Transforming West African agriculture through the ...€¦ · Change in the shape production...

Transforming West African agriculture through the development of

mechanization: what public policies?

Keynote Address

Hiroyuki Takeshima ([email protected])Research Fellow

International Food Policy Research Institute, Washington DC

Dakar, Senegal, February 1, 2017

mailto:[email protected]

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

Outlines

• Patterns of mechanization growths in West Africa and elsewhere

• Private sector in mechanization growth

• Custom hiring service in West Africa - growths and challenges

• Agricultural mechanization policy issues

• Broad agricultural policies and mechanization specific policies, government’s role

• Experiences in Nigeria

• Concluding remark


Agricultural mechanization has been slow in Sub-

Saharan Africa, including West Africa

Share (%) of land cultivated by

different tools / machineries

Source: Grigg (1984), Mrema et al.

(2008), Takeshima & Salau (2010)5054

8570

4565

89

1525

59

10 20

69

2035

68

2535

71

3221

1122

3025

10

1525

19

1520

17

2037.5

28

2030

23

1725

48

2510

1

7050

22

7560

14

6027.5

4

5535

6

Eastern Africa (97-99)Southern Africa (97-99)

Central Africa (97-99)West Africa (97-99)

(2030)(97-99)

Sub-Sahara Africa (82-84)

(2030)97-99

Latin America / the Caribbean (1982-84)

20301997-99

Near East / North Africa (1982-84)

(2030)(97-99)

Asia (1982-84)

(2030)(97-99)

Developing countries (1982-84)Hand tool

DraftAnimal

Tractor


In Asia, tractor use has grown rapidly in the last few

decades

0

10

20

30

40

50

60

70

80

90

100

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020Year

% of areas plowed by tractors in selected countries, year

India

China -

plowing

Indonesia -

rice

CambodiaBangladesh

Nepal

(Lowland)

Nepal

Nigeria

Thailand


Recent tractor use growth in Asia has been through custom

hiring, rather than ownership growth

0

20

40

60

80

100

1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Japan (owner)

In the US or Japan, early tractor uses grew

through ownership growth

*US: ownership of horses/mules declined in

response to tractor ownership => indicates

tractor ownership rather than rental primarily

replaced horses/mules

Recent tractor use growth in developing countries has

been mostly through custom hiring, rather than

ownership growth

Bangladesh (user)

China (user)

Nepal lowland (user)

China (owner)

Bangladesh (owner)Nepal lowland

(owner)

Japan (user)

USA (owner)

USA (horse/mule)

(%)

Indivisible tractor technologies are made scale-

appropriate through custom-hiring in many developing

countries today


In Asia, tractor use grew while many workers remained

in agriculture. Same is possible in West Africa

USA (1913)

Australia

France

Japan (1955)

Japan (1970)

China

Bangladesh

Nepal (1995)

Nepal (2010)

Nigeria (2010)

India (1994)

India (2015)

Cambodia

Mali Burkina Faso0

10

20

30

40

50

60

70

80

90

100

0 20 40 60 80 100

Share (%) of area plowed by

tractors

% of employment in agriculture

USA

UK

France

Japan

Australia

China

Bangladesh

Nepal

Nigeria

India

Cambodia

Mali

Burkina Faso

Source: Presenters based on various studies

In the past, mechanization

occurred only after the

agricultural transformation

had occurred

Mechanization today can

both retain smallholders, and

also transform smallholder

farming systems

Would these patterns apply

to West Africa ?

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 7

In Asia, mechanization not only substituted labor, but also

have raised returns-to-scale

→ Intensification (land, fertilizer, seeds etc)

When renting

in tractors

Change in the shape production function

output

Transformative effects on smallholder agriculture

inputs-use intensifications

Specialization

Divisions of labor

Returns to scale: 0.7 Returns to scale: 0.9

→ Intensification (land, fertilizer, seeds etc)

Source: Takeshima (2017).


