in the farmers' levels of.satisfaction in the different farm organizations (see Table 7). This is shown in Diagram 2 as well. Diagrams two and three show the significant differences in the direction and magnitude of change in the levels of satisfaction between the farmers in the farm settlements and those in the school leavers' farms. The averages of the actual numbers recorded during interviews were used in plotting the graphs. Diagram 3 and the results of.E statistics in Tables 6 A, B, C, and D Show that the farmers in both the farm settlements and the school leavers' farms felt that they were the same with respect to their levels of satisfaction in all the four 0". . , I. 85 Table 7. Attitudinal Variables: Numberical Distribution of Total Scores, by Farm Organizations Farm Organizations Present Past Future A. Satisfaction With Level of Living l 37 IAA l7 2 Al l52 l9 3 57 IA3 3l A 63 lA8 36 5 l87 lA3 252 6 I93 lA8 25A B. Satisfaction With the Scheme's Progress I 32 IAO II 2 55 I32 22 3 56 13A 32 u 7i lA8 3A 5 IBA l35 251 6 I93 IAS 263 86 Farm Organizations Present Past Future C. Satisfaction With One's Personal Security 1 A0 lAl l8 2 A2 lA2 l3 3 53 IAO 33 A 7l IAA 37 5 I66 I36 232 6 I77 IAO 2A0 D. Satisfaction With Income 1 A6 l38 l3 2 35 I3l 7 3 A5 l2A l6 A 56 l2A 33 5 ISI l20 223 6 ISO I33 230 Level of Satisfaction Diagram 2 Comparison of the Six Farm Organizations With Respect to the Level Of Satisfaction of the Farmers 270- © 2... 2l0. I80- ISO- IZOi 90- 60- 304 .......-'IIII---. ‘ g; ‘ :8 ° .2 I: '2 a a a n' Time ‘g If Level of Satisfaction 88 Diagram 3 Comparison of Farm Settlements And School Leavers' Farms With Respect To the Level of Satisfaction of the Farmers @Q@8 (‘9 Time Past. Present; Future- 89 predictors designed to measure satisfaction in this study when the farmers first started their lives in these farm organiza- tions. That is, the farmers, irrespective of their form of farm_organization, rated the organization equally. At the time of this study, which was at least two years after they had been in the organizations, farmers in the farm settlements had become pessimistic about the success of the farm settlement scheme while those in the school leavers' farms were filled with high hopes for the future. The conclusion from this is that the farmers in the school leavers' farms were reasonably satisfied with the progress they had made, and they appeared optimistic about their future. 0n the other hand, the farmers in the farm settlements felt that they had made no progress and that.the farm settlement scheme had worsened their conditions. They even felt that sluould conditions remain as they were on the settlements, the ssituation would continue to deteriorate with time (see Diagrams 2 and 3). The results analyzed above and those of the researcher's personal interviews with various officers in the farm settle- nmu1ts and in the school leavers' farms, as well as the researchers' experience by living with the farmers in these 90 two forms of farm organizations, gave a useful insight into the Operations of both the farm settlements and the school leavers' farms. In the following section, a brief description of these Operations is given. Attention focuses on the manage- ment practices in the two forms of farm organizations--the farm settlements and the school leavers' farms. Operation of the Farm Settlements _ The operation of the farm settlement scheme is very similar to the classical example of control in the well know Gezira scheme, where the farmer's land is plowed for him, and where he has to plant the seed he is given in the rotations he is told, to fertilize and cultivate as recommended, and to hand over the crOp for processing and marketing--for all of which operations he is, of course, financially responsible.§/ In addition, in the farm settlements, the houses are built for the farmers and the laborers that work on their farms are hired and paid by the government--all of which expenses the farmers also have to pay. This type of control has partly reduced the .§/ Arthur Gaitskell, Gezira: A Study of Develogments in the Sudan (London: Faber and Faber, l959T. 91 status Of the farmer from that Of an independent farmer towards that of a laborer acting under orders. This type Of hierarchially administered operation has created conflicts and tension between the few officers in the organization who command and the many farmers who obey. This type of control strongly mitigates against successful farm Operation. Successful farming demands a constant process of judgment-making, in which sound technical. and economic principles must be combined with partiCular facts of time and place. Decisions need to be made close to the ground and with minimum delay. In the farm settlements, the farmers do not have decision-making competence, and decisions regarding day-to-day Operations On their farms are made for them. This has affected their general dispositions and morale. Because of the strong control exercised by thegovernment, the farmers in the farm settlements have very little or nothing to do with the decision-making processes in the farm organiza- tions. Direct control Of expenditures and hiring Of labor are done not on the farm, but from far away in the headquarters. Neither the Officers in the field nor the farmers have control over the work they are doing; they have no powers to control labor and funds as dictated day by day by farm Operations and financial limitations. It is common for farms to take on casual labor at peak periods of Operations and lay them off when 92 Operations ease off. This recognized practice has not been put into Operation in the farm settlements. Instead, labor recruitment is controlled from the headquarters. As a result, the farm settlements have become a ”dumping ground” for unnecessary and redundant labor, and the laborers have no urge to do any work in the settlements in view Of the manner in which they have been employed and over whom the Officers in the field have no Operational control. Because the government hires the labor for the farmers, the laborer gets the government rate of 6/3d a day when the farmers can hire the.same labor for h/ or less a day. Similarly, the financial cost of the farm settlements has been increased partly because the government built the farmers' houses, rather than let them build their own houses. Table 8 shows that the houses built in five farm settlements in the Midwest would have cost the government £61,500 less if the houses had been built by local contractors. This would have meant a corresponding decrease of E6l,500 in the liability of farmers' dwelling hOuses. It is most likely that the decrease in farmers' liability would have been even greater if the farmers had organized the building of the houses themselves. Arthur Lewis writes, 93 .Amom_v .adm aMM .:_o>o .o >n .:mELmu Lm>mm4 _Oozum Ocu ocm mucoso_uumm Eton Oz» mo co_um:_m>m: .co_umo__n:m ucOEcLO>Oo umO3o_z ”outsom 68.4710 333 m 5:. cem.o~“JLOm mLOuomLucoo _OOO_ LO Lonm__uumc_o >3 u__:n coon O>mz o_:ou ;o_;z .oom.:mns..m._ .summ oomu_um mm u__:n _omtmm_z may .ucmem_uumm etm Ocaumnmmu: um omuuacumcoo mmmaoz 0n Ocu mo ago .Oucmumc_ Lou .Om:Oc to 0mm Jmo mc_>mm m mc_me .cumo ommjmmcmzuo Ono ocm comm coma—um oO:_m> coon m>mz Ou o_mm 0L0: mOmzos _Omcmm_z och .Lonm_ quL_o LO mLOuumLucou cmsuo ocm o0u_E_4 >cmaEOu _Omcmm_z >n omuuacumcou 0cm; m0m305 [who—uumm on» own» mLO;u:m Ocu v.0“ mucOEO_qum Ecmm mzu c_ m_m_u_mmo ucOEcLO>Ou "Ouoz oom._m oo..mm oom.~:p, mau 4mvcomm >mv comm mmmoox ucOEO_qum Econ “mmucmcmmm_o ommm um umoo comm um umoo mo consaz ummzo_z .. mOmJOI .mLO_qum Econ .m O_nmh 94 ”In all my travels, I have never found a government agency which could build cheap rural houses. Their houses cost more than the house the settler would build for himself, and only too Often become a burden round his neck and that of the minister of Finance. SO in underdevelOped countries I always feel that there is much to be said for leaving the rural peOple to put up their own houses.”2/ The farmers in the farm settlements are thus saddled with avoidable costs because the government does almost everything for them. This has increased the cost of the settlements considerably. Commenting on governments' involvement in land settlement, Arthur Lewis said that the more the government does for the settler, the greater is the financial cost of the settlement, and the smaller is the number of peOple it can help.lQ/ These types of management practices in the farm settlements have given the farmers the impression that they are government employees who have no stake in the scheme. This attitude is reflected in the responses Obtained from the social- psychological variables employed in this study (see Tables 5 A and B). It is also reflected in the general complaints in all 2/ Arthur W. Lewis, ”Thoughts on Land Settlement”, Agriculture in Economic Develo m , Carl Eicher and L. W. Witt (eds.), iNew York: McGraw-Hill, lnc.,l96h), pp. 299-310. lfl/lbid., p. 303. 95 the farm settlements visited. These complaints include: (l) that the farmers have not been given public holidays, and (2) that the farmers have not usually been given sick-leave and annual leave. These complaints, though they seem trivial, are significant in reflecting the image which the farmers have of themselves in the organization. The types Of attitudes among the farmers have been unfavorable and pessimistic. (see Diagrams 2 and 3). pgperation of the School Leavers' Farms 9 The Operation of the school leavers' farms is very similar to that of the traditional private farmer in Nigeria who clears his land himself, plants his seeds, sells his products himself in the local markets, and hires labor when his family labor becomes inadequate. He is the owner-Operator Of the farm. Unlike the traditional private farmer, however, a farmer in a school leavers' farm has the privilege Of the services Of a trained communicy development organizer who advises him on how best to use his resources. He also receives short-term loans from the government and buy“ subsidized seeds and seedlings from the government. In addition, the benefit of on-the-job training is made available to him once a month on :his farm. 96 In the school leavers' farms, the philOSOphy of "working with the peOple”, rather than "doing things for them” appears to be the guiding principle Of management. AThe farmers are given the Opportunity to make most Of their decisions with minimum interference from management authority--the community develOpment organizer is there merely to advise them rather than issue instructions, assign jobs, or hire labor for them. The feeling Of ego-involvement, sense of commitment and spirit of iownership which the management practices of the school leavers' farmers encourage among the farmers in the organization make them regard themselves as owner-Operators rather than as 9 government employees (see Tables 5 A, and B). The favorable attitude among the farmers is reflected in their general good dispositions and high morale (see Diagram 3). Summary Because Of the highly centralized administrative system with major and many day-to-day farm decisions being made by government Officers far away in the headquarters, the farmers in the farm settlements (government farms in default) in general have no feelings Of Ownership and no feelings of commitment in the scheme.~ They regard themselves as government employees rather than as owners of the farms. This attitude appears to 97 account for the general feeling_of powerlessness, unfavorable preference for risk-taking, tendency toward sabotage, and poor general disposition and low morale among the farmers.) Heavy expenditures by government on housing and formal training as incentives for the farmers have had no differential ImpaCt on ' the general dispositions and morale of the farmers. ‘ In contrast, in the school leavers' farms where there is ' more reliance On individual farmers in carrying out their routine farm Operations, there are strong feelings of ego- evolvement and feelings Of ownership among the farmers. These farmers regard themselves as owner-Operators and not as government employees. These.favorable attitudes appear to accoUnt for the lack of feelings of powerlessness, favorable preference for risk-taking, and general good dispositions and high moraleamong the farmers even though they lack such incentives as elaborate housing and formal training. Although_these young farmers feel-satisfied and are Optimistic about.the school leavers' farms, they complained of a lack of an all-purpose building on the farm site for Shelter. They also expressed the fear that their future acreage allotment may not be contiguous to their presentlfarms since large acreage has not been made available to them._ In addition, the Rural Organizers on-site in the school leavers' farms appear to be poorly trained fOr their job and the villagers whohave been a great asset to the scheme are beginning to lose interest due to lack Of any motivation from the Community Development DivisiOn. CHAPTER V FOOD CROP PRODUCTION -- SOCIAL-PSYCHOLOGICAL ASPECTS, RESOURCE USE AND PROFITABILITY Introduction Although attention must be given to export crOp production in Nigeria today in order to Obtain much needed foreign earnings, to expand the purchasing power of rural peOple and to.finance imports, the need also exists to increase food crOp production to feed Nigeria's pOpulation which_is growing by at least one million per year. Thus the farm settlements and the school leavers' farms have been organized to serve as a sourCe of food crOp production as well as to produce texport cnops. ‘This Chapter concentrates on foOd crOp production. Resource use is related to profitability (gross margin) of food crop production as conditioned by the situations existing on the different farm organizations. As was indicated in Chapter Four of this study,social-psychological variables vary importantly among the different farm organizations. As this chapter explores the relationship of these different social-psychological variables to both resource use and 98 99 profitability, it is, in this sense, a continuation of Chapter Four. Input-Output Survey Individual interviews were held with each of the 180 farmers randomly chosen for this study. The questionnaire (see Appendix C) prepared for this purpose was used. The questionnaire was complex since the farmers produce various types of annual crops. A farmer, for example, Often grows six different food crOps on his farm. In addition to recording the quantity and price of all sales during the period I965/66, the total value of sales and the total quantity produced during this period was recorded. The fraction consumed at home as well as the part stored for the next production year was also recorded. As the farmer is given land free and since all data was converted to apply to two acres per farmer, no cost is charged for the use of land in this analysis. Hired labor inputs were determined by asking the farmers how many laborers they employed during the period I965/66 and for how many days the laborers were hired. Tools and equipment inputs were determined by asking the farmers how many they owned, whether they have sold some, the cost of each tool, when it was bought, and its life expeCtancy. Estimates of 1100 ; the cost of fertilizer used were made in the same way. The farmers were asked when they purchased fertilizer, how much they bought, what was the cost and how long it would last. Because most of the farmers do not know the correct number of acres of food crops they own, every farmer was assisted to determine it. A prismatic compass and a tape measure were used, and each plot was plotted on graph paper. A planometer was used to estimate the acreage. Gross-margin is the difference between total sales plus home consumption and total variable~costs Of production. The gross-margin per farmer was adjusted to a twOuacre basis. This adjustment-was made in order to compare the profitability (grOSSamargin) Of food crOp production per farmer on an equal acreage basis. Two acres were used as over 85 percent of all the farmers interviewed, Operated two acres Of food crOps. Furthermore, 300 man-days per year Of the farmer's own labor commonly used by Nigerian governments as operator's labor was assumed for both his fOOd and export crops. This assumption was made because it was difficult to determine accurately how much of the farmer's time is devoted exclusively to food crOp production, especially that each farmer is engaged 101‘ at one and the same time in production for food and export ' crops. As explained on page IDA, the adjustment of the gross-margin per farmer on a two-acre basis, and the assumption of 300 manwday of Operator labor per farmer are factors which could lead to excessive variance. Hence, the interpretation of the results Of this analysis has to be done contiously.. Table 9-A shows the number of farmers interviewed in each type Of farm organization, and Table IS-B shows the mean values of resource inputs used per farmer in each farm organization during the period November l965 to November I966. Analytical Technigggg As explained in chapter three, the preliminary single dependent variable which was considered in this analysis is gross-margin per two acres of food crOp production per farmer. The association of quantity Of resources, social-psychological variables, and type of organization with gross margins for food crOp production was determined by using multiple regression techniques for a predictive equation. The predictive regression equation was first run for all the farm organizations together; in the equation shown on . page lOfi of this chapter, the types of farm organizations were 102 Table 9- A Number Of Farmers Interviewed in Each Type Of Farm Organization ’Farm *Number Organizations g Interviewed l. Ilora Farm Settlement 30 2. Imariwo Farm Settlement 30 3. Okitipupa Farm Settlement 30 h. Mbiri Farm Settlement 30 S. lgieduma School Leavers' Farm 30 6. Ushie School Leavers' Farm 30 Table 958 Annual Mean Values Of All Inputs Used Per Farmer in Each Farm Organization in I965-I966 ‘ Farm *THired ’Fertilizers Organizations Labor Tools ' and Seeds E 9E E? l. Ilora Farm Settlement 2l.l7 h.ll h.OO 2. lmariow Farm Settlement I6.6h 3.73 3.6l 3. Okitipupa Farm Settlement ll.23 3.98 h.26 h. Mbiri Farm Settlement 10.90 4.13 5.47 5. lgieduma School Leavers' _ Farm 2.l0 h.#6 5.86 6. Ushie SChOOl Leavers' Farm l.6O h.28 h.78 103 incorporated with resource inputs and social-psychological variables as a set of independent variables. The main purpose Of including the types Of organizations as independent variables was to determine the association between type of organization and gross-margins. A second regression equation shown on page lO6 was run using only resource inputs and social-psychological variables. The main Objective of this second analysis was to determine the association of these independent Variables with the gross- margin in each farm organization. In bOth analyses, certain independent variables were highly correlated. Such high correlation leads to the well- known statistical problem of multicollinearity. Put in practical terms, a problem of multicollinearity arises when some or all Of the independent variables in a relationship are so highly correlated that it becomes very difficult, if not impossible, to disentangle their separate influences and Obtain a reasonably precise estimate of their individual effects.l/ One alternative of partially avoiding the problem of multi- collinearity is to eliminate from the regression one Of a pair of correlated variables. Although this procedure reduces the l/ - J. Johnston, Econometric Methods, (New York: McGraw-Hill, Inc., 1963). p. 201. 