ISSN: 2454-2415 Vol . 3, Issue 3 , March 2017 41 International Journal of Innovative Knowledge Concepts, 3(1) March, 2017 The Effect on Farm Credit and Farm Produce in Kano State, Nigeria Ahmed Ibrahim Mohammed, Ahmad Bashir B. Aziz and Ahamad Faosiy Ogunbado (Islamic Business School, University Utara Malaysia (IBS-UUM)) Islamic Business School, University Utara Malaysia, 06010 UUM Sintok. Kedah Darul Aman, Malaysia E-mail: ahmad.ibrahimmuhammad@yahoo.com, Tel 1116625014 Abstract Farm produce serves as a sustainable way of livelihood in terms of food security, employment, income, industries and market among others. This paper is a conceptual paper that seeks to explore the viability of Murabahah finance on the relationship between farm credit and farm produce. This is a cross-sectional research design. Method of data collection is questionnaire; a total of 760 individual farmers will be the target respondent in this study. And structural equation model (Smart- PLS 2.0) statistical application will be used for data analysis. It was found that the problems of high interest rate, insufficient and timely farm credit, poor modern farm equipment such as: tractors, harvesters, planters, storage facilities, fertilizer, herbicide, insecticide, transportation and communications among others. Based on these findings appropriate recommendations were suggested that will tackle the affirmation problems. Key Words: Farm Credit, Farm Produce, Murabahah Finance 1.0 Introduction Agriculture is the backbone of the global food security, animal rearing and supplier of raw material to the industries for poverty reduction and socio-economic advancement (Anthony, 2010; Ogunbado and Ahmed, 2015). It is also seen as an act of soil cultivation for the purpose of food supply and raw materials as an agricultural output or farm produce to the man and industries for sustainable living and economic growth (Akoum, 2008). The access to agricultural credit, which is popularly known as farm credit is an important factor for accelerating farm produce in a given economy as well as a channel of income generation for the rural farmers. The availability of farm credit to rural farmers is significant to the socio-economic growth and development. Likewise, the obstacles encountered by these rural farmers in agricultural banks and other financial institutions (Phillips, 2009; Ammani, 2012 & 2013; Awe, 2013; Chisasa, 2014a). The obstacles encountered by the agricultural banks and other conventional financial institutions in serving the rural farmers are leading to high cost of transaction and socioeconomic risk at its peak. These difficulties lead Kano state government to distributed 10,000 Naira among 17,600 women farmers. Similarly, poultry, Rabbits and chickens among others that amounted 2.44, billion Naira were distributed in order to tackle the existing problems of farm credit in the state. Till date, the government is looking forward for less risk and less interest financial products to boost agricultural sector of the state (Kano state budget, 2012). On the other hand, Murabahah finance is an Islamic financial product that has features of free interest and less risk or gambling, free manipulation and exploitations among others. This means, Murabahah finance is one among a several Shariah oriented public policies used to boost farm produce. This is done through the provision of farm credit and trading farm input and output, base on the situation of the economy (Khan, 1996; Saddiqi, 2006; Ayub, 2007). In addition, the Shariah mode of finance through Murabahah was set to encourage needy farmers and agribusiness that needed less risk and free interest for the purchase of their farm input and sells of farm output (Khaleequzzamzn & Shirazi, 2012). As, it pronounces, Murabahah finance (mark-up) has covers buying and selling of commodities (agricultural inputs) at a price which includes an agreed profit margin by both parties. In addition, in Murababah finance, both buyer and seller most know the actual cost of the commodity or farm input and the profit margin during the sale agreement (Ahanger, Padder & Ganie, 2013). Based on the above view this seek for the present study that is the influence of Murabahah finance on the relationship between farm credit and farm produce in Kano state, Nigeria. Objective of the study 1- To explain the concept of farm produce 2- To explain the concept of Murabahah finance 3- To explore the socio-economic role of Murabahah finance on the relationship between farm credit and farm produce in Kano state, Nigeria.