Factors enhancing investment and farm capitalization in small holdings in Nigeria: Policy implications for transforming the agricultural sector

Small farm holdings require a substantial input of capital for transformation to medium or large-scale farms that are better suited to increased food output. The study examined methods and amounts of investment by small-holder farmers in southwestern Nigeria. Multistage sampling was used to randomly select 200 arable farmers from 20 LGAs distributed throughout five states in the region. Descriptive statistics and a multiple regression analysis were used to analyze data. The study showed that the average age of farmers was 46.5 years and that families were very large, averaging 10 members. The level of education was mostly low but respondents were highly experienced farmers with a mean farming experience of 24.6 years. Farms were generally small, averaging 3.3 ha per capita with land distribution of 6.6 ha in the study area. Ninety percent of farmers had no tenure on their farm holdings beyond usufructuary rights. Most farmers did not use critical farm inputs such as tractors; fertilizer, improved seedlings and agrochemicals while those who did use them had invested very little. Key factors determining farm investment were farm size and income while expenditure incurred on fertilizer, land improvement and capital assets were key determinants of a farm’s income. Important recommendations determined by the study include the use of farm extension agents to educate farmers on sources and how to access existing investment opportunities for small holder operators, land reform policies that will give tenure to farm operators, and to increase investment on farm inputs and assets to increase output and income.