104 standard error of the coefficient of the retained variable, it does give a biased estimate of the regression coefficient ‘ for the retained variable assuming the excluded variable fixed. HoweVer, the procedure will give an unbiased estimate Of the relationship between the dependent and the retained variable if the original model falsely specified a relation- ship between the dependent and the excluded variable, that is, the variable excluded due to multicollinearity should not _have been Included in the first place. It was felt that the gain by lowering standard errors outweighed the loss associated with bias estimates and, consequently, the variables with the smallest R2 delete.were exluded.Z/ As explained on the next page, instead Of a set of simultaneous structural equations, a single "predictive” equation was estimated in this analysis. This single predictive equation includes variables from a number Of equations from a system Of structUral equations. Thus, it is likely that some of the supposedly independent variables in the pre- dict-iveyone wereactually jointly determined in. the system. Z/ R2 delete is the amount by whiCh the total R2 decreases when a variable is dropped from a regression with all other variables retained. IOS When two variables in a single equation are jointly determined in a larger system, "the ordinary leastdsquares estimators will be biased and they will be inconsistent".i/ Thus the coefficients estimated from this analysis were obtained from an estimation procedure which probably yields a biased and inconsistent estimate. However, ”this fact alone will not necessarily rule out the use of ordinary least squares as an ~estimating methods, since the chOice Of a method in practice has to be made on a balance of the prOperties of the method and computational simplicity."fl/ For predictive purposes, ordinary least-squares may be further justified because it is not essential to have precise estimates of particular struc- tural parameters. Instead, the objective is to associate a particular dependent variable (gross-margin) with various combinations and levels of the independent variables determining intervening dependent variables. If the data had been good enough to obtain precise estimates of the parameters, so that e.g. elasticities could be calculated, it might have been possible to take into Q/J. Johnston, Econometric Methods, ( New York: McGraw-Hill Inc., I960), p. 253. .‘i/Ibid” p-253. 106 account other equations in the system, and a set of simul- taneous structural equations might have been used. One would then have interpreted the regression coefficient of an independent variable aS-a change in the dependent variable (gross-margin) due to the theoretical effect of a unit change in the use of that particular independent variable. Although using a single predictive equation seems justified for the predictive purposes Of this work, its' use places restrictions on any structural interpretations which can be given to the results Of this analysis. The two predictive regression equations used in the analyses are as follows: 3 6 12 (l) GM = be + .ilbix] I g bixi I .2 bixi I u I: I: I: 3 6 (2) GM: bO + E biXi + fibix; +U i: leh Where: GM - Gross-margin per two acres Of food crOps. and xi: x] Hired labor x2 Tools x3 Fertilizer and seeds l07 Preference for risk-taking x1. x5 a Level of participation X6 : Feeling Of powerlessness x7 - x12: Dummy variables representing the _ types Of farm organizations U = The disturbance term. An alternativespecification incorporated second degree terms (including interaction terms) as independent variables. They were x%, x%, xg, x].x2, x1.x3, and X2.X3. Although this procedure raised R2 as expected, it yielded coefficient estimates which were not significantly different from zero. Therefore, this theoretically more adequate but more complicated specification seemed unwarranted statistically and the linear specification was used for the final analysis. Since around the mean Of the independent variables, the linear relationship is a closeapproximation to a curvilinear one, one can reasonably interpret the-regression coefficient Obtained for any particularindependent variable as a change in gross- margin resulting from a unit increase in the use of that particular variable. I08 Two different sets of dummy variables were used in the first regression equation while only one set of dummy variables was used in the second regressiOn equation. The first set of dummy variables deals with social-psychological variables (xq,x5,x6) The main reason for including this first set of dummy variables was to determine the association of social- -psychological variables with grOSSemargin, i.e. to determine .whether the behavior of these variables is associated with the attainment of economic Optimum, i.e., whether these varaibles are associated with those who-miss their high prOfit points. The second set of dummy variables, (x7,...,x]2):is.concerned‘with the type of farm organization. 'The second set Of dummy 'variables was used to measure the association of type of organization with gross-margin. (The dummy variables for the type of organization are six as one was dropped to avoid a singular-matrix. None of the dummy variables representing the social-psychological variables was drOpped because the question of obtaining a perfect correlation among the variables does not arise since each of the variables can take a value of either one or zero, independently of the others; unlike the first set of dummy variables where if one takes a value Of one, all the others take the value Of zero. In this second 109 set of dummy variables representing the type Of organization, the coefficient fOr the variable (representing the group of private farmers) that was dropped is the constant for the regression equation. The value of these dummy variables is either one or zero. In the first set of dummy variablesrepresenting the social- psychological variables, a value Of one was used if the response was favorable, and zero was used for unfavorable responses. For example, consider the dummy variable for a feeling Of powerlessness. The value-of one was assigned to this variable if the participant had little feeling Of power- lessness (represents a favorable response), while the value zero was assigned if he had a feeling of powerlessness (represents an unfavorable response). In the second set of dummy variables representing the type of organization, a one.was used if the observation belonged to the organization represented by the variable; otherwise a zero was used. Details of the two sets of dummy variables in the regression models are shown below: X4 = I for R] O for all others i for R2 x5 0 for all others '110 X6 : l for R3 : O for all others X7 : l for Z2 = O for all others X8 : I for 13 =.O for all others X9 - l for Z# = O for all others X10 : l for Z5 - O for all others x d d II ‘ for 26 for all Others n O X12 = l for Z7 0 for all others In the matrix form, the dummy variables are as follows: X X \n -P II II o —a —" O C) CD xIo xII X12 Where: RI R2 R3 ll 12 Z3 Zh 000000 111 22 23 2Ll 25 Z6 27 I 0 0 0 0 0 0 I 0 0 0 0 0 0 I 0 0 ' 0 0 0 0 I 0 0 0 0 0 0 I 0 0 0 0 0 0 I Preference for risk—taking Level of participation Feeling Of powerlessness Private Farmers Ilora Farm settlement Imariwo Farm settlementéj Okitipupa Farm settlement Mbiri Farm settlement lgieduma School leavers' farm Ushie School leavers' farm é! Imariwo belongs to the ”Integrated Rural Development Scheme" -- a modified form of farm settlement. 112 The predictive equations in this analysis were fitted with techniques based on the following standard assumptions,é/ which for reasons stated below are not thought to be met. (a) The expected values of disturbance terms are zero, i.e., E (U) : O. (b) The disturbance terms have euqal variances for all observations, i.e., E (02) . 0‘2 (c) The disturbance is independent, i.e., E (Uin) : O, for all i j. (d) The independent variables are independent of the disturbance term. Failure to meet these assumptions requires that the estimates Of the coefficients be carefully interpreted. The problem results from the use of a single predictive equation instead of some set of structural equationsl/ such as shown below: (a) GM . 'f(X], X2, X3) (b) f is related to (X4, X5, X6) Q! J. Johnston, 92. cit., p. 107. 1! ”Structural relationships involve structural rameters, which have to be estimated by statistical methods." ee Gerhard Tintner, Econometrics (New York: John Wiley and Sons, Inc., 1952), p. 10. 113 (c) X, : f; (xA, x5, x6) i = 1,2,3 (d) f is also related to (X7, ..... ,Xlz) (e) X; : 93(X7,...., X12) i : I, 2, 3. Thus, theoretically, one should deal with a,b,c,d, and e separately as part Of a set of simultaneous structural equations. In this study, however, these equations have been combined in a single equation which is regarded as ”predictive”. This procedure places restrictions on the structural inter- pretation which can be given tO the results Of this analysis. By using one single equation Of the form: GM = f(X], X2, X3, X“, X5, X6, X7, . . ., X12) instead of 3 equations plus 2 sets Of 3 equations for a total system of 9 equations in 9 unknowns (but observed) dependent variables, 8 Ot these 9 dependent-variables have been inappropriately specified as independent variables, i.e. it would have been more appropriate to treat: X = f] (X4, X , X ) x; = f2 (x4, x2, x2) x3 3 f3 (Xu. XS: X6) x“ = 9] (X7, 0: XIZ) XS“: 92 (X7, 0 09 x12) X6 : 93 (X7, . e ., X12) f 'h H II ‘91 N A x \I v a u-I N V 11h Though, it would have been preferable, it probably was not possibletosolvethe systemlbr GM, X1, X2, X3, = fi (X4, .._., X12) i.e-O, . . ., 3. Even if this weremathematically possible, the variances of the data and the intercorrelations among the variables would make it statistically difficult to get good estimates. Thus the single predictive equation used in this study is such that any structural interpretations of its coefficients need to be done-carefully and cautiously. For example, in a structural equation, a change in gross-margin, resulting from a change in one variable is only a partial effect Obtained by changing that partiCuIar variable, certeris paribus. However, in this case it is possible that changing that variable may change-Other variables which are, in theory dependent on it rather than being independent. Thus, some Of the assumptions stated on page i13 are not strictlymet. If X].= f(X6) where X] (Hired labor) is an endogenous variable in the system of equations and X6 (Level of participation) is an exogenous variable, then by using a single predictive equation in which X1 is treated as an independent variable, the estimated regression coefficient of X] i.e. b] is Of dubiOus structural meaning. If for example.b1 : 0.6 for the predictive equation, this coeffiCient is some 115 unspecified combination of the influence of X6 on XI and of X] on GM. Thus, one-can easily make an error in regarding .b as measuring the effect of a change in X] on gross—margin. If Y is to be regarded as a linear, first degree structural function of X1: X2, X3 it is important to know whether the bi's are equal to, greater than or less than zero. Yet the above argument raises grave doubts as to whether the bi's for X1, X2 and X3 from the predictive equation can be interpreted as structural coefficients Of such a function without careful study of the correlations among the Xi's. A table of the simple correlation coefficient follows. The use of this table can be illustrated as follows: (I) If X4 (preference for Risk-taking) has medium values we expect X1 (Hired labor) to be such that the structural coefficient relating X] to GM is near zero. If X4 has high or low values our theory causes us to expect the structural coefficient to be greater or less than zero. In the regular farm settlement only 19.17 percent Of the farmers have medium values for X“. By contrast, in the school leavers' farms, 88.33 percent have medium values for X“. For the regular settlements, Table 12 indicates that so much hired labor was used that the relationship between labor use and GM ranges from -.27 to -.96 and that these were significantly different e._ NN. e_. we. so. so. mm. Ne. we. 4.. ea. mm. m_em= x ;; e._ as. we. mo.. so. mm. mm. we. m_. mN. mm. msses_m_ ..x .e._ e~. .mp me. me. em. es. m_. en. en. _t_sz e_x . 6.. ON. mm. mm. an. .m:. so. m_. mm. nese_e_xo mx 4 etc m_. an. em. es. we. ma. mm. oz_tme_ ex ; :0”. mm. .mm. me. ~_. ma. em. mto__ RX 6... mm. a:. mo. ~_. me. eo_umaww_wmmma ox e._ 0.. me. No. em. nnoewmsmuwamme mx 3 e. s. s. screens. 3. o._ .N. mes memos ensue mx .o._ mm. m.ooe .Nx 0.. tone. emt_: -.x we e_x onx IsWx ex we ex mx ex mx ~x _x “wwmmwwmwp_ mco_um_OLcoo o_oE_m .oum 0—3mp 116 117 Table 10. Regression Results for Gross-Margin Analysis of Food Crop Prodyction in All the Six Farm Organizations. Bo BI 32 83 84 35 Y = 13.95 - 0.97X]+ 0.79X2r 0.11X3+ 5.59X4+ 2.78X5 (h.6h) (0.23) (1.20)? (0.66)? (1.85)‘ (1.89) 36 97 B8 . 89 810 + 12.23x6 : 40.74x7 + 30.65x8 + 38.96x9 + no.5uxlo (2.58) (4.76) (4.82) (4.24) (3.86) B11 B12 (3.03) (3.28) R2 : 0.898 82 : 0.892 Y : Gross-margin : Hired labor X2 : Tools X3 : Fertilizer and seeds X4 : Preference for Risk-Taking X5 ; Feeling of Powerlessness X6 : Level of Participation X7 = Ilora Farm Organization X3 : Imariwo Farm Organization X9 : Okitipupa Farm Organization X10: Mbiri Farm Organization X]]=,Igieduma Farm Organization 1X12. Ushie Farm Organization I 0 O 0 '-/These figures represent regreSSIon coeffICIents. Standard errcs are given in parentheses from zero at a five percent level of significance.§/ By contrast again, the corresponding coefficients.for the school leavers' farms are .07 and .08 which are near zero even though significantly different from zero. Thus, the predictive coefficients seem to make structural sense. However, the simple correlations need to be checked further. As X] and Xg are positively correlated at .A8 level, overestimation Of one is associated with underestimation of the other and Vice versa. It is difficult to think of structural reasons why GM : f(X],X2, X3) should shift upward with preference for risk taking, and hence, it is difficult to reason structurally that GM should be a positive function of risk taking. Yet the coefficient relating GM to risk taking is ll.h for school leavers and l.h for regular farm settlements. However, it must also be remembered that X4 is correlated with type of farm; hence, the high regression coefficient for Xb‘ may reflect the type of farm as well as degree of risk taking. .‘i/ The significant level is the probability that the estimated regression coefficient would be as much different from zero if the true effect of the variable (i.e., the true Value of the corresponding B) were zero -- see 0. Gale Johnson and R. L. Gustafson, Grain Yields and the American Food Supply. (Chicago: The University of Chicago Press, 1962). 119 In general, there are reasons which are capable of explaining llfsaddition to GM in the school leavers' farms, as the co- efficients for the school leavers' farms are 28.h and 29.247'5 (see Table 11). In conclusion, the regression coefficients relating X] to GM for the total sample, the school leavers' farms and the regular farm settlements appear to be reasonable and may be given a structural interpretation with caution. (2) If X5 has high values, i.e., if the farmers feel they have power to control their work the structural coefficient relating X] (hired labor) to gross-margin should be expected to be near zero (at Optimum). Conversely, if X5 has low values (i.e., if the farmers feel they have no power to control) one expects the structural coefficient to be greater or less than zero. Table 5 shows that only 15.0 percent of the farmers in the regular farm settlements have high values for X , while 88.33 percent of the farmers in the school leavers' fafims have high values for X5. In the regular farm settlements, Table 12 indicates a negative relationship between XI and gross-margin, and that this relationship is significantly different from zero (at Optimum) at a five percent level of significance. But in the school leavers' farms, the corresponding coefficient is (.08 which is near zero (the Optimum). The results in Tables 5 and 12 indicate that the predictive co- ‘efficients seem to make structural sense. 120 ; Table 11. Relative Shifts in Gross-Margin Due to Differences in Organizational Pattern in the Different Farm Organizationsal ReTat’ ive Shifts 1h Types of Farm Organizations Gross:Margin l. Ilora Farm Settlement -O.9h 2. Imariwo Farm Settlement -ll.03 3. Okitipupa Farm Settlement -2.72 h. Mbiri Farm Settlement -l.lh 5. lgieduma School Leavers' Farm r28.35 6. Ushie School Leavers' Farm 929.19 7. Private Farmers ahl.68 -l/ The above figures were Obtained by calculating the deviation of each farm or anization from the average intercept. Mathematically, this invo?ves computing a correction factor which is b7 f b3 + b9 r 910 t bll + biz: where by through biz 7 represent the coefficients for the six dummy variables included in the equation. (See Table 10). To obtain the shift in gross-margin due to each type of farm organization, the correction factor was subtracted from the regression coefficient of the dummy variable representing that particular farm organization. To Obtain the shift in gross-margin due to the excluded dummy variable (Private farmers), the correction factor was subtracted from the constant term. 121 As Table 9C of simple correlations shows that X] and X5 are _positively correlated at 0.54 level, overestimation of one should be expected to be associated with underestimation Of the other and vice versa. StruCturally, however, one finds it difficult to imagine why GM'. f(X], x2, x3) should shift upward with a decreased feeling of powerlessness and, hence one finds it difficult to think of any structural reason why gross-margin should be a positive function of a decreased feeling of powerlessness. Yet in Table 12, the coefficients relating gross-margin to a decreased feeling of powerlessness-are 19.68 and 19.29 for the school leavers' farms and range from 1.15 to 2.31 for the regular farm settlements. However, since X5 is correlated with type of farm, the high regression coefficient for X5 may reflect the influence of type of farm on gross margin as well as the effect of a decreased feeling of powerlessness. An increase of £19.48 in the gross-margins of the farmers in the school leavers' farms are partially explained by the coefficients of 28.4 and 29.2 for the two school leavers' farms (see Table 11). These coefficients are associated with the type of farm which relies more on individual farmers and which enables these farmers to Operate around their high profit points. Table 12. Regression Results for Gross-Margin Analysis of Food CrOp Production in Each Farm Organization A. Ilora Farm Settlement .43.361 * 0.85x, . 0.65xz +0.02x3 + 1.02xh . 1.68X5 r 1.64X6 (17.06) (0.32) (0.69) (0.12) (0.95) (0.53) (0.85) -<> II R2 = 0.643 82 = 0.539 B. ,Imariwo Farm Settlement BO 81 82 B3 84 BS: 36 Y = 37.19 - 0.96Xl + 0.39X2 f 0.59X3 + 1.85Xh + 2.31X5 i 1.95X6 (10.75) (0.34) (0.39) (0.42)' (0.65) (0.97) (0.68) R2 : 0.719 82 : 0.646 C. Okitipupa Farm Settlement 1 . 40.67 - 0.42x, + 0.36x2 I 0.73x3 + 1.27xh + 1.st5 + 1.6Ix6 (9.55) (0.15) (0.42) (0.67) (0.36) (0.68) (0.46) R2 : 0.672 82 : 0.617 123 D. Mbiri Farm Settlement 80 B] B2 B3 Bu B5 B6 9 . 53.73 - 0.27x, . 