In West Africa, demand for mechanization still largely

depends on farming system evolutionForest fallow

(Slush & burn)

Bush fallow Short / grass

fallow

Annual

cultivation

Multiple

cropping

Fallow period 20 years ~ 6 – 10 years 1 ~ 2 years ~ 1 year No

Cropping 1 – 3 years 1 – 8 years Several A few months

Population ~ 10 / km2

Land clearing Fire Fire

Land

preparation Digging stick

Hoe/digging

stickPlow

Animal-drawn plow

Tractors

Weeding Some Intensive

Use of

animals

Plowing

Transport

Plowing, Transport, Post-

harvest, Irrigation

Labor demand Weeding Land preparation, Weeding, Harvesting

Source: Modified from Boserup (1965), Binswanger and Pingali (1988), Windmeijer and Andriesse (1993)

Population density ↑

Market infrastructure ↑


In West Africa, farming intensification has exceeded the

level at which mechanization demand starts growing

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Benin

Nigeria

Gambia

Togo

Burkina

GhanaSierra LeoneNigerGuinea-BissauGuineaSenegal

Liberia

Mali

R-value = harvested area / (arable land + pasture, meadows)

Source: Presenter’s calculations based on FAOSTAT

Farming intensification

often raises demand for

more farm power uses

Example: R-value = 0.33

Switch from long-fallow to

short fallow, and increased

uses of animal tractions

(Boserup 1965;

Ruthenberg 1980; Diao et

al. 2014)


Mechanization patterns are diverse: vary across

regions, and crops (and across countries)

15

19195

0 1

6861

990

0 0

Crops % of crop area using tractors

(Nigeria, 2010/12)

Rice 31

Maize 6

Sorghum 5

Millet 2

Cowpea 4

Ground nuts 3

Cassava 3

Yam 2

Vegetables 1

Source: LSMS-ISA (2010/2012)

Share (%) of land plowed by tractors

or draft animals in Nigeria (2010/12)

Tractors

Draft

animals


Use intensity of animals is still low in Nigeria: demand

for mechanical farm power (tractors) still insufficient?

Country / regions Reference year Animal tractions (days / per

farms, year)

Source:

Nigeria - North West 2010/12 6 LSMS-ISA

Nigeria – North East 2010/12 9 LSMS-ISA

Bangladesh Early 1990s 90 Mandal & Parker

Japan 1950s 30 Government of Japan

Thailand 1991 15 Pryor (1992)

USA 1930s 100 (including other uses) Jasny (1935)

Note: The figures are derived by the presenters from the original sources, and can differ considerably

depending on the assumptions used.


CUSTOM HIRING SERVICES OF

TRACTORS IN WEST AFRICA

Private sector has emerged as efficient service providers


Among various types of custom hiring services,

farmer-to-farmer model is often the most common

N

o

Types of CHS providers Cultivate

own farm

Ownership

of tractors /

power tillers

Sources of

tractors

Share in

Ghana /

Nigeria

1 Specialized service providers No Individual Government

selected

suppliers

Rare

2 Cooperative / Joint ownership Yes Joint Often

government

selected

suppliers

Rare

3 Farmer-to-

farmer

Government-

sourced

Yes Individual Government

selected

suppliers

Relatively

common

4 Farmer-to-

farmer

Market-sourced Yes Individual Market Most common


Examples in Central Nigeria

Government-sourced

(GS) owners

Obtained tractors only

through government

scheme

Market-sourced (MS)

owners

Obtained tractors

through private market,

private individuals

Tend to be more

efficientEEE

E

EEE

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EE

EEE EEE

E

E

E

EEE

E

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E

EE

E

E

E

E

E

E

EE

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E

EE

EE

E

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E

EEEEE

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Kaduna

Nasarawa

Abuja

Two types of tractor owners identified based on the

sources of tractors


Market-sourced owners use tractors more extensively

than government-sourced owners

Source: Presenter’s calculation based on survey.

