CHAPTER ONE
1.0  INTRODUCTION
In Enugu state most inhabitants survive through agriculture and their main occupation is subsistence farming which attract the interest of may cooperative societies both old and new ones.       Agriculture plays a very central role in the economic development of Nigeria like offering of employment to more than 65% of the working population account for more than 70% of non oil exports and provides raw materials for the industrial sector.    Following the oil boom in the seventies agricultural production started to decline, the country started expressing increasing food shortage with the attendant increase in the quantity of food imports.
       One can observe that Enugu state is still semi substantial and their output from agriculture production can neither feed the fearing population nor provide essential raw materials for the agro based industries. The export of the state major cash crops which has in the past supported the economy has verbally stopped.
       While a lot of observers dwelt on the urgent need to reinitialize this sector, Omuma (1998) implied that the adverse effect of non-initialization of the agriculture sector will only bring such condition like famine and Kwashiorkor to the village but emphasizing on the importance of improving agricultural production through loans from government Igbo (1986) said it is now on the government for the independence on the external sources of food because it has tried their state independence to the uncertainties of ridicule.’
       Then in the early seventies, the central bank of Nigeria and the federal government carried out a study to find out reasons for the declining agricultural production. The study revealed that credit was one of the major factors then the commercial and merchant banks (now deposit money bank) were reluctant to lend to agriculture because of the high default risk and the inability of the borrower offer tangible collateral.
       The agricultural credit guarantee scheme was established in 1977 to share in the risk of the banks in agricultural lending and hence encourage them to continue to extend credit to it. As at 31st December 2004 the total investment under the scheme were N4.4billion.
1.1  BACKGROUND OF THE STUDY
In our country today, sources of statements have been made in the newspapers and other news media, scholars advocating the use of agriculture for the development and improvement of living standard of the rural people.   Agricultural activities have brought about solutions to our national problem of massive food shortage. Many agricultural cooperative societies plays vital role and function in massive food production they include the following:
1.  Agriculture has embrace all the cooperative activities with the aim of helping farmers in their professional capacities and producers. The inherent weakness of farming Calo of this type of cooperative society.
2.  Agriculture has contributed immensely to the improvement of the viability of the small holders by bringing their economies of scale.
3.  Agricultural activities are a type of producers cooperatives which aim at improving food production and well being of the citizens.