0.41x2 + 0.11x3 + 1.64Xu + 1.st5 . 1.45x6 (6.76) (0.06) (0.41) (0.31) (0.45) (0.37) (0.63) R2 : 0.763 82 . 0.701 E. lgieduma School Leavers' Farm 80 B] 82 83 B“ 35 B6 1 : 85.77 - 0.08X] + 0.93x2 + 0.58X3 + 11.13xu o 19.68x5 + 16.96X6 (32.74) (0.03) (0.79) (0.45) (13.38) (24.06) (23.38) R2 =.0.436 82 a 0.369 F. Ushie School Leavers' Farm 7 : 80.90 - 0.07X1 + 0.58X2 + 0.27X3 + 11.43X4 + 19.29X5 + 16.68X6 (40.41) (0.03) (0.46) (0.22) (12.04) (15.28) (13.89) R2 = 0.431 fiz = 0.365 124 However, Table 11 shows that the private farmers who operate entirely On their own did not do as well in producing food crOps as either the school leavers' or regular farm settlers. This result is not surprising since the private farmers have little form of incentive by way Of short-term loans, input subsidies, and extension service which the school leavers' farmers enjoy. Furthermore, Table 11 indicates that Farm Settlements have done slightly better than the private farmers but not as well as the School leavers' farms. This suggests that there is something to be said for the extension attention which the farmers in the farm settlements receive by way of Farm Institutes training and farm settlement's personnel. However, the inferior performance of the farm settlements relative to the School leavers' farms indicates that the farm settlements have not gained much from the substantial capital invested in the Farm Institute and in the farm settlements' personnel. Thus the regression coefficients relating X] to GM for the total sample, the school leavers' farms and the regular farm settlements appear to be reasonable and may be given structural interpretation if carefully applied. (3) If X6 has high values, (i.e., if farmers are able to participate in decisions affecting their farm Operations), the structural V .. 5‘ (’1 o b ‘11. .s o" 125 coefficient relating X] (hired labor) to gross-margin would be expected to be near zero (the Optimum), indicating that the farmers are Operating around their high profit points with respect to labor use. On the other hand, if X6 has low values, (i.e., if the farmers are not able to participate in decisions affecting their farm Operations), one would expect the structural coefficient to be greater or less than zero, indicating that the farmers have missed their high profit point with reSpect to labor use. Table 5 shews that only 5.17 percent of the farmers in the farm settlements have high values for X6 while in the school leavers' farms, 96.67 percent have high values for X6. Table 12 indicates that farmers In the regular farm settlements have missed their hight profit point due to excess use of hired labor as the relationship between labor use and gross-margin ranges from ' -.27 to -.96 and that these were statistically significant from zero (the Optimum) at a five percent level of significance. By conStrast, the corresponding cOefficients for the school ’ leavers' farms are .07 and .08 which are near zero (the optimum). The existence Of predominantlyhigh values for X6 is associated with a profitable use of labor in the school leavers' farms; also, the existence of predominantly low values 126 for X6 Is associated with unprofitable use of labor in the regular farm settlements. This once again indicates that the predictive coefficients seem to make structural sense. Since X] and X6 are positively correlated at 0.75 level (see Table 9-C), over-estimation of XI should be expected to be associated with underestimatiOn of X6 and vice versa. One finds it difficult to think of any structural reason why GM e f(X], X2, X3) should shift upward with high values for X5 (level of participation), and hence, it is difficult to reason structurally that gross-margin should be a positive function of X6. Yet, in Table 12, the coefficient relating gross-margin to level of participation is 16.82 for the school leavers' farms and 1.66 for the regular farm settlements. However, since X6 is correlated with type of farm (see Table 9-C), the high regression coefficient for X6 may reflect the type of farm as well as level of participation of farmers in decisions affecting their farm Operations. A coefficient of L16.82 in the gross-margins of the farmers in the school leavers' farms is consistent with the regression coefficients of 28.4 and 29.2 for the two school leavers' farms (see Table 11). Therefore, in conclusion, the regression coefficients relating X] to gross-margin in the predictive equation appear to be reasonable and may be given structural meaning with caution. 127 Table 13. Distribution of Gross-Margin Per- wo Acre Farm in the Different Farm Organizations (Ell Farm‘Organizations Partici- - pants Ilora Imariwo Okitipupa Mbiri lgieduma Ushie l 23' 37 41 52 114 139 2 29 49 32 52 86 108 3 29 19 52 59 111 116 4 '-38 14 62 47 113 113 5 38 23 49 38 118 103 6 24 27 29 20 109 82 7 62 13 . 28 36 118 101 8 39 22 49 30 105 75 9 11 27 48 49 68 86 10 36 14 40 45 102 109 ll l9 13 24 59 122 115 12 53 47 32 41 125 100 13 39 44 48 57 85 107 14 29 31 45 '40 98 94 15 36 41 57 32 78 82 16 48 15 68 27 140 120 17 31 l6 19 32 76 115 18 26 17 28 40 77 78 19 30 18 45 .55 73 I38 20 55‘ 18 51 42 65 87 21 ' 43 16 57 67 124 80 22 54 20 41 45 94 74 23 27 58 53 22 83 90 24 29 . 33 27 49 64 104 ' 25 35 17 46 56 113 64 26 , 37 21 30 33 _ 77 75 27 ,- 37 21 30 64 ,65 ‘ i 99 , 28 50 20 40 29 88 . 71 29 62 15 41 35 * 118 63 3O 39 8 47 36 86 82 'l/More data will be available in a mimeograph to be published by the Consortium for the Study of Nigerian Rural Development, Michigan State University. I 28 Table 14. Avera e Gross-Margin Per Farmer in Each Farm rganization (L) Types of Farm A Average Gross Orqanizations Marqin Per Man 1 Ilora Farm Settlement 36.9 2 Imariwo Farm Settlement 24.4 3 Okitipupa Farm Settlement 42.1 4 Mbiri Farm Settlement 42.9 5 lgieduma School Leavers' Farm 96.5 6 Ushie School Leavers' Farm 95.6 129 (4) If X2 (L's of tools) and X3 (L's of fertilizer and seeds) are used in moderate amounts, i.e., in such a way that the marginal factor cost of X2 or X3 is not greater than the marginal value product of X2 or X3 respectively, the structural coefficient relating X2 to GM and X3 to GM should be expected to be near zero (at Optimum). Conversely, if X2 and X3 have been used so much that their marginal factor costs are greater than their marginal value products, one expects their structural coefficients to be less than zero. In the regular farm settlements and in the school leavers' farms, Table 9-B indicates a moderate use of X2 and X3. Also, in both the regular farm settlements and the school leavers' farms, Table 12 indicates a positive relationship between X2 and gross-margin as well as between X3 and gross-margin. Table 12 further shows that this positive relationship is not significantly different from zero (at Optimum) both in the farm settlements and in the school leavers' farms. This indicates that the predictive coefficients seem to make structural sense. As Table 9-C of simple correlations shows that X2 and X3 have very low correlations with X4, X5 and X6, this indicates that the shifts in gross-margins due to the regteSSion coefficients of X2 and X3 are not likely to be associated with Xh, X5 and X6. Furthermore, Table 9-C shows 130 that correlations between X2, X3 and type of farm are very low. Here again, it seems the addition to gross-margin from the use of X2 and X3 is not associated with type of farm. This is an indication that the predictive regression coefficients for X2 and X3 may reflect the true influence of X2 and X3 on gross-margin. Hence, one can reasonably conclude that the regression coefficients relating X2 and X3 to gross- margin in the predictive equation make structural sense and may be interpreted with caution as such. Summary Hired labor has been used beyond the most profitable level of production in the four farm settlements, and as a result, there is a negative relationship between hired labor and gross- margins in the farm settlements. By contrast, the positive relationship between hired labor and gross-margin in the two school leavers' farms indicates hired labor has not been used beyond the most profitable level of production. Thenon-significant positive relationship between tools, seeds, fertilizers, and gross-margin, in both the farm settlements and the school leavers' farms may indicate that all the farm organizations have not yet reached their high profit points with respect to the use of these variables. 131 The existence of predominantly lower grossemargins among the farmers in the farm settlements relative to the school leavers' is associated with the farm settlement type of organization where farmers feel they have no power to control their work, where farmers do not participate in decisions affecting their farm Operations, where farmers have less Opportunity to economize on the use of labor and have difficulty minimizing cost. However, in both the farm settlements and the school leavers' farms, results were superior to those obtained from the private farmers who Operate entirely on their own but who generally lack assistance by way of loans, input subsidies, and extension advice. The existence of predominantly higher gross-margins among the farmers in the school leavers' farms is associated with the school leavers' type of organization where farmers feel they have power to control their work, where farmers participate in decisions affecting their farm Operations, and where farmers have the opportunity to economize on the use of labor and to minimize cost. This suggests the wisdom of organizing farm settlements so that farm settlers do feel that they have power to control their 132 work, learn to take risks and so that they can participate in decisions affecting their farm Operations. Finally, the question of the relative emphasis to be placed on food crops vs export crop production in Nigeria, though not dealt with in this study, needs to be given tOp priority in considering future research needs in Nigeria. CHAPTER VI POTENTIAL INTERNAL RATES OF RETURN 0N INVESTMENT IN TREE CROP PRODUCTION IN THE FARM SETTLEMENTS AND THE SCHOOL LEAVERS' FARMS 'Introduction The purpose of this chapter is to analyze the various forms of investment in tree crops, cocoa, rubber and oilpalm, in the farm settlements and the school leavers' farms. In this chapter, investment in tree crOps in the farm settlements and the school leavers' farms will be evaluated, and the experience acquired during their years of Operation will be used to determine whether the farm organizations will achieve their objectives. Although estimated returns on an investment may appear to be quite reliable under various assumptions of yields, costs, and product prices, the actual implementation Of develOpment schemes may cause different results. The radical departure of a project from its planned schedule of Operation can affect its performance appreciably. For example, the planners of the farm settlement scheme counted on using cooperatives as a means Of reducing production and marketing costs. However, COOperatives have not generally been introduced and hired labor has been used 133 134 extensively. 'An FAO Report states that the farm settlement scheme now costs about £5,000 per settler instead of the estimated cost of £3,600 per settler.l/ Also, even though the settler was expected to refund one-fifteenth Of the cost (£250 annually) from the sixth to the twentieth year, after the seventh year, the settler is still unable to refund as much as a penny.Z/ However plausible these early criticisms may be, any constructive appraisal of the farm settlement scheme must take into account the potential returns from the tree crops over a 30-33 year period. For example, when the tree crops are at full bearing, the government expects the settlement to yield an average annual gross income of £450 per settler.§/ . Therefore, the success or failure of the farm settlement scheme will primarily depend upon the income and cost streams generated by the tree crops over a 30-33 year period. Sources of Data In rate of return analysis, there are sources of uncertainty which cannot be avoided. A lack of knowledge about appropriate l/ FAO, Agricultural DeveIOpment in Nigeria, 1965-1980, (Rome: 1966), p. 345. Z! FAO, The Farm Settlement Scheme in Western Region: Report to the Government of Nigeria (ROme: 1963), NO. 1720. 2! FAO, Ibid., No. 1720 (1963). 135 product prices is likely to affect the expected returns. One may know in advance that the prices used may fluctuate. The world market price itself may vary, and the producer price cannot be determined with any great confidence. These sources of variation in expected returns are dealt with in this analysis by assuming different levels of product prices and yields in calculating internal rates of return. Product Price Assumption Cocoa Prices: Three different price assumptions are used. These are a low f.o.b. price of £120 per ton, a medium f.o.b. price of £160 per ton, and a high f.o.b. price of £200 per ton. These prices, however, do not reflect the actual returns to Nigeria since there are certain cost differentials between the world market price and what Nigeria actually receives. The differential between the world price and returns to Nigeria of £26 per ton is shown in Table 15. Hence, returns to Nigeria per ton on the basis of f.o.b. prices given above are £94, £134, and £174, respectively. The corresponding returns to producer per ton are a low price of £66, a medium of £90 and a high price of £114 as shown in Table 16. 136 Table 15. Components of the Differential Between World Cocoa Price and RetUrns to Nigeria Components of the Differential Charges per . ton £ (1) Buying allowance to Liscensing Buying Agents 13.5 (2) Produce inspection charges 0.6 (3) Handling and storage 1.85 (4) Miscellaneous charges (fumigation, deterioration, etc.) 2.10 (5) Administration and finance 1.95 (6) Transport to port 6.0 Total Differential per ton . £26.00 ___r’ Source: FAO, Agricultural Development in Nigeria 1965-1980. (Rome: 1966), p. 69. See also Cocoa Project Analysis 1, Economics Department of Premier's OffTCe, western Nigeria, (1966). 137 Table 16. Cocoa: Calculation of Returns to Nigerian and to Producers under Various Price Assumptions Item 1 Low Medium High (E per ton) 1. F.O.B. pricel/ 120 I60 , -26 2. Differentialzj -26 -26 -26 3. Returns to Nigeria 94 134 I74 4. Sales Taxi/ 4 4 b 5. Export Duty 12 16 20 6. Marketing Board Surplus 12 24 36 7. Total (for 4, 5, 26) 28 44 6O 8. Producer Pricefl/(7) from (3) 66 90 114 l] F.O.B. price assumptions are thoseiused in FAQ Agricultural Development in Nigeria I965-1980, (Rome: 1966), p.69. For historical cocoa price movements see Table 17 in this chapter. ~ 3] Obtained from Table 15 in this chapter. if See FAO, Ibid., p. 69. Producer prices used in this analysis do not include transport allowance which has already been considered in direct production costs. 138 Table 17. World Cocoa Prices by Major Buying Points, 1957-1966 Price Differentiai Year pence/lb. £/ton £/ton "fi§£w$8:kLZhdon- 1957 30.6 245 247 ,2 1958 44.3 354 352 -2 1959 36.6 293 285] -8 1960 28.4 227 226 -1 1961 22.6 181 180 -1 1962 21.0 168 170 02 1963 25.3 202 208 06 1964 23.4 187 I 190 {3 1965 17.3 138 141 r3 Jan. 1965 23.0 184 192 I I8 July 1965 12.2 98 98 - Jan. 1966 22.6 181 179 -2 Source: FAO Cocoa Statistics. Vol. 9 (July, 1966), p. 17. 139 Rubber Prices: In estimating returns to Nigeria from rubber production, two different price assumptions are used, a low price of 15 pence and a high price of 18 pence per pound of dry rubber.&/ These correspond to 12 and 15 pence per pound of dry rubber,re5pective1y, in terms of return to producer.§/ These prices represent what the producers obtain for their latex delivered to processing plants. Oil Palm: Price Assumptions: Table 18 shows the two price assumptions for both palm-Oil and palm-kernels. Technical Assumptions: Yields Per Acre The technical assumptions underlying the calculations for cocoa, rubber and Oilpalm are presented in Table 19, 20, and 21, respectively. While the assumptions of yields per acre of cocoa and oilpalm are similar to those used in previous studies estimating expected returns from these crops, the assumption of 5/ FAQ, Agricultural Development, pp. cit., pp. 86-89. 9/ FAO, Ibid., p. 89. See also Kurt R. Anschel, "Economic Aspects of Peasant Rubber Production in Midwestern Nigeria”, (Un ublished Ph.D. Thesis, Michigan State University, 1965), p. 40. In using similar prices, Oyolu wrote, "even though rubber is subject to incessant price fluctuations, the price has been maintained at uniform price level of 12d per pound of dry rubber for the years 1959/60 to 1964165. See C. Oyolu, et. 31., ”Evaluating Farm Settlements and School Leavers' Farms in Mia: western Nigeria", (Unpublished Report, Benin: 1965). p. 85. 140 Table 18. Oil Palm: Calculation of Returns to Nigeria and to Producers Under Different Price Assumptions TLow Priee High Price Item PETm- PaTm 7Pa1m- Palm- oil kernels oil kernels (Eper ton) 1. F.0.B. pricel/ 65.0 40.0 75.0 50.0 2. Buying allowance 7.5 3.5 7.5 3.5 3. Port handling charges 4.0 1.6 4.0 1.6 4. Bags - 1.9 - 1.9 5. Administrative costs 1.0 1.0 1.0 ’ 1.0 6. Total Differential charges 12.5 8.0 12.5 8.0 7. Returns to Nigeria 52.5 32.0 62.5 42.0 8. Purchase tax 4.0 2.0 4.0 2.0 9. Export duty 6.5 4.0 7.5 5.0 10. Marketing Board surplus 6.0 4.0 10.0 8.0 11. Sub Total -16.5 10.0 21.5 15.0 12. Returns 59 producer_. 36.0 22.0 41.0 27.0 ll Source: FAO, Agricultural Development in Nigeria 1965-1980, (Rome: T966), p.714T. See aTso David MaEFarlane and Martin 0woren, ”Investment in Oil Palm Plantations in Nigeria: An Economic Appraisal”, Economic DeveIOpment Institute, Universit of Niggria, (Enugu: ‘Nigeria, December, 1964 , Mimeo. p. I- . , Z/ See Kurt R. Anschel, 2p. cit., p. 45. In 1964, the prices paid to producers were about £36 per ton Of palm-Oil and £22 per ton of palm-kernels. See FAO, Ibid., p. 130. 141 Table 19. Cocoa: Yield Assumptions per Acre - Yields of Dry Cocoa Beans in lbs. Per Acre 31:22:": “”322?” (a: H.212.) 1:881:82. (1:33:39 ac 4 1 60 60 60 5 2 170 170 170 6 3 340 340 ‘ 340 7 4 ,500 500 500 8 5 570 670 670 9 6 680 800 800 10 7 723 850 900 11 8 765 900 1000 12 9 806 950 1100 13 10 1850 1000 1200 33 30 850 , 1000 1200 Source: FAO, Agricultural DeveIOpment in Nigeria, 1965-1980, (Rome: 1966), p. 52. TEOW yield figures were calculated from FAO yields of 1000 lbs/acre. 142 Table 20. Rubber: Yields Assumptions per Acre lbs. of Dry Rupper per acre Planting Production Low Yield Medium Yield High Yield Year Year (600 lbs/ac) (900 lbs/ac) (1200 ;bs/ ac. 7 1 240 360 480 8 2 360 540 720 9 3 450 675 900 10 4 510 765 1020 ll 5 540 810 1080 12 6 570 855 1140 13 7 600 900 1200 33 27 600 900 1200 ESource: Using the assumptions of maximum yields above, the yield 3 estimate per acre per year was calculated from FAO assumptions of maximum yields. See FAO, AgriculturalA Develgpment in Nigeria, 1965-1980, (Rome; 1966), p. 89. .mco_uoE:mmm o_o_> Locuo Eocm uso ooxcoz mm; m_;u ocm .>o:um m_;u c_,ooo:_uc_ coon mm;.oL0m Loo monocoo ooom mo co_uoE:mmm o_o_> 30. < Amy .Aawm_ "omocm .0u:u_umc_ ucoEoo_o>oo u_80coumv .:m_com_z c_ co_umucm_m E_mol__o c_ ucoEumo>c_: .coLozo .