MS owners operate longer hours, serve more areas than

GS owners

692

499

977*

691

Mean Median

Hours operated, per tractor, year

GS MS

29 41

74

128

GS (mean) MS (mean)

Areas served (ha), per tractor per year

Own farming Hired out farming


Market-sourced owners realizes higher profitability than

Government-sourced owners

Source: Presenters.

GS MS

Median Mean Median Mean

Total gross revenues per year 5 8 11* 13*

Monetary values of own-farm use 1 2 3 4

Gross earnings from hiring out 4 6 6 9

Payment for operators and fuels 1 3 3 5

Operators 0 1 1 2

Fuels 1 2 2 3

Repairing 1 1 1 1

• MS owners earn significantly more than GS owners

• Revenues are much greater while operators / fuels costs are similar

Benefits from tractor use in the last 12 months (current USD 1,000)


Tractor use highly seasonal but Market-Sourced owners are

more active all-year around

3439

33

6575

111

80

43

24242734

63*5559*

104*

119*

147*

126*

65

44*

57*66*

72*

1 2 3 4 5 6 7 8 9 101112

GS

MS

4340

37

44

61

85

73

52

4236

33

42

63*58*59*

78*

89*92

84

67

4956*

67*68*

38

90

56

20

34*

12*23*

82*

103*

128120*

54

516*

44*51**

Hours of operation per tractor

Mean Median

% operating by month

Month

Substantial seasonality

But MS owners – mitigate seasonality; still find some work in off-season

* = statistically significant difference

between MS and GS


Market-sourced owners may have knowledge of soil types

and appropriate horsepower

Figure 4. Bulk density of soils in Kaduna and

Nasarawa (darker = heavier soils)Source: ISRIC (International Soil Reference and Information

Centre) (2013).

Kaduna Nasarawa Both

N of

obs

Corr.

Coeffic

ient

N of

obs

Corr.

Coeffic

ient

N of

obs

Corr.

Coeffic

ient

Could select from

a range of

horsepower

138 .196* 26 .577** 164 .241**

All 238 .011 71 .180 309 -.027

Source: Presenters.

Correlation between the tractor horsepower and bulk

density of soil – MS owners (conditional on operating

outside the home LGA)

MS owners who could select from a range of

horsepower

travel more to heavy soil area if they have higher

horsepower tractor

Some indication: MS owners can use tractor

efficiently based on soil type

(no such patterns among GS owners)


Power tiller service providers

Kpong Irrigation Scheme, Ghana

Brief description of Kpong irrigation scheme• One of 22 irrigation schemes in Ghana

• 4000 ha of rice area (2000 ha X two seasons)

• 2500 registered farmers (mostly indigenous farmers)

• Opened in 1959

• Aromatic rice production (Jasmine 85, etc) since 2009

• Yield = close to 6 tons / ha

Power tiller use• 100% of irrigated rice area (4000 ha) prepared by power

tillers

• Private custom hiring with 50 ~ 100 power tillers

• Power tillers introduced by the government, donors, private

companies since 80s

• Growing share of power tillers sourced directly from private

market (20 – 50%)

!

!

!

!!

Kpong

Accra


Market-sourced power tiller service providers seem

more efficient than government-sourced owners

All

Obtained power

tillers from

private sector

Obtained power

tillers from

government

Categories USD / year USD / year USD / year

Fuel cost 562 626 421

Lubricant cost 184 195 159

Repair cost 424 422 428

Spare parts 570 473 775

Workmanship cost 246 231 280

Operators 513 537 459

Depreciation of power tiller (assuming 5 years) a 713 773 576

Depreciation of implements (assuming 5 years) b 316 359 316

Revenue c 3675 3971 3008

Total area plowed (ha) 23 25 19

Revenue per ha (USD / ha) 158 159 157

Profit 263 542 -311a Based on the (1) power tiller price = $3000; (2) average number of power tillers owned = 1.15. b Assuming that the original value is twice that of current value of implements, and they typically last 5 years.c Imputed revenues for own farm use are included.

