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ECONOMIC ANALYSIS OF FINANCING AND SUSTAINABILITY OF IRRIGATED AGRICULTURE IN THE LOWER ANAMBRA AND LOWER BENUE IRRIGATION PROJECTS, NIGERIA

ABSTRACT

Irrigated agriculture provides a very important part of national food security strategies as well as individuals’ and communities livelihoods at the local level. Yet the performance of many irrigation and drainage systems in Nigeria is generally below potential due to a variety of shortcomings. The monopolistic nature of the sector and its social sensitivity has fostered extensive government intervention that has not always been conducive to financial sustainability. Insufficient cost recovery and lack of direct linkages between revenue and expenditure, and between the client and the service agency are the root of the problems resulting to lower performance. Globally, there is a consensus for irrigation  sector reform to increase water productivity, bothering on the institutional structure for irrigation management and the incentives for agencies and farmers. These reforms suppose that irrigation water is to be priced and that farmers will have to pay for the cost of water supply and related services. While such arrangements are important, some questions arise: would it work in situations where the physical infrastructure is dilapidated; user ability to pay is severely constrained by macro-economic factors; market concepts and institutions are absent or in their infancy; and capability in both management and regulation is limited.These concerns informed the need for this study. The broad objective of this study was to analyze the financing and sustainability of irrigated agriculture in the Lower Anambra (LAIP) and Lower Benue (LBIP) Irrigation Projects. The specific objectives of this study were to (i) describe the sources and volume of investment;(ii) determine levels of cost recovery achieved, (iii) analyze the institutional and management patterns of irrigated farming in the two schemes; (iv)describe gender participation in the schemes; (v)Describe gender division of farm decision making and performance of activities; (vi) measure resource productivity and enterprise profitability in both schemes; (vii) determine farmers willingness to pay for irrigated agriculture ; and (viii) Identify the socio-economic factors that influence their willingness to pay.Data for this study was collected mainly through focus group discussion and administration of structured questionnaire to farmers randomly selected from the two projects. In the LAIP, a total of 143 farmers were randomly selected for the interview, while in the LBIP a total of 33 farmers were randomly selected and interviewed. In both schemes key management and technical staff were also interviewed. Information cllected includes socio-economic characteristics of farmers like educational status, income, age, years of experience; institutional and management patterns of irrigated farming; farmers’ input costs and output price data, and amount they are willing to pay for improved water service. Data collected was analyzed using frequencies, percentages, gross margin, financial self-sufficiency indicator, Cobb-Douglas Production function, and Tobit regression model.The LAIP scheme is not able to sustain itself for operation and maintenance as the financial self-sufficiency indicator is 0.60. In both projects, the major interests identified by the farmers include water quality, quantity and availability and also timely maintenance and repair of irrigation infrastructure. Headship of household was indicated by 81.81% of the respondents in LAIP as a factor affecting access to land in the project. Another major factor is community membership which was indicated by 79.29% respondents. Major farming decisions like leasing land, fertilizer and pesticide use, were taken by male heads of households. The Cobb -Douglass production function analysis showed that for the LAIP rice enterprise the variables that are significant are fertilizer, seed and land; with seed being negatively related to output. The overall F-Value of the regression was significant at 5% leading to a rejection of the null hypothesis that resources used in the production do not significantly influence the output. Seed, Land and fertilizer were significant in the analysis of potato production in LBIP.