< c_uLm: ocm mom—Lmuumz .4 o~>mo ANV .ma. .6 .Aoem_ .oeoeo.omm_-mom_ o_toa_z e_ oeoan_o>oa .otso_so_ema .oau A_o "nootsom Om: mo: :om oom. ouc. m_~_ 0m mm om: mo: :om oom_ o~m_ m_~_ m o— mo: mo: :om owe. H oum. m_~_ o m 3 HM omm oom onw o::. w o::_ omo_ m m m_m m_m mmw oom— oo~_ mam : .m mam mam mm. omm omm mam m m m—_ m__ mm om: om: mmm N m mo mm mm omu omN omm _ : meow meow meow oLum A oLOm. meow \mozucoo \mocucoo \mozucoo \mocucoo \mosucon \mosocoo mo. ooo.o_ .mg. ooom .mo_ ooow .mg. ooo. .mg. ooom .mo_ ooom Lmo> Lmo> o_o_> sa_m neo_> ss_ooz11teo_s zoo o_o_>ea_: m—oesleaom:w o_o_> zoo eo_oosoota me_oeo_a neoeLox-e»na _em.e_oa .Amo_v oto< Loo mco_uoE:mm< o_o_> "E_mml__o ..N o.oop 144 yield per acre of rubber is different from that Used-In any previous study of this kind. FAO assumes a maximum yield of a low 1,000 pounds and a high 1,300 pounds of dry rubber per acre,é/ while in their estimate of expected returns from rubber in the Midwest, Oyolu, _£,_l,, assume a maximum yield of 1,500 pounds of dry rubber.per acre.1/ In view of the production records of rubber in Nigeria, these assumptions appear too high. Anschel found that the average yield per acre in Nigeria is slightly.under 400 pounds.§/ Messers Armstrong, Tappan, and Robertson, all of whom have had considerable experience in rubber production in Nigeria, agree that the average current yield of producers in Nigeria is below 400 pounds.2/ In this study,however, a low yield of 600 pounds per acre is used to allow for possible improvement in management and tapping practices. 6/ FAO, Agricultural Development in Nigeria, 1965 1980 (Rome: 1966) P 89 l/ Oyolu, Ibid. 8/ Kurt R. Anschel, "Economic Aspects of Peasant Rubber Production in Midwestern Nigeria”, (Unpublished Ph. D. Thesis, Michigan State University: 1965), p. 95. 9/ Letter from Orin J. Scoville, Field Project Leader, Consortium for the Study of Nigerian Rural DeveIOpment, (Lagos, Nigeria: August 17, 1967). , 145 Total expected returns are based on the target acreage for each farm organization up to the end of the first develOpment plan 1962-68 over a 33 year life span for the tree crOps. The acreage planted up to December 1966 and the target acreage for each farm organization are shown in Table 22. .In addition, the rental value of the houses built in each farm settlement was included. This was estimated at 10 shillings a month for each settlers' house over a 33 year life cycle. Cost Assumptions The cost items in this study have been divided into two broad groups -- the social-overhead costs and the direct costs of production. Social-overhead costs are defined in this study as costs not directly involved in the productive process. These costs are influenced by the form of farm organization employed. For example social-overhead costs in the farm settlement scheme include costs of providing houses for the settlers, formal training in Farm Institutes, and administrative costs such as office buildings, stores, office supplies, and staff costs both on site and in the headquarters. The social-overhead costs incurred in each farm organization through December 1966 were obtained. The costs of settlers' houses were based on the actual amount spent on the houses plus 146 -- -- omm -- -- 0mm oz_tme_ m om. o¢~ -- om oo. -- m_;m: : om. OJN -- om oo. -- manum_m_ m mam. am“ -- Nfim :om -- _t_nz N com. ~_m -- om__ ~_m -- masa_u_xo _ E—ma— _O gmnnzm MOUOU E—ma— _O 1.639).”. MOUOU mc0_uMN_cmmLO Stun» gamma“ mam mm.._..mfi.wmm.¥ co_um~_cmmco Ecmm zoom c_ wm\Nwm_ cm_m ucoan_o>om umc_u osu, 0 new. on“ Ou a: ommoco< uomcmh ocm mom. .consoooo ou 3 poucm_m o moco< .NN m_nmh 147 the.costs of houses to be built to complete the l962-68 DeveIOp- ment Plan. Even though some of the houses built cost L600 each, while some cost £350 each, the remaining houses to be built in the First Plan were estimated at L350 each. Costs of formal training were based on the number of settlers trained in the farm settlements. The cost of training each settler in the Farm Institute for two years is £400.19/ With respect to administrative costs, the actual costs involved up to December 1966 were used. To obtain.annual administrative costs up to the end of economic life'of the tree crOps, an average of the costs spent up to December 1966 was calculated for each farm organization. Even though experience from similar government projects in Nigeria or in other countries seems to indicate that adminiStrative costs tend to increase over the years, a 10% decrease in adminis- trative costs was used in this study in the interest of caution. Hence, instead of using the annual average obtained for each farm organization, it was reduced by 10% to obtain yearly administrative 11/ expenses.-—- (See Appendix D). 12/ Jerome C. Wells, "An appraisal ongricultural Investments in the l962-68 Nigerian Development Plan", ( npublished Ph.D. Thesis, University of Michigan, Ann Arbor, 1964), Table B-13, p. 263. 11/ Such items as stores and offices built as part of administrative expenses but which require no major costs once the initial investment has been made~were accounted for by allowing a five percent maintenance cost. 148 Direct costs are divided into five categories -- (1) Development, (2) Nursery and Pre-Nursery, (3) Tools and Machinery, (4) Establishment and Maintenance, and (S) Harvesting and Transportation. Each of these cost categories is made up of the following items: Development Eggts: These include surveying, land acquisition and crOp compensation, transport of labor and supervisory staff prior to the erection of buildings on the settlement, roads and bridges directly involved in the settlement. Nursery and Pre-Nursery: Labor for pre-nursery and main nursery, seeds and seedlings, fertilizer, and other costs such as pesticides. Figures used in this study for these two categories of costs above are the actual costs incurred in these farm organizations, and they are based on the data obtained from the farm accounts and the files in their respective headquarters. 1921; and Machinery: These include nursery equipment, tractors and equipment, traditional tools and equipment. Estimates on costs of tractors and equipment are based on the actual number of tractors purchased specifically for each farm organization. Agricultural tractors and equipment were estimated at £1,500 each. An annual maintenance allowance of 5% has been 149 included.lz/ Since the useful life of a tractor is approximately ten years, one may assume that a new tractor is purchased every 10 years. Although new sets of tractors would be required about three to four years before the end of the economic life of the tree crops in each farm organization, only the 5% annual main- tenance allowance has been imputed, for it is better to err on the side of caution and assume that the already purchased tractors might still be useful after ten years. With respect to the School leavers' farms where there is no modern equipment, the basis for calculation is shown in Table 23. To obtain the total cost of tools and equipment in one farm organization, the costs per farmer were multiplied by the number of farmers in the farm organization. The life expectancy of the tools was used to determine the appropriate time for replacement. Establishment and Maintenance: These include labor costs involved until all the acres are fully planted, costs of mlz/ ”In underdevelOped countries, maintenance is more important and costly because of the delays and costs involved in getting spare parts, and because of additional hazards caused by poorly trained and inexperienced workers, and frequently by bad climatic conditions". See Murray D. Bryce, Industrial Development:' A Guide for AcceleratinggEconomic Growth, (New York: McCrawéHill,'lnc., 1960), p..133.” 1 Table 23. Estimated Average Equipment Requirements and Costs per Farm in Midwestern igeria - Number Expected Average Unit Average Tools Owned Life Cost Annual cost (months) (shillings) (Shillings) Hoes 1.0 29.8 ' 4.6 1.61 Spades 1.0 39.6 15.5. 5.01 Cutlass . 2.0 33.5 5.0 3.26 Knives 2.0 19.2 2.5 3.33 Files 1.0 36.0 2.5 0.83 Tapping knives 2.86 6.6 3.8 ' 1.92 Pails 2.79 19.9 4.98 8.37 Cups (snail ‘ shells) 515.38 29.6 0.05 10.46 Cups (coconut shells) 640.31 29.4 0.05 13.09 Cups (cans) 1.50 16.0 2.74 3.10 Cups (sardine - cans) 5.57_ 9.0 1.60 10.10 Source: Input-output Data collected during the study, November, 1966, and data obtained from Kurt Anschel's Study on ”Economic. Aspects of Peasant Rubber Production in Midwestern Nigeria”, (Unpublished Ph.D. Thesis, Michigan State University, 1965). ' 151 maintaining immature acres, and all costs of maintaining the mature acres until the crops are harvested; such costs also include labor costs, costs of materials such as herbicides, insecticides, and fertilizers. Since these farm organizations have been in operation for some years, costs of establishment and immature acreage used in this study are the actual costs spent in these farm organizations. The figures were obtained from both the farm accounts and from the various files in their respective head- quarters. To obtain the costs of maintenance of mature acres, the cost assumptions used by FAO in estimating cost data on farm settlements in Western Nigeria were used. These costs are based on the implicit assumption that a settler will work full time in his farm and hence will require only occasional hired labor. Although from experience acquired after seven years of operation of the farm settlements more hired labor has been used than expected, the farm settlements have been given the benefit of the doubt by using these conservative cost assumptions.li/ The same cost assumptions have been used for the school leavers' farms since the planners of this scheme assumed that the farmers in the school leavers' farms, like those in the farm settlements, would work fUII time in their farms. lE/See FAD, Agricultural Development, 22..gl£., p. 408 (cocoa), p. 432 (rubber), andp. 468(0i1pa1m). FAD cost assumptions were also used to,estimate cost of establishment and maintenance of immature acreage of the number of acres yet to be planted to reach the target acreage for 1962/68 DeveIOpment Plan. 152 Harvestingagg_Transportation: This includes costs of all operations involved from harvesting of the crOps to transpor- tation to markets. Since the farmers are expected to carry out most of the farm Operations with a modest demand on hired labor, the FAD estimates based on this assumption were used. At full bearing L1.9 per acre was used in estimating the cost of harvesting cocoa.l&/ At full bearing, for tapping and collection of one acre of rubber, £15.65 was used.l§/ For harvesting an acre of oilpalm, L0.6 was used in this estimate.l§/ To obtain transportation costs, six pence per ton' per mile was used.ll/ When compared with one shilling per ton per mile used by MacFarlane and 0woren in estimating returns from oilpalm production in Eastern Nigeria, a transportation cost of 6d per ton per mile used in this study appears to be on the low side.l§/ Table 24 showing the distances of the farm organizations from nearest major markets was used together with output produced in each farm organization to obtain the transportation COStS. Lh/FAO, Farm Settlement Scheme in Western Nigeria, EPTA, Report No. 1720 (ROme: 1963, Table Appendix T. 2), p. 34. Elma” p. 37. lé’Ibid., p. 36. lZ/FAO, Agricultural Develgpment, .QE- cit. , p. 85 and p. 125. LB/David L. MacFarlane and Martin A. 0woren, "Investment in Oilpalm Plantations in Nigeria”. (Economic DeveIOpment Institute, University of Nigeria: August, 1965), p. 92. 153 Table 24. Distances of Farm Organizations From Nearest Major Markets in Western and Midwestern Nigeria (miles) Farm Organizations Distance to Nearest Major Market 1. Okitipupa 7 2. Inmriwo A 3 3. lgieduma 2 4. Mbiri 12 5. Usmie 3 154 All the labor cost assumptions used in this study are based on the current government rate of 6/3d per day in WeStern and Midwestern Nigeria. The returns calculated in this study assume favorable soil conditions and good farm management practices. The assumptions of static-micro economic theory underlie the estimate in this analysis. In addition, this study assumes perfect competition, proportionality, and continuity of the production function. The assumption of perfect competition implies that factor and different product prices used in this analysis are independent of the actions of any single buyer or seller. This permits estimates to be made over the relevant farm sizes without adjuSting these prices. Little evidence indicates that the markets for inputs used and for the products at the farm level in Nigeria are less than perfectly competitive. The number of buyers and sellers is too large to permit signi- ficant market control. Method of Analysis Using the various yields, costs, and product price assumptions, two sets of internal rates of return on investment were determined, one set with the social-overhead costs, and the other set without the social-overhead costs. The planners of the farm settlement form of farm organization attach much importance to indirect benefits that can be achieved from the scheme. Emulation of the 155 settlement form of organization by farmers in the neighboring villages and a subsequent slowing of migration of youths from rural to urban areas are frequently cited as significant indirect benefits which may later more than offset the rather heavy social-overhead costs involved in this form of farm organization. In recognition of these alleged indirect benefits to the farm settlement scheme, the Ministry of Agriculture in its initial estimates of returns to individual settlers applied a subsidized rate of interest of 1-1/2% to all capital inputs used in the scheme. Such estimates assume not only the existence of the indirect benefits but also their magnitude. Wells writes, I'Although the potential of such indirect benefits may be great, they defy quantitative estimation and cannot be assumed to exist per se. It is assumed that unless direct benefits in the form of returns to crOps and livestock cover the costs directly attributable to their production, there will be no indirect benefits to the project. Since it is highly unlikely that farmers will emulate techniques which do not appear profitable to them, this assumption approximates a necessary-- if not sufficient--condition for the presence of such benefits."12/ Calculating two different sets of internal rates of return provides an Opportunity to determine the profitability of 12] Jerome C. Wells, ”An Appraisal of Agricultural Investments in the l962-68 Nigerian Development Plan", (Unpublished Ph.D. Thesis, University of Michigan, Ann Arbor: 1964). 156 investment with and without the social-overhead costs. The difference between these two different sets of internal rates of return indicates the magnitude of the indirect benefits that must be generated for overall success of the scheme. In each set of internal rates of returns, returns to producer and returns to Nigeria, or to the economy as a whole, were calculated using producer and world market prices respectively. Computation 9f Internal Rates 2f Return: The internal rate of return for a project in the general case is defined as that discounting rate r which reduces the stream of net 'returns associated with the project to a present value of zero (or, equivalently, which makes the discounted value of the associated cost stream equal to the discounted value of the receipts stream). Mathematically, we have: bl-cz bz-c3 ' bn 0 -c] «.AWI-IWII. . Am)” where r is the internal rate of return, n is the full life of the project, and b1, b2 -- bn and c1, c2 -- on are a series of prospective receipts and costs respectively. By comparing the internal rate of return with the Opportunity cost of capital, it is assumed that productive investment decisions cannot be correctly made independently of the financing decision. The opportunity cost of capital is important in productive investment decisions, because the decision on the margin involves a balancing of the opportunity cost of capital and the return from further productive investment.£9/ Using the mathematical formula for the internal rate of return explained earlier in this chapter, we have: (1) o . -¢ Ibl'cz +b2'c + . . . .+ bn ' W1 +r2 (Tl—r)" The above equation can be reduced to: a] g .. (2) O = -C]+W)1+ 113—”2+ . . ”+(TTFTI'I ‘where a], a2,-. . . , a are series of prospective net receipts n from year one to year 33, and cl is the investment in year one. Equation (2) above can be reduced to I-n a (3) 0 : 12-1 (T717) - C] 29] The borrowing rate (the "cost of capital”) has been recommended by Dean and Lorie and.Savage. (See Joel Dean, Ca ital Budgeting, (New York: Columbia University Press, 1951) pp. 43-44. James H. Lorie and Leonard J. Savage, "Three Problems. in Rationing Capital”, Journal of Business, XXVIII (October, 1955), pp.r229-39. 158 where n = 33 years, the economic life of the project. By computer programming, r, the internal rate of return on the investment, was obtained. V The following are the assumptions about the costs and returns given above. (1) Capital costs along with the variable costs are -assumed to have occurred at the beginning of each year, i.e. January 1, throughout the life of the project. (2) It is assumed that returns are realized at the end of each year, i.e., December 31. (3) Since the returns obtained on the 3lst of December of the first year are closer to costs incurred in January lst of the second year than to costs incurred in January lst of the first year, the net returns for the first year were obtained by subtracting the costs incurred in the second year from the returns obtained in the first.year. 1n the same manner, the net returns for the second year were obtained by subtracting the costs incurred in the third year from the returns obtained in the second year. This procedure was followed throughout the entire life of the project. The costs incurred in the first year remain as cj as shown in the preceeding equation. Although this procedure in which investment expenditures and returns on invest- rnent are assumed to occur at different times gives a somewhat 159 lower yield than when investment expenditures and returns on investment are assumed to occur at the same time; it is preferred because it is better to err on the side of caution in an analysis of this type.Zl/ Results Tables 25 through 30 summarize the expected internal rates of return on investment in tree crOp production in the different farm organizations. A number of alternative calculations have been made to permit evaluation of the investments under different yields and product price assumptions. These results show that internal rates of return to the producer and to Nigeria are considerably higher in the school leavers' farms than in the farm settlements' farms. The derivation of a measure for the Opportunity cost of capital, .El/ Moreover, this procedure avoids the possibility of obtaining meaningless results such as a negative or an infinite internal rate of return on an investment which yields positive net returns every year throughout its economic life. This situation could arise if one makes the assumption that costs, including capital costs, and returns occur at the same time. Under this assumption, the equation for internal rate of return 15 1: n o : 2 bi-ci. 1:1 (1+r11 Estimated internal rates of return under this assumption (i.e., the assumption that costs and returns occur at the same time), were 2 - 3% higher than estimated internal rates of return under the assumption used in this analysis. See Appendix H for a mathematical proof of the equation used in this study. 