Profitability of power tiller service provisions by two-types of power tiller owners (USD / year)


Most tractors are purchased using personal savings;

credit is sometimes provided by tractor importers / retailers

• In Nigeria / Ghana:

• personal savings are generally dominant source of tractor finance

• the dominance of expensive, high horsepower tractors aggravate this

condition

• In Asia, credit is mostly provided by tractor importers / retailers

who also have sufficient know-how of loan management (with

specific divisions dedicated for it)

• Bangladesh

• Transactions costs are high for monitoring payments and insuring default

risks; but the private sector still has incentives as the demand is high

enough to bring profits

• Challenges for some finance mechanisms


Challenges in West Africa: tractors are large but very few

0

10

20

30

40

50

60

70

80

90

100

0 10 20 30 40 50 60 70

1952

1958

1960

Japan

2010

Nigeria

1995

2010

Nepal

1994

India

19701974

USA

1945

1930 (US)1984

Indonesia

2010

Indonesia

2008

Bangladesh

1978

China

2010

China

Many countries started out with low

horsepower (10HP) at early stage of

tractor use growth

High average horsepower in low

tractor adoption environment – only

recent phenomena observed in Sub-

Saharan Africa

Indivisibility with tractors is more

serious

Scale of mechanization is definitely

an issue

Average tractor Horsepower

% of area tractor-tilled


Challenges – mobility of tractor is limited, except small

clusters of long-distance travelers

6 59 12

2326231911 8 9 7

1 2 3 4 5 6 7 8 9 101112

Month

4 4 59

212825

20

95 6 7

20*15*

45*39*

45

23202423*32*

39*

10

Travel alone (N = 79)

Travel in group (N = 11)

6 51012

21232216

11 8 7 7

151110

25

73*

95

62*

84*

1010

53*

15

Travel on tractor (N = 83)

Travel on truck (N = 6)

Group traveler –

- travel further away in

off-season

Truck traveller (10% of sample)

- travel further away in

peak-season

- Travel is generally

confined within 25 km

radius (Euclidean distance)

Average distance (km) away from home district in each

month (Euclidean distance from home district)


AGRICULTURAL MECHANIZATION

POLICY ISSUES

Labor market

Tractors

Machinery Service providers

Operational

knowledge

Mechanics,

repair service

Spare parts

Land

market

Population growth

Market growth

(food crop,

preferences)

Demand for intensive

land preparation

Demand for transportation

(food, non-food items)

Mechanization demand

Draft animal Mechanization supply Labor

Exchange rate policy

Agricultural R&D and inputs policies

Formal finance, machinery subsidies policy

Informal finance

Infrastructure

policy

Geography, agro-ecological conditions

Crop choice

Farm size

distribution

Education

policy

Crop-livestock

integration

Growth in non-farm economy

Self-learning

Training policy

Information

Public / private

efforts

Trade policies on machineries

Land

policy

Food import

Complex impact pathways of broad economic policies and mechanization specific policies

FuelFuel subsidy


Agricultural mechanization policy issues

• Mechanization

• is affected more by a broader set of agricultural and economic policies

• is also affected by mechanization-specific policies, but in more limited scope

• Private sector can often meet the demand (if the demand is sufficient)

• Investment in machines

• Provisions of services, spare parts, repairs

• Innovation; engineers in the private sector are often as capable as those in public research

institutions; different from innovations on some other technologies (eg, improved varieties)

• Government can focus more on gathering information and knowledge through

research:

• Effects of broad policies on mechanization, and their mechanisms

• Extent and nature of private sector activities, and where exactly government needs to fill the gap

• Experiences in foreign countries


Tractor related policies have had mixed effects on

overall mechanization growth in NigeriaPeriods -1972 1973-85 1986-99 2000-12 2013 -

