ROLE OF FARM ACCOUNTING IN THE FINANCIAL SUSTAINABILITY OF AGRICULTURAL ENTERPRISES IN NIGERIA
Publication Type: Journal Article.
Publication Year: 2026
Author(s): Okpanachi, G.E., Negedu, E.B., Akor, C.A., Agobie, G.O., Atabor, J.A., and Ocheja, P.I.
Journal Name: (IJAEMD)
ABSTRACT
This study investigates the role and impact of formal farm accounting on the financial sustainability of agricultural enterprises in Nigeria. It specifically examines the relationship between the adoption of core farm accounting practices—Costing and Profitability Analysis, Inventory Valuation, and Capital Investment Appraisal—and key sustainability metrics. The study employed a cross-sectional survey design, collecting primary data through structured questionnaires from 150 registered agricultural enterprises (crop production, livestock, and integrated farms) in the North-Central and South-West regions of Nigeria. Data were analyzed using descriptive statistics and multiple regression analysis. The results indicate a low level of adoption of formal accounting practices, with only 32% of enterprises maintaining full cost accounting records. Regression analysis revealed that Costing and Profitability Analysis and Capital Investment Appraisal are significantly positively related to financial sustainability (Profit Margin and Debt-to-Equity Ratio). However, the adoption of formal Inventory Valuation methods showed an insignificant relationship. The study concludes that the adoption of formal farm accounting practices, particularly in costing and investment analysis, is a critical driver of financial sustainability in Nigerian agriculture. The findings underscore a significant “accounting gap” that constrains the sector’s growth. There is an urgent need for policy intervention and educational programs to build accounting capacity among agricultural entrepreneurs.
Keywords: Farm Accounting, Agricultural Enterprises, Financial Sustainability, Costing, Inventory Valuation, Investment Appraisal, Nigeria