160 . however, is a complex process for there is no completely satisfactory solution for its measurement in an Operational setting. As a measure of Opportunity cost of capital, Eckstein has suggested the use of a government rate which measures the Opportunity cost of additional taxation. He argues that when foreign borrowing is an important source of government funds, ”Opportunity costs of marginal taxation'l is similar to the rate which reflects capital rationing to the borrowing government.2;/ To estimate the real cost of capital to the economy, Schmedtje suggests that the "prime rate'I of interest on investments involving least risks from bank rates to the government and major safe investments be combined with a free “market rate”. Applying this approach to Nigeria, Schmedtje's estimate of the real cost of capital in Nigeria is about 9-10%.2i/ Stolper, on the other hand used 6% in planning Nigerian l962/68 DeveIOpment Plan. Six percent may not reflect the true Opportunity cost of capital in Nigeria since the government's borrowing rate -;;/ Otto Eckstein, Water Resource Development: The Economics of Project Evaluation, Harvard Economic Studies, Vol. CIV, fifiinbridge,Mass.: Harvard University Press, 1961), pp. 97-99. Specifically, Eckstein argues for the use of a weighted average of the rates relevant for the business households on which the burden of additional taxation falls. 31/ Jochen Schmedtje, ”On Estimating the Opportunity Cost of Capital", (Washington: J.B.R.D., 1963), p.50, (Mimeograpfed). of interest involves lower risks relative to typical farmers in Nigeria. Six percent would certainly be too low as ”cost of capital" to a farmer who has to finance investment with his own cash. 1 In view of the difficulties associated with obtaining an adequate measure of the opportunity cost of capital, I have assumed various rates of interest to reflect the Opportunity cost of capital. In this study, to evaluate the economic justification of investment on tree crops in each farm organi- zation, 6%, 10%, and 15% are used to represent the range of most likely cost of capital or opportunity cost of capital. The profile of potential returns is compared with these different opportunity costs of capital. Table 25 shows that when total costs of production include both direct costs and social-overhead costs, no individual farmer \NOUld likely invest in rubber-oilpalm production in either Okitipupa or Mbiri farm settlements since the internal rate of return to the producer on such an investment in these two farm carganizations is less than 6 percent, the lowest cost of capital assumption used in this study. Table 25 also shows that except IJnder conditions of high yield and high product price assumptions, “thelinternal rate of return to the producer is negative in these tnvo farm settlements, indicating that the discounted present 162 value of cost is greater than the discounted present value of returns in these investments. Table 25 shows that even under conditions of low yield and low product price assumptions, it is still profitable for an individual farmer to invest in rubber-oirpalm production in either lgieduma or Ushie school leavers' farms. Even at an Opportunity cost of capital of 10%, it is still profitable for an individual farmer to undertake the investment even under low product price assumption. At the highest cost of capital of 15%, however, unless the medium yield assumption is achieved, there is no profitable level of investment for an individual farmer in rubber-oilpalm production in the school leavers' farms under low product price assumption. Table 26 shows that when tOtal costs of production include both direct and social-overhead costs, the economy as a whole will have to depend almost entirely on indirect benefits for economic justification of the investments in rubber-oilpalm in either Okitipupa or Mbiri farm settlement, even at an Opportunity cost of capital of 6%. The internal rate of return to Nigeria in these investments is less than 6% in both farm settlements except under the conditions of high yield and high product price assumptions. 163 .mumoo m>_uo:ooLa uooL_o ocm mumoo omoccm>ol_m_OOm coon mos—oc_ mumoo _mu0u cos; ucoeumo>c_ co ceaumc mo mmumL omumE_umw\H "muoz o.u~ ~.m~ m.m_ m.:~ o.m_ m.m Eco» .mco>mo_ .oo;om o_cm: .: m.m~ ~.m~ m.m_ m.:~ m.m_ m.m Eemm .mLm>mO_ _oo:om I: . I mE:OO_m_ .m _.N w m..- o.m- m.o- _.k- ~.ko_- acmem_uumm.stmu L . . _L_nz .N 4.0- w.mu mo_l :.m- m.mo_- v.0..- ucoem_uuom Ekmm .mo:a_ubxo .— o_o_> .o—m_>..p_mw> : o—OL>:. p_o_> v_o_> 5mm: Eokmmz so; £m_I E:_ooz 304 mco_um~_cmmco Eme mco_uoE:mm< chwmm53mm< .. mu_mn_;mpxi mo_tnizou m_me_z ccmummzo_z ocm chummz c_ mEme .mLO>mog _oo£om ocm mAEOEO_uuom Ecmm c_ co_uo:ooLm E_ma__o new Lonnzm c_ ucosumo>c_ co mcooaooLm Ou eczumm mo mmumm OOumE_umu .mN O—pbh 164 .mumoo omozco>ou_m_OOm ocm mumoo Home_o Lyon Op:_0c_ mumoo .mu0u cos; ucmEumO>c_ co eczumc mo mOumm omumE_umm\H ..m: ~._: m.m~ m.mm ~.mm _.:~ Ecmm .mLO>mO_ _oocom o_;m: .: ..w: _._: m.m~ m.mm ~.mm ..JN Ecmm .mLo>mOa _oozom _ I mssom_m_ .m . All! : .1111... 1.11.“ VIIIIII . . . :.k m.: N 5.0- \ 6.: m._ J m.e- “coem_uumm Etna H J . lb _L_nz .N m.m . m._ . ~.m- M k._ m e.o- m._o_- acmeo_uumm ELmL . -I-;:m v.11- II, ma:a_u_xo ._ o_o_> o_o_> o_o_> . O_O_> p_m_> o_o_>. .Immh: E:_OOE 3o; Ink: E:_wmz, 3og mco_umN_cmmco Econ mco_uaE:mm< mconuasamm< .. 6 mo_ta ewe: mu_ta zoo. mwm_Lom_z cLOumozowz new CLOumOz c_ mEme .mco>mou _oo;om new mu: m_uuom,Ecmm EOLm co_uo:OOLm E_ma__o new Leanna c_ ucoEumO>c__co m_me_z ob ccaumx mo maumm omumsmumu .om m_nmh 165 With respect to both lgieduma and Ushie School Leavers' farms, however, it is profitable for the economy as a whole to invest in rubber-oilpalm production even at an opportunity cost of capital of 15%‘without depending on indirect benefits. Table 27 shows When total costs include both direct costs and social-Overhead costs, no individual farmer would be willing to invest in cocoa production in the Imariwo farm settle- Inent unless under conditions of medium yield and high product priceassumptions or high yield and high product price assumptions. In terms of returns to the ecOnomy as a whOle, Table 27 shows that} an inVestment in cocoa is profitable under conditions of medium and high price assumptions. With low product price assumptions, however, the government would have to depend entirely on indirect benefits for economic justification Of such an investment. Table 28 shoWs that when total costs do not include social- overhead costs, at an opportunity cost of capital of 6% it is profitable for an.individual farmer to invest in rubber-oilpalm production in either the Okitipupa or the Mbiri farm settlement only under conditions of: (1) high yield and low product price assumptions, (2) medium yield and high product price assumptions, and (3) high yield and high product price assumptions. With respect to lgieduma and Ushie school leavers' farms, even at a 15%.opportunity cost of capital, it is profitable for an .mumoo omonco>ou_m_OOm ocm mumoo uOOL_p Loon ova—oc_ mumoo _mu0u con; ucosumo>c_ co ccsuOL mo maume ovumE_umm \fl k.m_ k.N_ m.m m.m m.m 6.6 m.: 6.m. 6.0 . m_tom_z . ob mcezuom .N m.k m.m N.m m.m. m.m, m..- _._- m.m- N0.. 666366.; I ,.II:I;1€.--;III;- -..IIIL . Ou mecauom .— Em_>..u.__m.._> 36.; 26.; 36; 36; 26;. .36; 36; mmkx. 5:466: 366 so”: Es_6mz, zoo. Imm_:, e:_umz .265 co_uQE:mm< co_uQE:mm< co_uOE:mm< 8...; Fat? .. 6 81.:12366: mute 36.. wam_coqu cLOHmoz c_ geese—uuom ELM; oz_LmE_ c_ co_uonooca mooo c_ ucoeumo>c. co cLzuom mo mOumm emumE_umm .NN o_nmp 167 . .mumoo omozco>01_mmuom Ova—uc_ no: Op mumoo .muou c653 u:OEumO>c_ co ceaqu mo mOumL oeume_umm \fl :.mm m._m. ,m.o~ o.mm w.n~ :.m_ Ecmm .mLo>mm_ _oo;Om _ 6_;ma .: m.nm o._m m.o~ .o.mm m.m~ m.m_ Eco» .mco>mo_ .oo:um .II mE:OO_m_ .m m.m k.k . m.m m.k 6.: . m..- 66626.666m 2666 , _L_nz .N m.“ m.: W :._r q m.m m.~ 3 m.k- 66656.6666 2666 .1. .6. .1...: . .. --I;L ma:a_u_xo .— 6_6_> 6_6_> 6_6_> 6_6_> 6_6_> 6_6_> mc6_66~_cmmto ;m_: 266665, 264 ;m_m sa_662 364 etme mco_uoammm< mco_uoE:mm< mumta earn 66_66 366 .lm_LOm_z cLOummzo~z 6cm cL6um63 c_ mEme .mLo>mog _oo:om ocm mmmoeo_uuom Econ c_.co_uo:ooLm E_ma_wo new Leanna c_ mucmEumO>c_ co mcooapoLQ Ou ccsuom mo maumm.OOumE_umm .mm Oénmp 158 individual farmer to invest in rubber-Oilpalm production. The internal rate of return to the producer in the school leavers' farms ranges from 18.6% to 39.7%. Table 29 shows that even when total costs do not include social-overhead costs, at a 6% Opportunity cost of capital, it is not profitable for the economy as a whole to invest in rubber-oilpalm production in either the'Okitipupa or Mbiri farm settlements under low yield andlow product price assumptions ,unless the government would have to depend on indirect benefits for economic justification of such investments. At a 10% opportunity cost of capital, the low yield assumptions under low and highproduct price assumptions becomes unprofitable in both farm settlements and the government would have to depend on indirect benefits to provide economic justification of the investment. At an Opportunity cost of capital at 15%, only the Mbiri farm settlement is profitable on the basis of direct costs and direct returns to Nigeria. In the lgieduma and Ushie school leavers' farms, it is highly profitable for the economy as a whole to invest in rubber-Oilpalm production even at a 15% opportunity cost of capital on the basis of direct costs and direct returns to Nigeria. Internal rates of return to Nigeria in the two school leavers' farms ranged from 39.2% to 66.0%. 169 .mumou omozcm>oI _m.OOm Ops—oc. uoc Op mumoo .mu0u cos; ucmEumO>c_ co cLJumL mo mmumc omumE_umu \— m.m6 m.km ..m4 m.mm «.6m 6.6m same .m.6>66_ .66366 6_;m: .4 m.mm m.mm ..m: m.mm ~.om m.om 5L6; .mcm>66_ 466:6m I I I I I I I .I I .I .I I I m53oo_m_ .m :.m_ ~.m_ m.“ ~.~_ m.m m.: pause—446m 5666 _L_6z .N m.m_ m.o_ m.m _.o_ m.k ~.N 466264666m 5666 66=6_6_4o ._ 6_6_> 6_6_> 6_6_> 6_6_> 6_6_>, 6_6_> . mc6_66~_66666 mm“: e:_m6z‘ 364 mm_: e:_m6z 364 2.66; . mco_uQE:mm< mco_uQE:mm< 6mLtm :mwm 6meta 364 Im_Lom_z cLOummzo.z 6cm cLOumoz c. mELmu .mLO>mm4 _oo;Om 6cm mAmoEo_uuom Econ c. co_uo:OOcm E_ma__o 6cm Leanna c. u:OEumO>:. co m_LOm_z Ou ecsuom mo maumm oeumE_umu .mN o_nmh 170 Finally, Table 30 shows that when total costs do not include social-overhead costs, at a 6% Opportunity cost of capital it is profitable for an individual farmer to invest in cocoa production in the Imariwo farm settlement under medium and high product price assumptions. With low product price asSumptions, however, it is profitable for a farmer to invest only if the high yield assumption is achieved. At a 10% opportunity cost of capital, the investment is profitable only at a high product price assumption and also at a high yield and medium product price assumption. At an opportunity cost of capital of 15%, however, there is no profitable investment for the farmer since the internal rate of return to the producer even at a high yield and high product price assumptions is less than 15%, the Opportunity cost of capital. With regard to economy as a whole, at a 6% Opportunity cost of capital, investment in cocoa production is profitable on the basis of direct costs and direct returns to Nigeria. At a 10% Opportunity cost of capital, investment in cocoa still represents a profitable investment even on the basis of direct costs and direct returns except at a low yield and low price assumptions. At a 15% Opportunity cost of capital, however, the government would have to depend on indirect benefits for economic justification of investment in cocoa production under a low price assumption, and also at a low yield and medium price .mumoo omOLLO>OI_m_OOm mos—Oc. no: on mumoo _mu0u cos: ucoeumo>c_ co ccauo. mo mOumL oeumE_umw\H 4.6. 6.3. 6.6. 6.4. 3.6. 6... 6.6. 3.6 6.3 6..66.2 Ow mccaumm .N 6.6. 6... 3.6 6.6 4.3 - 666 6.6 6.4 6.~ .66666.. On mccaumm .— 6.6.3. 6.6.3‘ 6.6.3 6.6.3 6.6.3 6.6.3 6.6.3 6.6.3 6.6.3 66.: E3.662. 366, 66.: 2636621 .364, 66.: E6.66.. 364 co.uaa:mm< 66.6. 66.: C. co_uqe:mm<. oohtnleakmmm \Hm.cmm_z cLOummz c. mco.uoE:mm< Emu. 603.6 sou pause—uuom Eemu oz..mE_ co_uu:ooca mooou c. acoEumo>c_ co ccsuom mo mmumm oeumE.umu .om o_nmh 172 assumptions. Medium yield and high yield at a medium price assumption and all yield assumptions under a high price assumption represent profitable investment decisions on the baéis of direct costs and direct returns. In the farm settlement form of farm organizations, a low internal rate of return to the producer on an investment in cocoa and rubber-oilpalm in general will make such an investment unprofitable for an individual farmer, and the government will have to depend almost entirely on indirect benefits from the farm settlements form of organization for economic justification of the investments in the tree crops in terms of returns to the economy as a whole. In general, in the school.1eavers' farms, it is profitable for an individual farmer to finance investment in rubber-oilpalm because internal rates of return to the producer from the investment will be substantially higher than the opportunity cost of capital. In terms of returns to the economy as a whole, the investment in rubberéoilpalm represents a profitable investment, and the government does not need to rely on indirect benefits for economic justification of the investment. I73 Summary ‘.In this chapter, we used a rate of return to compute internal rates of_return on an investment in tree crOps in the farm settlements and the school leavers' farms. The computed internal rates of return show that the rates of return on investments in tree crops (cocoa, rubber and Oilpalm) are considerably higher in the school leavers' farms than in the farm settlements. CHAPTER VII SUMMARY, CONCLUSIONS AND RECOMMENDATIONS Introduction The purpose of this chapter is to summarize the preceding chapters, draw general conclusions, and arrive at policy recommendations forinvestment in farm settlements and school leavers' farms in Western and Midwestern Nigeria. Summary and Conclusions Because of the colonial land policy of preserving land for Nigerian private farmers, the main source of growth in Nigeria's economic develOpment from 1900-1960 as outlined in chapter two came from Nigerian private farmers who expanded export and food crOps primarily through additional kabor and land inputs with little assistance from an agricultural extension service, foreign aid, or government land settlement schemes. Farm settlements were established in Western Nigeria, in 1959 with the primary Objectives of increasing agricultural productivity and Opportunities for employment. Subsequently, the Western region was Split into two regions and in 1963, the Midwestern region came into being. Farm settlements continued in the Midwest and a new scheme was introduced: school 174 175 leavers' farms with objectives of increasing agricultural productivity and opportunities for employment. Western and Midwestern Nigeria need information on the performance of these farm organizations to guide them in the preparation and implementation of their second development plan. Thus, in order to help provide such information, this study evaluated the performance of the farm settlements and the school leavers' farms in Western and Midwestern Nigeria. In making this evaluation the "regular'l farm settlement scheme is contrasted and compared with less capital intensive schemes in the midwest, the school leavers' farms. Three measures of performance, social-psychological characteristics of the farmers, efficiency of tree crop production and internal rates of return on investment in tree crops, training and housing were used to appraise the per- formance-of agricultural production in the farm settlements and the school leavers' farms. Results show that because of the highly centralized administrative system of the farm settlements in which major and many day-to-day farm decisions are made by government officers from a far away headquarters, the farmers in the farm settlements view their roles in the scheme as government, 176 labOrers rather than as private farmers. Moreover, despite heavy government expenditures on elaborate housing and the formal training of settlers in Farm Institutes, the farmers have poor general dispostions and low morale. By contrast, even thOugh the farmers in the school leavers' farms lack housing and formal training in Farm Institutes, they Irave strong feelings Of ego-involvement, feelings of ownership, good general diSpositions and high morale. Such feelings have been caused mainly by the administrative system in the school leavers' farms which relies on individual farmers to carry out their own routine farm operations. Turning to food crop production, in the farm settlements, the excessive use of hired labor has reduced the farmers' profit margin, while tools, seeds, and fertilizers have not been used enough to maximize profits in both the farm, settlements and the school leavers' farms. In addition, social- psychological variables were highly significant statistically ' in explaining within-group variations in farm settlements with predominantly low gross-margins, but such variables were not statistically significant ‘ in explaining within-group variations in school leavers' farms with predominantly higher gross-margins. Finally, results show that a farmer in a school leavers' farms, ' certeris paribus, is likely to have a higher gross-margin per (acre than-a farmer in a farm settlement. 177 Results of estimates of potential direct benefits from investment in tree crOps (cocoa, rubber and oilpalm) including the rental value of the houses built in the farm settlements show that substantial expenditures on training, and adminis- tration yield very low returns in the farm settléments. As shown in Table 31, internal rates of return to producers on investment in tree crOps range from less than -110% to 12.9%. In terms of returns to the economy as a whole, returns on investment in tree crops and the rental value of the houses built in the farm settlements range from about -101% to a maximum of 18.9%. It is clear that the margins of profit are such, even after taking into account the impact of marketing board taxes, that careful adjustment to economic optima is required for economic viability and survival. Further, it is clear that the regular farm settlers have not been generally successful in reaching these optima. Except under favorable prices and yields the government will have to depend almost entirely on indirect benefits from the farm settlement's form of organizations for economic justification of the investment in tree crops in the farm settlements. In the school leavers' farms, the prospective internal rates of return on export crOps to the producer and to the economy as a whole on investment were estimated to be generally high. Rates of return to producers range from a minimum of 10% to-a maximum of 37.4% while rates of return to the economy as a whole range from 24.1% to 63.5%. The greater efficiency in the use of 178 .ucmEo_uumm 6.;u LOm ovum—:o_mo mm; maOLo OOLu c. acoeumm>c. co segue. mo mum. .mcLOuc. oc.oo:o: .czoLm Ocm maOLO OOLu O: 50.53 c. geese—uumm 5.6» 636.6 cm 6. 62:. .ucoEOZuOm Econ. 96: 6. 60:34am ”Ease—366 fix; of. \I... 111 6.66 . ..:~ 4.36 6.m 5.63 .6.6>66. _OO;Om 0.36: m m.mw ..JN m.mm m.m Ecmm .mLO>mo_ . .oo:om mE:oo.m_ : :L0>m04 —OO£UW: 4.6. 6.6 m.~. «6.- .uc656.6666 Eme oz.LmE_ m 6.6. 6.6- m.m 3o.I 6:656.4666 .56.. .63: N m.m_ _o_I m.m o__I ucoso_uuom Ecmm moaa.u.xo _ :uCQEfl—uumw . Econ Lm_:mox: ..txsuom.mo.,. .ctsumm.mo.. . ..cLsuom.mo.. . ccauoa mo ........ utOEo_uuom mOumm,E:E.xmz mOumm 8353:.2 663mm.E:E.xmz. mOummIE:E.ckz_ 7 mo OEmz .oz m..om.z Ou 6.0036066 Ou ccauom mo mOummI cezuom mo mOummI .I.mELmu :mcm>mO4 .oo;um vcm mucoeo_qum Econ Ozu c. maoLu much 5. ucoEumo>c_ co m..om.z O» ocm mcoozooLm op ccauom mo m6um¢ E:E.xmz 6cm E:E.c_z OOumE_umm ..m o_amh 179 resources is due to the absence of relatively unproductive large capital investment in housing and amenities. It is profitable for an individual farmer to finance investment in tree crOp production in school leavers' farms. In terms Of returns to the economy as a whole from investment in tree crops in the school leavers' farms, the government does not need to rely on any form Of indirect benefits for economic justification of its investment in the school leavers' project. It is apprOpriate at this point to evaluate the possible indirect benefits-that may be generatedfrom the farm settlements' form of organization in terms of returns to the economy as a whole. The major problems in evaluating such indirect benefits however, are those of identifying such possible indirect benefits and _relating‘ their relative importance to the project's direct benefits with some degree of accuracy. ’McKean has noted that the best counsel is to include only those indirect benefits which are directly relevant and significant or those, even though indirectly related, which are clearly identifiable and measurable. 1/ Since expected revendes from export taxation on. ll Roland N. McKean, Efflciengygln Government Through O erations Analysis, (New YOFk: Johaniley and Sons, Inc. , donaon, 1966), pp. 141-42. 180 tree crops have been incorporated in calculating direct benefits to Nigeria in this analysis and since rental values of the houses built have been accounted for, other types of indirect benefits to Nigeria that may result from the farm settlement's form of organization are in the form of ”diffuse” effects. The diffuse effects that are frequently cited as possible indirect benefits from the farm settlement's form of organiza- tion include employment and ”demonstration.” Wells has noted, however, that: It is not sufficient to assume, as is often done, that beneficial indirect effects automatically justify a project. Some attempt to estimate the magnitude of the alleged effects should take place, and at least some questions should be asked about the direction in which the might act, or about variables in project eva uatign upon which their realization might depend.— Results from this study show that returns to an individual investing in either food or tree crOps in the farm settlements are generally low and unprofitable. In addition, the farmers in the farm settlements have poor general dispositions, low morale and highly pessimistic views about the success of the scheme. Thus With respect to possible ”demonstration" effects IE/Jerome C. Wells, “An Appraisal of Agricultural Investments in the l962-68 Nigerian DeveIOpment Plan”, (Unpublished Ph.D. thesis, University of Michigan: Ann Arbor, Michigan, 1964). 181 from the farm settlement's form of organization, it is hard to imagine private investors emulating an investment which is not directly and obviously profitable to them. By October, 1965, 143% of the total intake of farmers in Western Nigeria had left the farm settlements, even though they received a daily wage of 653d, an equivalent of approximately L115 per annum.§/ This shows that the magnitude of possible indirect benefits to Nigeria from emulation of the farm settlement's form of organization appears small. When the employment benefits of the farm settlements are considered, farm settlements do not seem to be important creators Of employment. In mid-1964, for example, all the farm settlements in Western Nigeria employed only 1,170 farmers. In a region where over 50 percent out of 108,000 new primary six school leavers every year are unemployed, indirect benefits from employment effects in the farm settlement's form of organization appear insignificant. In brief, indirect benefits to Nigeria from "demonstration” effects which could arrest the rural-urban flow of young peOple are likely to be small due to the unprofitability of investment 2/ A. Husein, ”Western Nigerian Farm Settlements", (Ibadan: Western Nigeria Ministry of Agriculture, 1966), (Mimeographed). 182 in the farm settlements. In addition, employment benefits of the farm settlements are insignificant; hence the indirect benefits from the farm settlement's form of organization seem to be insignificant if indeed they do exist. Thus in terms of combined direct and indirect benefits to the economy as a whole, when the farm settlements are viewed as investments carrying small indirect benefits, they do not seem economically sound. Farm settlements have the alleged advantage of ensuring the adOption of the latest techniques and therefore of achieving high yields per man and per acre. Unfortunately, these benefits do not seem to have been used to advantage; furthermore, the form of organization employed seems to make these benefits unlikely and positive rates of return on investments in tree crops, training and housing may not be possible. The school leavers' farms, on the other hand, represent profitable investments which are more likely to stimulate greater investments in export and food crOps than take place in the farm settlements. Finally, this study shows that a less capital intensive form of investment in agriculture involving less elaborate housing and training schemes and under a form of organization that relies more on farmers themselves will likely yield higher rates of return on investment. 183 Recommendations 1. Discontinue new investment in the farm settlement scheme as presently organized. In its Draft of the Second National DeveIOpment Plan 1968/69 - 1972/73, the Western Nigerian Government attaches tOp priority to farm settlements and proposes to spend £1,776,260 on farm settlements during this period. Huge sums of money already paid for land acquisition and crOp compensation as well as possible reduction in unemployment of primary school leavers are cited as important justifications for new investments in 4/ the farm settlement scheme.—- In view of the unprofitability of investment in the farm settlements in Western and Midwestern Nigeria, there appears to be no justification for new investments in the farm settlement scheme as presently organized.§/ In addition, when rural population is projected to increase at one million per year any benefits from a capital intensive scheme which are going to create employment for a small number of peOple will be narrowly distributed. «El "Second National DeveIOpment Plan l968/69-1972/73, (Ibadan: Ministry of Agriculture, 1967). PP. 1-2, (Unpublished document). -5/ The form of organization in Midwestern Nigeria farm settlements has recently undergone some modifications which appear to be moving in the right direction. These modifications were, however, just being implemented at the time of this study, and this probably explains why there are no significant differences between Western and Midwestern Nigeria farm settlements in this study. 1 184 2. Modifications in the farm settlements When the farm settlement scheme as it has operated is evaluated on the basis of combined potential direct and indirect benefits from the scheme, except under extremely favorable yield and price assumptions, no monetary justification exists for the scheme to continue in operation. Modifications in the way they are Operated however, would make the settlement less unprofitable and in~some instances profitable. Further, neither private nor governmental decisions on such matters are based solely on monetary rationale. Non-monetary factors have to be considered, and they may take preference over monetary considerations in some circumstances. Viewing the farm settlement scheme therefore on the basis of monetary values, non-monetary values and political and social considerations, it will be in the best interest of both individual farmers and Nigerian governments if the existing farm settlements are modified as follows: (a) There should be a complete assessment Of each farmer's holdings, obligations, and his house so that each farmer's prOperty and indebtedness are known. A system of repaying the government's loans can then (b) 185 be worked out and duly signed as a legal document tay' both parties. The present system in which no farmer in the farm settlements knows his irudebtedness is unsatisfactory. 1W1e present organization in which all decisions relating tc> labor and finance come from a far away headquarters should be modified to permit more decentralized decision making. Successful farming certainly demands Ia constant process of judgment-making in which sound technical and economic principles are applied with respect to particular time and place considerations. Decisions, therefore, need to be made close to the group and with minimum delay by those who bear responsibility for the outcomes. It is judged to be cheaper and more effective to build the decision- making competence into the farmers and to place the responsibility squarely on them. Recruitment of labor for routine farm Operations should be left mnflrely in the hands of the farmers themselves. (C) 186 lrl view of the fact that the expenditures incurred cn1 hired labor are converted into loans charged tt) the farmers, farmers should be given the opportunity to economize on the use of labor so that they can minimize cost. In order to help private decision-makers do this, the "systems" should inform them as to what the cost is and exactly as to .how they are responsible. If the organization relies more on the farmers for decision-making, these farmers are likely to develop a sense of committment and a feeling Of ownership; hence, their individual potentials could be tapped. In view of the fact that substantial expenditures on training the farmers in the Farm Institutes have had no differential impact on rates of return on investment in the farm settlements as compared thh school leavers' farms,the training of settlers in the Farm Institutes should be discontinued or 187 substantially reorganized. Many of the farmers look upon the Farm Institutes as means of extending their periods Of free education at government expense whi 1e they are looking for white'collar jobs in the - «Lg-— big cities. This is reflected in the large number of trained settlers who have left the farm settlements. The type of training provided at the Farm Institute 1 is such that the farmers are not prepared adequately for the rural life on the farm settlements. Conse- quently, the farmers find it very difficult, if not impossible, to adjust. Many become dissatisfied and leave. The present Farm Institutes should be reorganized and be used for refresher courses, seminars, and short-term courses for local farmers. It is submitted that on-the-job training will have advantages over training in Farm Institutes, provided that formal lectures and demonstrations are included hithe scheme. Apart fromthe saving in cost, on-the-job training exposes the farmers early to the work on their fiums. On-the-job training also provides an oppOrtunlty for the farmers to share in the experience of establishing‘their farms from the start, and beginning (d) 188 .early to develop the Spirit Of COOperative action and community development. On-the-job training should, however, nOt.be confined to giving technical information on the principles and practices of good husbandry and farm management; it Should also include lectures on the philosophy, policy and Objectives Of the-scheme. The provision of adequate and cOmfortable accomodation for farmers and their families early in their lives on the Settlements was considered a prerequisite for the success Of the farm settlements scheme. .Providing houses for the farmers in this nuclear type-of settle- ment may be a reasonable incentive for the young farmers. One question, however, the wisdom of building the houses for the farmers and the timing of this form of incent1veaat .. The houses cost about twice as much as these which the farmers would have built for themselves.~ Most Of the farmers assumed that the houses were free gifts from the government, but they were told later that the cost has been charged to their accounts. In order to keep the settlement's costs reasonably“ low, the farmers must construct their Own houses. ..__'._. (e) 189 Farmers could be given loans to build their own houses subject to zoning restrictions and code require- ments after they have shown sufficient interest in their farming operations. Such loans seem to be better rewards than the building Of expensive houses for farmers who will live in them for only a few months before leaving the settlements. The desire to make farming attractive to young school leavers, the desire for something to act as a show-piece for others to emulate as stated in the Objectives for establishing the farm settlement scheme seem to have caused the planners of the farm settlements scheme to invest in building houses for the farmers. It is doubtful that the local farmers would emulate such an adventure. _If farming is to be made attractive, it shOuld be based on a sound economic fOundation. Multipurpose cooperative action, the main philOSOphy of the Moshav system which the farm settlement scheme is trying to emulate, is an essential aspect of the scheme. This means that the OOOperative Division should have been fully concerned with the farm settle- ment scheme from the start. It is a serious deviation from the principle Of the farm settlement scheme for (r) 190 the government to undertake the responsibilityof selling products for the farmers. As reported in chapter four of this study, farm products from the farm settlements are marketed by the government. It is the duty of the Cooperative Division staff of the Ministry of Trade and Industry to provide multipurpose cooperative education and training for the farmers in the farm settlements. The farmers shouldII'ave individual passbooks, should know how much they have saved, should have the pleasure of watching their sayings grow and should enjoy the benefits of interest or dividend and credit facilities. The fact that a multipurpose COOperative society has not been established, in the farm settlements is a serious weakness of the' scheme. The Objective of the COOperative Division should be to organize the farmers into multipurpose) COOperatiVe societies which will assume the responsi-' bilities for marketing, purchasing, supervising, auditing, and ultimately the whole function of business organization The experience acquired from the ”regular" farm settle- ment scheme has demonstrated that there are severe (g) 191 limitations to increasing agricultural production through the farm settlements in Western and Mid- western Nigeria. Rates Of return on investment are too low for any average farmer to imitate; the rural- urban flow Of youths has hardly been affected, and the contribution to unemployment problems by the farm settlements has been insignificant. A reduction in costs and higher rates of returns on investment can be achieved in the farm settle- ments if there is a reduction in the personnel allocated to farm settlements and if the farmers have their own decision-making responsibilities. The displaced personnel should be engaged in paying more attention to the small local farmers who have been the driving force behind the process of economic develOpment in Nigeria since the beginning of the 20th century. The farm settlement scheme is not only an exercise in agricultural production, it is also an exercise in the 192 manipulation and organization of human beings and rural cOmmunities. Human beings should therefore not be regarded as an incidental part of economic activity. It is important for good relationship and efficient organization that officers on-site in the settlements hold monthly meetings to discuss progress made and know the requirements of the farmers. .As reported in Chapter Four of this study, the Officers in the farm settlements are only concerned with issuing instruc- tions to the farmers and dO not appear concerned about the general well-being of the farmers. The success of the scheme depends not only on the farmers, but also on the quality and dedication of the men who supervise the activities of the farmers, as well as the degree of understanding, cooperation and coordina- tion which these supervisors receive from the head- quarters. The personnel posted to the farm settlements must, therefore, receive training in human relations. In addition, personnel on-site in the settlements should be allowed to remain involved in their-respective settlements for a long time because proficiency grows with experience. 193 3. Modifications in the School Leavers' Farms The following recommendations are of special interest to the school leavers' farms. (a) The Rural DeveIOpment Organizers in charge of the nschool leavers' farms are rather poorly trained for the important task assigned to them. Even though these men appear to be doing a good job, in terms of long-run benefits tO the scheme, the supervisors on-site in the school leavers' farms need to be better trained in good husbandry practices, in human relations and cooperatives. (b) The farmers should be ensured that they will have their future acreage allotments next to their present farms. This requires that the government should assist the farmers to acquire a large area of land through the cooperation of the villagers. (c) The farmers in the school leavers' farms should have an all-purpose building for shelter in case of rains, - and also for meetings, and for mid-day meals. Often the farmers are tempted to stay home after lunch rather than to go back to work, especially on a very sunny day. 194 (d) The village leaders that form the “Block Council“ in the school leavers' farms are doing a good job. This "Block Council'l should be properly constituted as an advisory body for the school leavers' farms. In addition, means of stimulating their greater interest and their continued participation in the development program should be sought and implemented. 4. Implication for External Assistance Agencies The prospective high rates of return on investment in tree crOps in the school leavers' farms suggest it is desirable for external agencies such as USAID, CDC, etc. to consider supporting through loans the expansion of modified farm settlements and modified school leavers"forms of farm organization. 5. Modifications in Credit Systems Even if external assistance is not forthcoming to Offer loans, new credit organizations are needed to support the expansion of modified school leavers' farms and modified farm settlements. It is recommended that Nigerian Governments consider setting up new credit institutions which will offer farnmms short-time and long-time loans which will be guaranteed 13y government, since neither the privatenor the public agencies 195 as they are presently organized are willing to lend a sufficient amount of money to farmers whohave little or no equity. The new credit institution should Operate through a system of federal, and local agencies. There is need for a high degree of coordination between agricultural extension and the staff of these credit agencies. This new type of credit institution must be protected from political difficulties that have beset the previous credit organizations in Nigeria. Some useful guidelines to consider in establishing new credit inst- tutions in Nigeria can be obtained from CSNRD credit report.l/ 6. Implications for Future Planners in Nigeria An important issue now facing planners in Nigeria is the relative emphasis to be placed on the expansion of food and export crops. This research has demonstrated that expansion of export crOps in Western and Midwestern Nigeria can effectively take place via modified farm settlenents and school leavers' farms and probably via other forms. Unfortunately, there are l/ '— Harold Bauman, Chan Connolly, and John Witney, "A Situation Report of Agricultural Credit in Nigeria", CSNRD-3 Report, Michigan State University, June 1966. 