Adoptions (%) – Tractors 1 ~ 5 5 ~ 10 10 8 10 +

Adoptions (%) – Animal traction 3 ~ 4 25 25 +

Animal traction (North) 6 ~ 10 60

Subsidies:- Subsidized distribution of

tractors (fixed amount)- (in the form of interest rate

subsidy)

Large import and subsidized distribution (as many as 3000 tractors / year)

Occasional distribution of subsidized tractors by both Federal and State governments(generally inefficient targeting)

Federal: switch to support for service provider

States: continue subsidized distribution of tractor

Trade policies Generallyliberalized

Import duties for spare parts raised

Devaluation following SAP (8- fold increase in tractor price)Tractors often VAT-exemptImport duties; 5% for spare parts; varied between 0 ~ 25% for tractors

Fuel prices (diesel) Unregulated

Price controlEnhanced domestic refinery capacity

Government control of fuel imports

Diesel - unregulated since 2007Kerosene / gasoline remain subsidized

Industrialization policies (domestic manufacturing)

Joint venture unsuccessful due to poor raw materials

Agricultural R&D Release of farm-power-responsive

varieties (responsive to intensive

tillage – maize, for example) =>

growth of animal tractions thereafter

Reduced support for NARS and reduced farm-power-intensive crops

(limited response to intensive tillage, and demand for farm-power)

Growing food import to fill production shortage

Agricultural R&D Limited effort in public knowledge accumulation (tractor census, agricultural mechanization statistics, etc)


Concluding remark

• Mechanization growth in developing countries in the last 25 years

• widespread mechanization growth is possible for smallholder farmers

• mechanization can grow even when many workers are employed in agricultural sector

• mechanization has transformative effects, rather than simply substituting labor

• In West Africa, overall demand for mechanization is still largely affected by

farming system evolution

• the demand has grown sufficiently high in some areas, but has remained low in other

areas

• Where the growth has occurred, private sector has often emerged as efficient

suppliers of custom-hiring services

• However, accessibility is still constrained

• Tractors are large but few - we need to know more about the optimal size of machines in

West Africa (animals, small pumps, motorcycles are commonly adopted – why not small

tractors?)


Concluding remark

• Agricultural mechanization policies

• Agricultural mechanization is affected by broader set of policies, rather than

mechanization-specific policies

• Important to increase overall support for agricultural sector

• CAADP target – allocate 10% of government spending to agriculture

• Agricultural R&D; develop varieties that respond to intensive tillage

• Agricultural R&D on mechanization: gathering information on

• which factors raise demand for intensive farm-power uses

• what the private sector is doing (investment in machines, mechanization service provisions etc)

• situations in other countries (the designs of machineries used, etc)

• Infrastructure development

• rural electrification – lowered the costs of mechanical water pumping in South Asia

• rural road infrastructure


References

Diao X, J Silver & H Takeshima. (2016). Agricultural Mechanization and Agricultural

Transformation. IFPRI Discussion Paper 01527.

Hayami Y & VW Ruttan. (1985). Agricultural development: An international perspective.

Baltimore and London: The John Hopkins University Press.

Hayami Y & T Kawagoe. (1989). Farm mechanization, scale economies and polarization: The

Japanese experience. J. Devel. Econ. 31(2), 221-239.

Takeshima H, E Edeh, A Lawal & M Isiaka. (2015). Characteristics of private-sector tractor

service provisions: Insights from Nigeria. Developing Economies 53(3), 188-217.

Takeshima H, R Adhikari & A Kumar. (2016). Is access to tractor service a binding constraint for

Nepali Terai farmers? IFPRI Discussion Paper 01508.

Takeshima H. (2016). Custom-hired tractor services and returns to scale in Nepalese

smallholder agriculture: A production function approach. Agricultural Economics,

forthcoming.

Zhang X, J Yang & T Reardon. (2015). Mechanization Outsourcing Clusters and Division of

Labor in Chinese Agriculture. IFPRI Discussion Paper 01415.


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