The Journal of Development Studies, 2017 https://doi.org/10.1080/00220388.2017.1329525
ARTICLE
Thinking Outside the Plot: Insights on Small-Scale Mechanisation from Case Studies in East Africa DAVID KAHAN*, ROGER BYMOLT** & FRED ZAAL** *Socio-economics programme, International Maize and Wheat Improvement Center (CIMMYT), Addis Ababa, Ethiopia, **Royal Tropical Institute (KIT), Sustainable Economic Development, Amsterdam, the Netherlands
(Original version submitted April 2016; final version accepted May 2017)
ABSTRACT The changing agricultural sector and the challenges faced by smallholders call for the need for farm mechanisation suited to smallholder farming. Conventional four-wheeled tractors (4WTs) are not feasible for many smallholders owing to their high capital costs, unsuitability for fragmented holdings as well as topography and slope. More appropriate technologies are needed such as two-wheeled tractors (2WTs) and their requisite accessories. Our findings show that opportunities exist for the introduction of 2WTs in maize based systems through service provider models combining a number of operations that can be offered throughout the year and targeted to niche areas where 4WT access is unlikely. The paper also suggests that attention needs to be given concurrently to development of the 2WT supply chain to ensure that its profitability is sustainable.
1. Introduction Over the past 50 years or so there has been phenomenal growth in the number of tractors in use in Asia, Latin America and the Caribbean. However, the current state of mechanisation in sub-Saharan Africa (SSA) is one of stagnation and in some countries even decline (Mrema, Baker, & Kahan, 2008). SSA continues to have very low levels of mechanisation and available data indicate low levels of adoption and farming systems that are heavily dependent on manual labour (Houmy, Clarke, Ashburner, & Kienzle, 2013, p. 18; Pingali, 2007). The persistent low level of mechanisation in a relatively land abundant region has been a longstanding puzzle in the literature on agricultural mechanisation (Pingali, 2007; Pingali, Bigot, & Binswanger, 1987). Some explanation was given by the lack of incentives for farmers to intensify production in low input and low yield production systems. This failure was traced to the inelastic demand conditions of production that emanate from low population densities and weak market infrastructure (Pingali, 2007). Over the last four decades there has been considerable debate on the benefits and costs of mechanisation. Proponents of mechanisation argued that the use of tractors and draught animals could increase productivity of land through timeliness of farm activities, overcome seasonal labour shortages, reduce farm drudgery and be used for other off-farm activities (Eicher & Baker, 1982; FAO, 2011). Others have suggested that mechanisation would leave rural farm labour unemployed (ILO, 1973), thus offsetting the benefits from land productivity increases. There have also been debates about the intended and Correspondence Address: David KAHAN, Socioeconomics Programme, International Maize and Wheat Improvement Center (CIMMYT), PO Box 5689 Addis Ababa, Ethiopia. Email:
[email protected] © 2017 Informa UK Limited, trading as Taylor & Francis Group
2 D. Kahan et al. unintended outcomes of mechanisation on off-farm employment (Biggs, Justice, Gurung, Tripathi, & Sah, 2002). Following these debates, it was widely recognised that the advance of mechanisation is impeded by a host of factors, the most important being infrastructural factors, capital constraints, profitability and the nature and choice sets of the technologies available. These were some of the factors cited for the failure of mechanisation in SSA (Sims & Kienzle, 2006). When new technologies require more capital inputs or high levels of technical and management skills, these requirements tend to disadvantage smaller farmers (Hazell, Poulton, Wiggins, & Dorward, 2007). To pay for investments in mechanical technologies, farmers have to be able to generate sufficient income from their production. Furthermore, the sustainability of mechanisation requires access to organised markets for high value crops. Because of the high capital costs associated with 4WTs, only larger farms in SSA have generally been able to afford to buy them, utilise them and maintain them efficiently (Mrema et al., 2008). This paper examines the case for small mechanisation with low cost engine units and accessories purchased from Asia as a possible avenue for the transformation of smallholder farming. The paper is based on research conducted through funding provided by the Australian Centre for International Agricultural Research in three east African countries – Ethiopia, Kenya and Tanzania.1 The research project was set up to test and introduce 2WTs and their accessories in maize based farming systems, answering three key research questions: 1) Why invest in 2WT mechanisation? (2) What package of technologies are the most appropriate in different circumstances? 3) How to deliver appropriate mechanisation to the largest number of smallholders? This paper attempts to summarise the evidence collected.