196 insufficient data at this time to estimate rates of return on investment in food crop production in any part of Nigeria; therefore, the final decision as to the most profitable means, ways, and location of producing food in Nigeria will depend on the results obtained from future research directed to economics of food crOp production in Nigeria. A study on "The Livestock Human Nutrition Balance in Nigeria'I by Smith, Dema and Idusogie, is in progress; this study is expected to provide 2/ guidance on this issue when it is completed.— 7. Need for Further Research Although the Objectives of this study have been restricted to farm settlements and school leavers' farms, planners preparing Nigeria's Second DeveIOpment Plan need to sponsor research on estimating rates of return on investment in alter- native farm organizations such as nucleus plantations, government plantations, and through input subsidies such as the fertilizer subsidy scheme which has achieved considerable success in Northern Nigeria. -2/ This study is under Sub-Project 3 of a number of studies bein conducted by Consortium for the Study Of Nigerian Rural Deve opment. 10. 11. BIBLIOGRAPHY Books Arensberg, Conrad M. and Arthur M. Niehoff, Introducfng Social EDEESEJ (Chicago: Aldine Publishing Company, 1964): « Baldwin, K. D. S. The Ni er.2- A ricultural Prgject, (Oxford: Basil ac e , 7): Bauer, Peter. West Africa Trade: A Study of Competition, Oligopoly and Monopoly_infia Changing Economy, (Iondbng Routledge and Kegan Paul Ltd., 1963). Bennis, W. 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PP. 1-4. 202 Reports Blanckenburg, Peter Von. ”Rubber Farming in Benin Area, A Study of Some Socio-Economic Factors Influencing Rubber Production", (Preliminary Report, N.I.S.E.R.: lbadan, 1963). FAO. The Farm Settlement Scheme in Western Region: Report to the Government of Nigeria, (Rome: 19631, No. T720. FAO. Agricultural DeveIOpment in Nigeria: 1965-1980, (Rome: October,71966), p. 19. Heckman, John H. USAID Consultant Report, NO. C-45, (March, 1964). Schmedtje, Jochen. ”On Estimating the Opportunity Cost of Capital", I.B.R.D. (Mimeo, Draft, 1963), p. 50. Webster, J. B. ”Agege: Plantations and the African Church”, Conference Proceedings, (Ibadan:.N.I.S.E.R.,; March, 19621. Unpublished Materials Anschel, Kurt R. "Economic Aspects of Peasant Rubber Production in Midwestern Nigeria", (Unpublished Ph.D. Thesis, Michigan State University, 1965). Clark, John. Manual of Computer Programs, Research Services, (unpublished paper, Department of Communication, Michigan State University: 196 ). Eicher, Carl K. "The Dynamics of Long-Term Agricultural DeveIOpment in Nigeria", (Unpublished paper presented at the Annual Meeting of American Farm Economic Association, Guelph: Ontario, August 13-16, 1967). 'Husein, A. "Western Nigeria Farm Settlements”, (Unpublished paper, (lbadan: Ministry of Agriculture and Natural Resources, 1966).. 203 5. Jefferey, Nugent B. and Grant B. Taplin. I'COOperatives in Nigeria", (Unpublished Report, Syracuse University, 1961). 6. Klayman, M. I. “The Transferability of the Israeli Moshav for the Agricultural Development of Other Countries", (Unpublished paper presented at the ADC Conference on Cooperatives, University of Kentucky: April 26-30, 1967). 7. MacFarlane, David and Martin 0woren, ”Investment in Oilpalm Plantations in Nigeria: An Economic Appraisal”, (Economic Development Institute: University of Nigeria, December, 1964), p. 84. 8. Rogers, Everett M. ”Motivations, Values and Attitudes of Subsistence Farmers: Towards a Subculture of Peasantry”. (Unpublished paper presented at the Agricultural DeveIOpment Council's Conference on Subsistence and Peasant Economics, (Honolulu, Hawaii: East West Center; University of Hawaii, 1965). . 9. Stickley, Thomas S. “Socio-economic Correlates of Levels of Living Among Farmers in Three Columbian Neighborhoods”, (Unpublished M.S. Thesis, Columbus: Ohio State University, 1964). 10. wells, Jerome C. "An Appraisal of Agricultural Investments in the 1962-68 Nigerian DeveIOpment Plan“, (Unpublished Ph.D. Thesis, University of Michigan: Ann Arbor, Michigan, 1964). ll. Welsch, Delane Emil. ”The Rice Industry in the Abakaliki Area of Eastern Nigeria", (Unpublished Ph.D. Thesis, Michigan State University: 1964). 12. Yalan, E. ”Planning of Agricultural Settlements in Israel”, (Unpublished paper, Ibadan: Ministry Of Agriculture and Natural Resources, 1960). Other Sources Letter from Orin J. Soville, Field Project Leader, (Consortium for the Study of Nigerian Rural DeveIOpment, Lagos: Nigeria, August 17, 1967). APPENDIX A QUANTITY OF SOME NIGERIAN AGRICULTURAL EXPORTS 1900-1960 205 6.6 463.. 6.6.6 643 466.33 6.6.66. 66..6 6.6. 664.. 336.3 366.3. 666.. .66.33 364.36. 666.4 4.6. 663.. 646.3 663.6. ..6 666.66 6.3.43. .36.6 6.6. 334 366.. 6.6.3 663 466.63 636.46. 666.6 3.6. 664 666 63... 666 366.63 666.63. .64.4 ..6. 666 66... 666 63... .66.63 366.33. 366.3 6.6. 666 343.3 6.6.. 36 66..36 646.66. .43.3 666. 4.6 436.. 466.. 6 664.63 666.66. 666.. .666. 666 636.. 666.. 66 634.66 666.66. 666 366. 66. 463.. .66... 666.. 663.36 346.6.. 633 666. 63. 6.6 663 666.. 366.66 336.66. 634 666. .6.: 6.6 333 46... 346.36 663.66. .66 466. .6.: 63. 664 466 363.46 666..6. .63 666. .6.6 6 336 464 36..46 666.36. 366 366. .6.6 6 6.3 466 663.66 646.4.. 663 .66. .6.6 .. 666 .33.. 666.64 436.66 363 666. Ummmm ccmm cOquO HDCUczogw Lmnnsm —_O M—mCme .MOUOU mme> 3mm 53mm Ebmn. 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UOOm_ccom cOuuou uncocao.u Lonnam ..o m_ocLox mooou memm> 30ml Eben E—mOI 207 663.6 666.. 343.63. 6.6.6. 66..4.. 666.363 466.33 646. 633.6 636.4 46..66. 666.6. 636.43. 666.6.6 .66.63 446. 666.3. 36..3 36..34. 666.3 663.66. 363..66 364.36 646. 466.33 3.6.6. 66..46. 366.6 363..6. 666.446 366.66 346. 663.6 663.6. 63..343 666.3 633.33. 43..636 .66.46. .46. 636.6 .66.6 664.66. 366.3 633.36. .36.663 363.66 646. 66..6. 466.4 663.34. 633.3 346..3. 646.663 .46.6.. 666. 443.3. 433.6 66..66. 66..6 643.6.. 646.6.6 46..36 666. 646.6. 666.6 636.636 636.3 6.3.64. 643.366 6.3.66. 366. 664... 6..... 666.6.3 63..3 633.36. 64..666 666.66 666. 66..6. 346.6. 666.66. 666.3 636.34. 643.3.6 64..66 666. 646.3. 366.6 366.443 6.6.. 633.3.. 344.663 366.33 466. 666.6 664.4 666.463 366.. 666.63. 646.663 363.66 666. 6.4.6. .6... 63..66. 646 666.6.. .66.666. 666..3 366. 666.6 6.6.6 ,663.66. _.36.. 63..6.. 464.463 666.36 .66. “ovum—Cram cOquU HDCUCDOLO. 3033....”— :O m—mchv— MOUOU mme> . .. 36¢ . €366 E_mm .666-366 .66 .6663 .6.oc..33 .66636566 .c.3t_ 66666.6 .6..66.z 6. :uZOLu.o.Eocoom ocm ucoEceo>oo «Oc:u_JO_Lm< ucmmmom .Loc_o__or .x o_mcou .OOLJOm 633.33 436.63 6.6.366 633.36 666.66. 63..6.4 63..46. 666. 666.6. 466.66 633.664 436.66 366.66. 666.664 666.34. 666. 463.3. 663.66 66..6.6 663..4 666.63. 633..44 466.36 666. 3.3.6. 66..63 666.366 366.66 663.66. .663.664 666.66. 366. 66..33 366.33 466.644 64..66 663.66. 666..64 66..3.. 666. 636.3. 43..66 466.666 666.66 64..36. 463.664 6.4.66 666. .33.6. 666.63 666.334 666.63 364.663 ....464 636.66 466. 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Lmnndm. :0 m—OCmew mOUOU .mgmm> . 366. 2366, .6.63 APPENDIX B VALUE OF SOME NIGERIAN AGRICULTURAL EXPORTS 1900-1960 210 6 66. 63. 66 466.. 6...6 36. 6.6. 6 66. 6. 63. 666.. 363.3 .6. 3.6. 4 36 6. 63. 366.. 436.3 66. ..6. 3 63 6 3.6 343.. .64.3 .6. 6.6. 6 66. 6. 66. 344.. 6.6.. 33 666. 3 66 6. 66 44... 634.. .6 666. 3 36 6. 643 4.6.. 666.. 64 366. . 34 6. 366 366.. 46... 33 666. . 6. 3 643 666 666.. 3. 666. .6.: 6. 6 36. 636 633.. 6. 466. .6.: 3 6 33 646 466.. 6. 666. .6.: 3.6 3 66 666 433.. .. 366. .6.: 3.6 . 33. 6.6 646 6 .66.. .6.: 6.6 4 66. .66 466 6 666. .omm63ttmm..._.c0uuoo uncoc:OLu connax ..o m—Oceox mOOoU memo> 3mm. E—mn. 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U0.0m_ccmm COHHOU USED—.3030 Lmnnzm :0 m—chmv— MOUOU mgmm> 3mm 3..—me E-mm 213 61.6. 41,. 4.1.... 2. 3. TI». ..6. .mfl 50.506 .66.. 363.6 636.33 663.4. 366.6. 366.63 333.66 666. 36... .66.3 334.33 666... 666.6. .36.63 663.66 666. 666 646.3 646.63 336.3 666.3. 664.63 666.63 666. 666.. 366.6 66..63 336.3 .66.6. 666.3. 666.63 366. 366.. 6...3 463.33 664.6 666.4. 644.63 666.63 666. 666 666.6 46..63 336.6 .6..6. 66..6. 36..63 666. 636 666.3 666.63 366.3 ..64.6. .63.33 .63.66 466. 363 6.6.6 636.43 363.6 636.6. 66..33 666.43 666. 66... 463.6 4...33 66..4 .66.3. 363.33 666.63 366. 366 666.4 .36.6 664.3 646.3. 666.63 .66..6 .66. 463 636.3 363.6. 666.3 336.3. 466.6. 466.6. 666. 666 644.. 6.6.6. .66 6.6... 6.6.6. 366.4. 646. .366 634 666.6 6.3 646.6 .64... 666.3. 646. 34. 636 366.6 336 666.6 .64.6 666.6. 346. ommm_ccmm. coupon unconsoLu . Lonnsm. 3.0 m_mc.ox .MOOOQ mLmo> 33mm 83.63. =me APPENDIX C QUESTIONNAIRE APPENDIX C QUESTIONNAIRE Column Code Number Project No.i ..4 (1-2-3) Respondent No. (4-5-6) Card No. (7) Group 1: Locations 1 2 - (8) 3 1.; Group 11: Locations 2 (9) Date Interviewer No. Good day, I am from the Nigerian Institute of Social and Economic Research. We are conducting a sUrvey to learn how to improve conditions in Nigeria. We are speaking to some Of the farmers in this settlement to learn more about the conditions of farmers. I would like to ask you a few questions privately, and my first question is: (INTERVIEWER: If respondent answers 'no' and you see indications Of a poor interview situation, such as company, small children playing around, etc., make some mention of the difficulty (if appropriate) and then ask:) 'Is there some time between now and (Tuesday, for example) that would be more convenient for you? I'd be glad to come back and talk to you at any time you-mention. (If thisgifituation is suitable and the respondents t is willi to talk with you then you can sit with him and oceed as follows:) 215 216 For the purpose of this investigation, the answers of all persons who will be'gueStioned'are'important. Tfyou know very little or nothing about the questions, your answers are important. If you know a great deal about them, your answers are even more important. As you can very well see, this guestionnaire is completely anonymous, you may answer all of the questionsfreeTy without any concern about being identified. It is very important to this study to Obtain your answer to every question. I. How Old are you? (IO-ll) 2. What is your marital status? (please circle only one) Married ....... 3 Single ...... ..2 Divorced ...... 1 Widower ....... O (12) 3. If married, how many wives do you have? (13) 4. How many children do you have? (Please indicate their ages as well). Children Age Years of School (14) 5. How many years of complete (a) School did you have? (b) Which certificate did you receive? Secondary ............. 3 Modern Secondary ...... 2 Elementary ....... ..... 1 None .................. 0 Other (specify) ....... (15) 217 6. What is your religion? (a) (b) (c) 7. (a) (b) (c) (d) Catholic ........ ..3 Protestant ........ 2 Moslem ............ 1 Traditional ....... 0 Other (specify)... (16) Would you say religion is important to you in your daily ife? (Unless Don't know, proceed). Would you say it is very or fairly important or unimportant? Very important ........ 4 Fairly important ...... 3 Don't know ............ 2 Fairly unimportant....l Very unimportant ...... O (17) How many times since last November have you been to see an Officer of this settlement about the Operation of your farm? (18 How many times since last November have Officers in this settlement come to see you about the Operations of your farm? (19) How many times since since November have there been meetings of both the settlers and the officers of this settlement? (20) How many times since last November have there been meetings Of only the settlers in this farm settlement? (21) (e) Would you say the meetings in which both the (2) YES (0 N0 officers and the settlers are present are useful to ou in our farm Operations? (1) DON'T KNOW (22) (f) Would you say the meetings in which only the settlers are present are useful to you in your farm operations? (2) YES (0) NO (1) DON'T KNOW (23) 8. 218 (9) Which type of group meeting would you say is more useful to you in your farm Operations -- the type with the settlement Officer and settlers present or the type with only your fellow settlers present? (1) Both settlement Officer and settler present. (2) Only fellow settlers present. (3) Don't know. (24) (a) Extension experts say adding fary yard manure to (b) (C) the soil results in more to your crOps. If you could add these manures to your farmland at a small cost to you, would you be willing to have the manure added? Yes .......... 3 Maybe ........ 2 Don't know...l Not at all...0 (25) Are you favorable to the use Of artificial insemination as a means Of improving the breed of livestock? (Unless Don't Know) would you say very or only somewhat favorable/unfavorable? Very favorable .......... 4 Somewhat favorable ...... 3 Don't Know .............. 2 Somewhat unfavorable....l Very unfavorable ........ l (26) DO you think it is important that the supervisors, or organizers (e.g., Senior Agricultural Superintendent, Agricultural Superintendents, and Agricultural Assistants) of this farm settlement be changed regularly, even if they are doing a good job? Very important ......... 4 Fairly important ....... 3 Don't know ............. 2 Not very important ..... 1 Not at all important...O (27) 9. (a) (b) (C) (d) (e) (f) 219 DO ou use hired labor on your farm? (Please circle one 1 (YES) (proceed with b) O NO((§kip to Q.e) 2 Who hires the labor? 1 Self 0 Officer (29) DO you take part in such decisions as regards hiring labor on your farm? (Please circle one). l YES 0 NO , (3o) DO you like to be consulted about whether to use hired labor on your farm? 1 YES (Proceed with Q.e) O NO (skip to Q. E) ) 31 How important is it to you to be consulted about decisions pertaining to hiring labor on your farm? (Please circle only one). Very important .......... 4 Fairly important ........ 3 Don't know .............. 2 Not very important ...... 1 Not at all important....0 (32) In general, do the Officers on this farm settlement Often seek your opinion in matters concerning the Operation of the settlement? (Please circle only one). Always ........... 4 Sometimes ........ 3 Don't know ....... 2 Sledom ........... 1 Not at all ....... O (33) 10. (a) Before you started farming in your unit, was any clearing done on the farm? (Please circle one). 1 YES (proceed with Q.b) 0 NO (skip(t2)Q.ll) 3 (b) Who cleared the land? 1. Self 2. Communally O. Govt. (35) (c) About how much did you pay all together to these peOple for helping you clear all your land £ Don't know 3 9 . (36-37) ll. 12. 13. (a) (b) (c) (d) (e) (f) (a) (b) (C) (d) 220 Which farm tools and implements do you have on this farm? 1 Modern 0 Traaitional . (38) DO ou have a house of your own? (Please circle one). 1 YES (proceed to Q.b) O No (skip Q.13) . ‘ (39) Who built the house? (Please circle one). 1 Self (skipt to 0.9) 0 (Govt. (Proceed with Q.c) (40) DO you know how much it cost to built the house? (Please circle one). 1 YES 0 NO (41) Have you paid any money for the building of the house? (Please circle one). 1 YES 0 NO (42) How much have you paid? (Please circle one) £ Don't know = 9 (43-45) How much do you still owe on the house? (Please circle one). £ Don't know . 9 (46-48) Do you owe the Government any money for the establishment and maintenance of our farm and house? (Please circle one). 2 Y S (proceed with Q.b) O NO (skip to 0.14) 1 DON'T KNOW (Skip to Q.I4) (49) How much do you owe the farm settlement? £ Don't know = 9 (50-52) Do you pay back this money installmentally from your own pocket or is it deducted from your earnings before you see it? (Please circle only one). 1 Pay from own pocket (skip to 0.14) O Deducted from earnings (proceed with Q.d) DO you know how much is usually deducted from your money? (Please circle one). YES 0 N0 (54) 14. 15. (a) (b) (c) (a) (b) (c) (d) (e) 221 Suppose you needed to borrow some money, say, to buy some cows or perhaps to fence your farm, is there any organization in this settlement that you could approach for such an amount? 1 YES (Proceed with Q.b) O NO (skip to C(15) 55 DO you belong to any Of such organizations in this settlement where you can go to borrow money? l YES 0 NO (56) In your opinion, are the credit facilities available in this settlement adequate for farmers who wish to develo and modernize their land? (Please_circ1e one). 1 YES 0 NO (57) DO you raise poultry on your farm? 1 YES (Proceed with Q.b) O NO (skip to Q.d) if married, (skip to 0.16) if not married. ( 8) 5 th>manages the poultry? (Please circle one) 1 Self 2 Wives 3 Hired Labor (If wife, proceed with Q.c; if self or hired labor, skip) to Q.d). 59 Do you regard the income from the sales of this poultry as your own or your wife's or both wife's? 0 Own 1 Both (60) Does your wife have any other sources of income of her own apart from poultry keeping? (Please circle one). 1 YES 0 NO ( l) What are these other sources of income? (Please list) Petty Trading ............ 1 Farm work ................ 1 Other (please specify)... (62) 16. (f) (a) (b) (c) (d) 222 Do you think it is important for your wife to have her own source of income independent of yours? (Unless don't know) How important is this feeling you have just expressed above to you? Very important .......... 4 Fairly important ........ 3 Don't know ........ , ..... .2 Not very important ...... 1 Not at all important....0 (63) CARD 11 (ID) (1-9) What is your total cash income, before taxes, earned since last November? Include income from any regular sources. Make the best estimate ou can. £______ (IO-ll-IZ) How much are your taxes per year L T‘TT3) About how do you think your income compares with your mates or friends of same education who are not on this farm settlement but who are working in the towns? (Please circle one) Don't know .......... 5 (Repunched to median) Much higher ......... 4 Higher .............. 3 About the same ...... 2 Lower .......... .....1 . Much lower .......... 0 (I4) Which of the following requisites do you consider most important to make your life happier and satgsfactory in the future? (Please circle only one . More money ......... 1 O (15) More friends ....... l 0 (16) Better job ......... l 0 (l7) 17. 223 Good health ........ l 0 (18) Don't know ......... l O (19) Importance in community ........ l 0 (20) Security ........... l 0 (21) Other (please specify)... (INTERVIEWER: Hand respondent card showing ladder. Point to top of ladder each time you mention it. (TOp of ladder is step number 10). Point to bottom of ladder each time you mention it. While you ask a question, move your finger up and down ladder). Now here is a picture of a ladder. Suppose we say that at the £92 of the ladder stands a person who is living the best possible life, and at the bottom stands a person who is 1iving the worst possible life. (a) What step on the ladder do you feel you personally stand at the present time? Step Number (22) (b) What step on the ladder would you say ou stoOd five years ago? Step Number (23 (c) What step do you think you will be On the ladder five years from now? Step Number ~ (24) Now let's change the things which stand at the tOp and bottom of this ladder. Suppose we say that the to of the ladder represents your greatest hOpes for this farm settlement and the bOttom represents your worst fears for this farm settlement. (a) What step do you think the farm settlement stands on the ladder at the present time? Step Number (25) (b) What step did the farm settlement stand on the ladder five years ago? Step Number (26) (c) What step do you think the farm settlement will stand on the ladder five years from now? Step Number (27) 18. 