ASSESSMNT OF THE EFFECTIVENESS OF COORDINATION OF AGRICULTURAL EXTENSION AND CREDIT SERVICES IN SUDAN:A CASE STUDY OF WHITE NILE AGRICULTURAL SERVICES PROJECT

Abstract

This study was conducted to assess the effectiveness of the coordination of extension and credit services for agricultural development in the IFAD-supported White Nile Agricultural Services Project (WNASP). WNASP aims to improve agricultural services to small-scale farmers and rural women through the rehabilitation of selected agricultural schemes in White Nile state. The study focused on the relationship between the Agricultural Bank of Sudan (ABS) and the Farmer’s Commercial Bank (FCB) as agricultural credit institutions and agricultural extension agents in the project area in the delivery of their services to farmers participating in company, cooperative and private farm operations. The aims were (1) to investigate the impact of credit services on farmers’ productivity, (2) to explore the nature of supervision and follow up of agricultural credit programmes, (3) to examine the role of agricultural extension within the credit supply programmes, and (4) to assess farmers’attitudes toward credit supply services. The research employed primary data that were collected by means of structured interview schedules, field observations, and meetings with project personnel. Secondary data were collected from WNASP documents, books, research publications, theses, scientific journals and internet sources. The data collected were processed and analyzed to generate frequency distribution tables, percentages and graphs for comparative analysis of access to extension and credit services by company, cooperative and private farmer groups. The analysis also involved use of t-tests for assessing the significance viii of observed differences between company, cooperative and private farmers in terms of the study variables. Analysis results were used to evaluate the supervision and follow up roles of credit institutions and agricultural extension agents relating to use of credit funds by farmers in the project area. The conceptual model employed in this study has three components, which are related to the role of agricultural credit institutions and agricultural extension in supervision and follow up of credit services for the different agricultural operations and to farmers’ attitudes toward acquiring and using of inputs supplied by agricultural credit banks for different agricultural production operations. The study concluded that farmers have only little of the knowledge and skills needed for efficient use of the received inputs, and most of the farmers were facing many agricultural uncertainties, which affect their ability to repay loans. Also the study revealed a real problem related to inadequacy of the amounts and timing of the input supply services provided by ABS and FCB, which affected agricultural production negatively. There was complete absence of medium and long-term loan services. The research revealed that agricultural credit banks supply farmers only with short–term loans. The majority of farmers were not able to benefit from agricultural credit services, as most of them have no assets to provide as guarantees for loans repayment. It was revealed by the study that farmers spend considerable amounts of their borrowed money in meeting the expenses of family consumption needs and social occasions. That explains why most farmers prefer to acquire loans individually. ix The study revealed that farmers have positive attitudes toward extension agents and negative attitudes toward bank agents concerning transfer of agricultural information and training related to different agricultural practices. They prefer to be supervised by extension agents rather than by bank agents. It was found that bank agents could transfer adequate amounts of credit information to farmers, while extension agents could not. This finding suggests a need for training of extension agents in agricultural finance and institutional loaning procedures. It was also found that farmers find great difficulty in understanding the salam system of Islamic agricultural finance. The Barriers that face access to credit by farmers were found to be the complicated credit supply procedures. Most of farmers are also aware about the harsh measures that banks take against farmers who fail to repay loans, and because of that they tend to be apprehensive about applying for getting loans from agricultural finance institutions. The study recommended that agricultural institutions should adopt policies that facilitate small farmers’ access to production credit and to household consumption loan funds as well, and that loans should be made on individual bases and with close institutional supervision. Farmers should also be provided with opportunities to receive medium and long-term loans. The study also recommended that agricultural institutions should arrange to supply farmers sufficiently and timely with agricultural inputs, and to strengthen their credit supervision units. It is recommended that agricultural credit services be accompanied by educational efforts of general and technical nature to make farmers aware about credit risk problems, how to acquire credit funds and x how to use credit funds efficiently for agricultural production purposes. This requires involvement of extension agents in agricultural credit programmes The research highlighted the importance of establishing effective coordination between agricultural credit and extension institutions in the Sudan.