224 Suppose at the $23 of the ladder stands a person who is completely free from worry about the future, who feels confident and unworried-in other words, secure. At the bottom Of the ladder is a person with little or no security. (a) What step do you stand on the ladder right now? Step Number (28) (b) What step would you say you stood on five years ago regarding your feelings Of security? Step Number (29) (c) What step do you think you will be on five years from now?’ Step Number (30 Let's consider the ladder again. At the top of the ladder stands a person who earns enough money to pay for all his needs, and at the bottom of the ladder stands a person who earns too little money to pay for any of his needs. In terms of income, where would you place yourself? (a) Right now ........... Step No. (31) (b) Five years ago ...... Step NO. (32) (c) Five years from now.Step NO. (33) If you receive a money gift today which is equal to the amount of money you earn in a whole year in your present work, would you:I (INTERVIEWER: Read alternatives, a, b, c, to the respondent who should pick just one. If he does not know, mark g). (a) Invest most of it in a businss where you stand the chance of either losint almost all the money or gaining substantial profits that will almost double the money? 2 (b) Put most of it in a bank or other business where you stand the chance of either losing just a small part of the money or gaining some little profit? 3 (C) (d) 225 Not invest it in any business at all? 1 No answer. (Don't know) 0 (34) 19. (3) Some people say planning only makes a person 20. unhappy because your plans hardly ever work out anyway. Other peOple say that you must plan so that things will work out so that you will be happy. Do you think it is important to plan for the future? Very important .......... 4 Fairly important ........ 3 Don't know .............. 2 Not very important ...... 1 Not important at all....O (35) (b) Some people say it is luck that determines a man's success. Do you agree with this statement? Disagree strongly .......... 4 Disagree slightly .......... 3 Don't know ................. 2 Agree slightly ............. 1 Agree strongly ............. O (36) (c) Do you think that man can control his own future? Yes .............. 4 1 Maybe ............ 3 Don't know ....... 2 Probably not ..... 1 Not at all ....... o (37) Now I'm going to read some statements to you. I would like you to tell me what your feeling on each statement is; that is, tell me if you agree or disagree with the statement. 21. (a) (b) (C) (d) (e). I (a) 226 Sometimes I feel all alone in the world: Disagree strongly ...... 4 Disagree slightly ...... 3 Don't know ............. 2 Agree slightly. ........ 1 Agree strongly ......... O (38) There is little chance to get ahead in this life unless a man knows the right peOple. Disagree strongly ...... 4 Disagree slightly ...... 3 Don't know.............2 Agree slightly ......... I Agree strongly ......... O (39) Sometimes I have the feeling that other people are using me. - Disagree strongly ...... 4 Disagree slightly ...... 3 Don't know ............. 2 Agree slightly. ........ 1 Agree strongly ......... O (40) There is very little persons like myself can do to improve the general Opinion of this farm settlement. Disagree strongly ...... 4 Disagree slightly ...... 3 Don't know ........... ..2 Agree slightly... ...... 1 Agree strongly ......... O (41) ‘think each of us in this farm settlement can do a great deal to-improve the condition of things. gree strongly ......... 4 Agree slightly ......... 3 Don't know ............. '2 Disagree slightly ..... '.l Disagree strongly. ...... O (42) Apart from the farm you have in this settlement do you have private farm outside the settlement?‘ 0 YES I N0 (43) 227 (b) How many acres is the farm you have outside the settlement? Acres (44) (a) DO you exchange labor with Others on this settlement for any farm work? 1 YES (proceed with Q.b) 0 NO (skip to 0.23). (45) (b) For which of these jobs do you exchan e labor? (1) land clearning ...... (42) (2) planting ............ (47) (3) harvesting .......... (48) (4) weeding ............. (49) (a) Has anything been sold from your farm since you started this farm? 1 YES (Proceed with Q.b) 0 NO (skip to 0.24) (50) (b) Who sells these products? Self .................... 2 Wife .................... 1 Other (pleasespecify)..0 (51) (c) To whom do you often sell your products? Other ................... 1 Govt. or its agent ...... O (52) (d) Do you often know for how much these products are sold after they have been sold? 1 YES 0 N0 (53) (a) Do you have any savings? 1 YES (Proceed with Q.b) 0 NO (Skip to Q. 25) (54) (b) Where do you save this money? Cooperative ............... 2 Public bank ............... 1 Self ........... ' ........... 0 Other (please specify) (55) (c) About how much do you save every month? £‘ (56-57) 25. 26. (d) (a) (b) (C) (d) (a) (b) (C) (d) .0 Government (60) 228 Who tells you how much to save every month? Nobody ............... 2 Fellow farmers ....... 1 'Officer .............. O Other (please specify) (58) DO you work on this settlement? 1 YES (Proceed with Q.b) O NO (skip to 0.26) (59) Who owns the farm on which you work everyday? 3 Self 2 Both 1 Don't know Who will have the money realized.from this farm? 3 Self 1 Don't know 2 Both (self C Govt.) 0 Government (61) You told me that you work on this farm, in what capacity do you work? As the owner? .......... 2 As a supervisor?.......l As a laborer?.... ...... O (62) For about how many hours did you work on your farm this last week? hours Don't know 3 9 (63) Are you told the amount of work or the operations you have to do on your farm every week? 1 YES (Proceed with 0.c) O NO (skip) (64) Do you always finish the work or operations assigned to you every week? 1 YES 0 NO (65) Why didn't you finish the work? Too much ......... 1 Not enough time..0 Other (please specify) (66) 27. 28. 29. 30. 31. 32. 33. 34. 35. 229 Do you have any farm apart from the farm government established for you? 2. YES 1. NO (Discontinue the interview) Where is this other farm you said you have? 2. On the settlement 1. Outside the settlement What crops do you plan on this other farm and how many acres is each of them? CrOps No. Of‘ACFGS U1.PWN-I Others. (please specify) 00 you have poultry in this your second farm? 2. YES 1. NO (Skip Question 5) What is the size of this poultry unit? layer units How many acres is the size of this your second farm? acres DO you have any other livestock apart from poultry? 2. YES 1. NO (Skip Question 8) What is the size of this livestock? (In units of livestock) Do you hire labor on this your second farm? 2. YES 1. NO (Skip Question 10) 36. 37. 38. 39. 40. 41. 42. 43. 44. 230 How much have you spent on hired labor since November 1aSt year? (Amount in shillings) How much do you think you Spent on hired labor from November 196 to November 1965? (Amount in shillings) How much do you pay per day when you hire labor on your farm? . (Amount in shillings) DO you keep a record of this expenditure? 2. YES (Proceed with Question 14) 1. NO (Skip Question 14) Will you like me to see this record? 2. YES 1. NO If respondent answers "yes” ask for the record and look throught it. If respondent answers "no'l ask for his reason. How much have you Spent since November last year in buying the seeds you planted on your farm? (Amount in Shillings) How much do you think you spent from November 1964 to November last year in buying seeds to plant on your farm? (Amount in Shillings) Did you plant any new crop this year? 2. YES 1. NO (Skip Question 18) How much did you Spend in planting these new crOps? (Amount in shillings) 45. 46. 47. 48. 49. 50. 51. 52. 53. 231 Have you added this amount to your earlier estimate for 1965/1966? 2. YES 1. NO If respondent answers ”no” adjust for this in 1965/66 estimates. How much have you spent on your poultry unit since November last year? Include cost of layers, poultry ' mash, and other costs. (Shillings) How much do you think you spent from November 1964 to November 1965 on similar items? (shillings) How much did you spend on your other livestock since November last year? (shillings) How much did you Spend on this other livestock from November 1964 to November 1965? (shillings) Do you use fertilizer in this your second farm? 2. YES 1. NO (Skip Questions 25 to 27) From where do you Often buy this fertilizer? 2. Government 1. Other (please specify) How much did you Spend on fertilizer on this your second farm since November last year? (shillings), How much did you Spend on fertilizer from November 1964 to November 1965? (shillings) 54. 55. 56. 57. 58. 59. 60. 61. 232 Is there any other money you spent on this your second farm which you have not mentioned? 2. YES 1. N0 (Skip Questions 29 and 30) How much do you think this additional cost you have not mentioned iS Since November last year? (Shillings) How much do you think this additional cost will be from November 1964 to November 1965 if there were such costs? (shillings) 'Space Which tools do you use on this your second farm and what are their costs? Hoe (shillings) Cutlass Shovels Knives WPUJN— Others (please specify) Total Cost When did you buy these tools? I 96__ Did you buy any new tools this year? 2. YES 1.NO (Skip Question 34) How much did you pay for these new tools and what are they? (shillings) Did you use any machine on this your personal farm? 2. YES 1. NO (Skip Question 36) 62. 63. 64. 65. 66. 67. 68. 233 How much did you pay since last November last year for using these machines? (shillings) How much did you pay from November 1964 to November 1965 for using these machines? (shillings) Has anything been sold from this your second farm? 2. YES l.NO (Discontinue the interview) Who sells these things? 3. Self 2. Wife 1. Self and wife 0. Other (please Specify) If you do not sell these products, do you always know for how much they are sold? 2. YES 1. NO Is the money always given to you? 2. YES 1. NO How much have you realized from the sales of your crops since last November? CrOps Total sales I. 2. 3. 4. 5. 6. Other (please Specify)— 69. 70. 71. 234 How much did you realize from the sales of these crOps from November 1964 to November 1965? Crops Total Sales 6: Other (please Specify) How much have you realized from the sales of your poultry products since November last year? la ers (shillings) pu lets (shillings) eggs (shillings) Others (please specify) (Shillings) How much did you realize from the sales of these poultry products from November 1964 to November 1965? la ers (shillings) pu lets (shillings) eggs (Shillings) Others (please Specify) (shillings) 72. How much have you realized from your other livestock 73. 74. since November last year. (shillings) How much did you realize from these livestock from November 1964 to November 1965? (shillings) Do you realize money from any other source(s) from this your second farm that you have not mentioned to me? 2. YES 1. NO (Skip Questions 49 to 51) 75. 76. 77. 78. 79. 80. 81 82. 83. 235 Which are these sources? Please name them: How much have you realized from these additional source(s) Since November last year? (shillings) How much did you realize from these additional sources from November 1964 to November 1965? (Shillings) How many members of your family help you to do some work on this your second farm? If respondent answers “none” skip tO Question 53. Does this number you have given me include your brothers and cousins? 2. YES 1. NO (Skip Question 54) How many brothers and cousins are included in this number then? . How much do you spend every month for your food? (Shillings) Does this amount include the cost of feeding your family? I mean those living with you on this settlement. 2. YES (Skip to Question 57) 1. NO (Proceed with Question 55) How much do you spend altogether on food every month then? (shillings) 236 84. DO you Obtain any of the items for your food from this second farm? 2. YES I. NO 85. What do you think is the percentage of your food items that you Obtain from this your second farm? 4. 75 percent to 100 percent 3. 74 percent to 50 percent 2. 49 percent to 25 percent 1 Less than 25 percent Because of the difficulty of recall, the analysis on food crOp production was confined to one year period, November 1965 to November 1966. APPENDIX D SOCIAL-OVERHEAD COSTS (£) 238 666.6. 666.6. - - 4. 666.6. 666.6. I I 6. 666.6. 666.6. - - 3. 666.6. 666.6. - - .. 666.6. 666.6. I I 6 666.6. 666.6. I - 6 666.6. 666.6. - I 6 466.66 46..6. 666.6 666.6. 3 666.6. 666.6. - - 6 666.66 336.33 663.6 6.6.4 6 666.66 664.6. 666.6 364.6 4 346.66 663..3 I 66..6 6 636.64 664.63 663... 666.6. 3 336.66 366.63 - 66..63 . 4 : o>.umcumvm.eo< mc.c.mck, 6.3066uom mc.ucm.e 3coEo.qum ELmu 66:6.uxo c. E.ma..o-.onp:¢ c. ucoEumo>c_ co .4..mumOo omozto>oI.m.OOm .. 6.663 239 666.6. 666.6. I I 63 666.6. 666.6. I I 63 666.6. 666.6. I I 33 666.6. 666.6. I - 63 666.6. 666.6. I I 63 666.6. 666.6. I I 43 666.6. 666.6. I I 63 666.6. 666.6. I I 33 666.6. 666.6. I I .3 666.6. 666.6. I I 63 666.6. 666.6. I I 6. 666.6. 666.6. I I 6. 666.6. 666.6. I I 3. 666.6. 666.6. I - 6. 666.6. 666.6. I I 6. 44363., x. w 4666 ...... _ .666.6666.eo‘ 66666: .663 o>_umcum.c.Eo< mc.c.m.p kmeo.uuom1 mc.ucm.n 240 666.6. 666.6. I I 66 666.6. 666.6. I I 36 666.6. 666.6. I I .6 666.6. 666.6. I I 66 44363... .66.666wmmm.e64 ........ 66M&Wwwweww ........ .6WMWMMMM 6enmw636 241 66..6. 66..6. I I 4. 66..6. 66..6. I I 6. 66..6. 66..6. I I 3. 66..6. 66..6. I I .. 66..6. 66..6. I I 6. 66..6. 66..6. I I 6 666.63 66..6. I 666.6 6 664.6. 664.6. I I 3 664.66 666.4. 666.3. 346.6 6 366..3 366.6. 666.6 I 6 4.6.66 666.6. 663.3 643.6 4 666.36 636.43 I 666.3 6 366.64 636.63 666.6 366.6. 3 .36.34 66...3 I 636..3 . .4<363 .......... mumoo. . , ..mto.uuom.mo., 666:0: , Lmo> 0>humgum_cmEm< mcmcthhi .mLm—uumm GET—cm—E ....... ucoEo.uuom Eton ...nz c. E.mo..oILonnsm c. ucosumo>c_ co .4. mumoo omoceo>oI.m.OOm .N o.nmh 242 66..6. 66..6. I I 63 66..6. 66..6. I I 33 66..6. 66..6. I I 63 66..6. 66..6. I I 63 66..6. 66..6. I I 43 66..6. 66..6. I I 63 66..6. 66..6. I I 33 66..6. 66..6. I I .3 .66..6. 66..6. I I 63 66..6. 66..6. I I 6.. 66..6. 66..6. I I 6. 66..6. 66..6. I I 3. .66..6. 66..6. I I 6. 66..6. 66..6. I I 6. .;<363 ......... m>.ummwmmwwemn ......... mLMfiwwWWLHo.. 4 .mmwwwwum .. Lam» mczcflh 243 66..6.. 66..6. I I 66 66..6. 66..6. I I 36 66..6. 66..6. I I .6 66..6. 66..6. I I 66 mm_.o_ mm_.o_ I I mN 4 m>_um.um_c.Ew< mc_cvm.b .m.m_uumm m:_ucmrm Zhh mom mom I I :— 366 366 I I 6. nom mom I I N. 366 366 I ,I .. 366 366 I I o. 366 _ 366 . . I I 6 366 366 I I 6 366 366 I I 3 366 366 I I 6 366 366 I , I 6 366 366 I I 4 366 366 I I 6 366 366 I I 3 mmo._ mmo._ I I _ A<._IO._. mumoo mum—Humm. “v.0. . . . mmmDOI me> m>_um.um_c_Ev< m:.c.m.# .mLm—uumMI mc.ucmbn Egmm m. Lm>mm4 _oo;um mE:nm_m_ c. E_ma_.oI ILmnnam c. ucmEumm>:_ co 36w mumou vmmLLm>oI .m.00m .m m_nmp ZHS 3cm mom I I wN mom mom I I RN «om mom I I mm uom mom I I mN mom mom I I :3 nom nom I I MN mom 3am I I NN nom mom I I .N 30m 3am I I 03 mom mom I I m. Rom mom I I m. nom mom I I m. mom mom I I m. mom mom I I m. 4 m>_um.um.c_8v< mc_c_m.h .mLm—uumm mc.ucm_m 2h6 mom mom I I mm 366 366 I I 36 Ram mom I I .m mom Rom I I om mom mom I I mm 4 o>bumtum.c.ev< mc_c_m.F .mgmbuumm mc.ucmbm 2h7 366 366 I I 4. 366 366 I . I 6. 366 366 I I 3. 366 366 I I .. 366 366 I I o. 366 366 I I 6 366 366 I I 6 366 366 I I 3 366 366 I I 6 366 366 I I 6 366. 366 I I 4 366 366 I I 6 .366 366 I I 3. 666.. 666.. I I . .<.o. «>6umwwwmw.em< m.M9wwww.H6 .wmwwnmum menmmw.n 4 Eumm m.Lo>mo4 .oosum v.56: c. E_ma__oI.mnn:m,c_ ucmEumm>c_ :0 Amy mumoo nmmsz>oI_m_00m .: 0.2mh 2h8 mom mom I I mN mom mom I I mu mom mom I I mm mom mom I I mN mom nom I I :3 mom mom I I MN mom mom I I NN mom mom I I .N mom mom I I 03 mom mom I I m. mom mom I I @— uom mom I I m— uom mom I I 6. mom nom I I m. 4 m>_um.um.c_sv< mc_c.mgh 3m.m_uumm mc_ucmhn. 2h9 Rom mom I I mm Rom mom I I Nm mom mom I I .m 366 366. I I 66 mom mom I I mu 4 . mohumLum_c_£w< mc_c_mLF .mgwbuummI mc_ucm_¢ 250 334.6 334.6 I I 6. 334.6 334.6 I I 3. 334.6 334.6 I I .. 334.6 334.6 I I 6. 334.6 334.6 I I 6 334.6 334.6 I I 6 334.6 334.6 I I 3 334.6 334.6 I I 6 334.6 334.6 I I 6 334.6 334.6 I I 4 334.6 334.6 I I 6 666.4 .666.4 I I 3 .66.6 .66.6 I I . I._<._IO._. mumoo mgm—uumm $0 I. mmmDOI gmm> m>.umLum.c_Ev< mc_c.mgk m.m_uumm mc_ucmbn ucmEm_uuom Egmm oz_LmE_. c. mouoo c. ucmEumm>c_ :0 Am. mumoo nmmcgo>oI_m_00m .m m_nmh 251 334.6 334.6 I I 63 334.6 334.6 I I 33 334.6 334.6 I I 63 334.6 334.6 I I 63 334.6 334.6 I I 43 334.6 334.6 I I 63 334.6 334.6 I I 33 334.6 334.6 I I .3 334.6 334.6 I I 63 334.6 334.6 I I 6. 334.6 334.6 I I 6. 334.6 334.6 I I 3. 334.6 334.6 I I 6. 334.6 334.6 I I 6. 334.6 334.6 I I 4. I.. m>6umgum.m6£ma mc_c_m.k .mgmbuumm mc_ucwbm 252 334.6 334.6 I I 66 334.6 334.6 I I 36 334.6 334.6 I I .6 334.6 334.6 I I 66 334.6 334.6 I I 63 4 I m>6umLum_c.Em< mc»m_m.h .m.m_wuov mc_ucm*m APPENDIX E 636.66 66..33 646... I I 6. 636.66 66..33 646... 636.. I I 3. 636.66 66..33 646... 636.. I I .. 666.66 66..33 646... 666.. I I 6. 646.46 633..3 646... 636.. I I 6 633..6 .64.6. 646... 666.. 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NZ New... _ Low: >megazlmem new _ new new . new eww> mm6umw>ewz uewfimmv.nwumm mbnmk >ewmeaz uewan.w>wo me.uewpm_ 258 .36.66 66..63 666.6. 63 I I 66 .36.66 66..63 666.6. 63 I I 36 .Nm.om om..o~ mom.o. 66 I I .m .Nm.om om..o~ wmm.o. 66 I I om .36.66 664.63 666.6. 63 I I 63 4<60h eo.uwueommeweh woewewue.wz >ewe.euwz >eomenzIwe¢ new new new new eww> me.umw>ew: uewEem..nwvmm 6.00%, >ewmeazl uewsao.w>wbl me.uew_n 259 4.4.6 66..4 666.3 43. I I 6. 466.6 66..4 666.3 46 I I 3. 466.6 66..4 666.3 46 I I .. ,4.4.6 66..4 666.3 43. I I 6. 346.6 66..6 666.3 46 I I 6 464.4 636.3 666.3 46 I I 6 666.6 334.. 66..3 43. I I 3 66..6 436 664.3 I I I 6 466.3 6.4 66..3 I I I 6 666.. 663 646.. 66 I 66 4 336.. I 343.. I I 63 6 66... I 666.. I I 66. 3 666 I 666 66 I 66. . 4ewmenzIwem new new new new eww> me.umw>ew1 newEem..nwumm 6.006 >ewmeaz, uemEQo.w>wo mevuewrfi Eewm m.em>ww. .OOLUm wssnw.m_ e. 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ENE EEEZEE ENE EEE 2E EEE ..EEE mc_ucm_m coEEEE_J "mu_EE £m_: coEEEm_J "mu_EE EsEmmz c0u\qom "moEmezou 300 nwwom Jummw ::#_N mmmmm _—moN :_mm_ Nmmm— mJN:_ Jmm—_ mm EENOE :EmEE :::_N ENEEN __moN :_mm_ Nome. m:~:_ :EE__ NM mmmom :Nmmw :::_N mmmmw __moN :_mw_ mmmm_ m#~:_ :mm_— _m NmNOM :waN :::_N mummm —_MON J—mm_ NOM0- mJNJ— #mm_— 0m an0m :nmwu :::_N mNmmm ——MON :_mm_ Nwmo— mJNJ— Jmm—— mm nmuom :Nmmu :::_N mNmmm —_MON :_mo— Nmmm_ mJNJ— :mm__ mm nowom :nmwu :::_N mNmmu __m0N :_mm_ Nomw_ wJN:_ 4mm__ RN NwNom :Nmmu :::_N mwmmm _—moN J_mm_ Nomw— mJNJ— #mw_— ow ENE EEEE ENE EEEE 2E EEEEEE mc_ucm_¢ coEEEEEJ "muEEE £m_: cOuNmeH "mo_gm E:_Umzx coEE:mm;umuEEE so; APPENDIX H 302 Mathematical Proof of the Equation for Internal Rate of Return Used in this Analysis Assume: (1) hi - C; : bm)0 (2) i-—9 cxo ,.30 years or more where bi's are series of prospective receipts, and ci's are series of proespective costs then - - bm + hm hm ’ ----- °- “Tn—Fri 11W*'°""‘(1Tr730 m\ 0: - + b I * I ’...., I f ..... C {TW' WV 'Tfifi” } 0:-C+bm(/é 1’) i=1 7!?! - - m l l ---- °'C*b{nml'rT+—rr2' } mo 0:-C§bm I ‘l {l - l ll+rl°} 'TTF 1! George B. Thomas, Calculus and Analytic Geometry (Reading, Mass.: Addison-Wesley Publishing Co., I960), p. 77], Theorem 2. bm bm 303 f(C) -q—-—--- ---.—-;9 c?"