2. The case for small mechanisation: literature review Small farms remain the focus of agricultural policy and rural development strategy in East Africa (FAO, 2014; IFAD, 2011). On a global scale, small-scale producers are the main source of agricultural investment in many countries, with around 500 million small-scale farms supporting almost two billion people; nearly one-third of the global population (Vorley, 2012). Rapid population growth in rural areas of many sub-Saharan African countries together with the sub-division of land among children is leading to an expanding number of smallholders and a general decrease in the average size of farms (Jayne, Muyanga, Chamberlin, & Nkonde, 2014). Although this trend is partially offset by rural-urban migration, there is evidence that the move towards smallholder fragmentation in SSA is continuing with average farm sizes ranging from 1.0 to 3.7 hectares (Masters et al., 2013). A demographic shift is also occurring in agriculture, where owners are becoming older and less likely to invest in mechanisation (even when this would make sense economically), and younger populations are attracted by higher and more regular and secure wages in urban areas. Investments in labour-saving technologies are low, even in areas where labour is becoming scarcer over time (abetted by an aging farmer population) (FAO, 2014). A further consequence of low farm mechanisation is high labour drudgery in the tasks that remain, which affects women disproportionately (Vergnani, 2013). Women comprise on average 43 per cent of the agricultural labour force in developing countries, a share of 50 per cent or more in parts of Africa (FAO, 2011). Improving women’s productivity through mechanisation can make a substantial contribution to raising overall agricultural production as well as reduce drudgery. If family labour diminishes there is considerable potential to increase agricultural productivity and reduce drudgery by promoting greater use of appropriate mechanisation technologies that are suited to the farming conditions of smallholders. While headway is being made in some countries in SSA by the expansion of 4WTs for commercial farming and rental services to smallholders (Diao, Cossar, Houssou, & Kolavalli, 2014), given the predominance of small scale farms and their limited land size, and the problematic supply situation of high-level mechanised technologies, supplementary or alternative and appropriate means of mechanisation are essential to ensure sustainable agricultural productivity and growth. Animal-traction is
Smallholder mechanisation in Africa 3 threatened by the lack of land for fodder production due to shrinking land sizes, alongside the impacts of drought and increased incidence of animal disease vulnerability. In the Asian context, the Green Revolution occurred as a result of the adoption, use and dissemination of smaller scale equipment such as 2WTs, shallow tube wells, smaller scale low lift pumps and two, three and four wheeled motor transportation vehicles (Biggs & Justice, 2015). The 2WT is particularly attractive given its ability to perform multiple functions (if equipped with the corresponding attachment), including planting, ripping, transporting, shelling, threshing and water lifting. This makes them ideal candidates for mechanising the various functions along the agricultural value chain (Baudron, 2014). A number of lessons have been learned from the experience over the last four decades of mechanisation. Firstly, the approach to mechanisation in the past focused largely on incremental change (Collinson, 1999; Eicher & Baker, 1982). Experiences in Africa with incremental change and reliance on low-input systems stand in stark contrast with the cropping systems approach in Southeast Asia that underpinned the shift to high input and intensity multiple-cropping systems (Mrema et al., 2008). Secondly, it should be recognised that the earlier studies, conducted over the last 20 years, largely focused on farm level profitability and impact to the exclusion of the mechanisation system as a whole. This neoclassical approach was intellectually limiting although it did highlight the need to focus attention on increasing the profitability of investments in mechanisation for smallholder farmers, whilst ensuring affordability and the need to strengthen capacity to operate machineries (Eicher & Baker, 1982). Thirdly, the vast majority of the earlier empirical evidence was largely around 4WT based technologies with little knowledge of the new range of low cost technologies that have come onto the market in recent years. There was a failure to separate out the effect of different types of mechanisation, in combination and in sequence. Furthermore, the studies carried out in Asia and Africa that provide the background data for the earlier analyses, did not measure the supplementary income from machinery hire services, much less quantify the benefits from non-agricultural use of equipment. Fourthly, mechanisation needs to be understood as a process that should not be appraised only from the standpoint of factor substitution or net contribution to production at farm level (Binswang 1974 and 1978) but rather as part of a system of interlinked changes in the structure of agricultural sectors, in the nature and performance of agricultural support services and in the livelihood strategies of farmers and rural entrepreneurs. In this way, smallholder mechanisation needs to be viewed strategically within a longer-term time frame, and as part of a broad-based economic development strategy aimed at economic growth and agro-industrialisation (Mrema et al., 2008). The benefits of the 2WT technologies are that they are more appropriate to match small holding sizes, are better able to manoeuvre in small fields and have multi-functional purposes. Additionally, because of their post-harvest potential they are more appropriate to reduce drudgery, particularly for women. 2WTs are also energy saving which is essential to promote crop intensification in a sustainable manner and for productivity gains to be made with minimum environmental consequences (Baudron, 2014). The need for increased efficiency in the use of resources for farming and greater savings of energy, can be best achieved by promoting 2WTs that improve the farm power balance through increased power supply whilst concurrently adopting sustainable intensification principles that reduce power demand and increase power supply through appropriate mechanisation (Baudron, 2014). Sustainable intensification can only occur if the issue of declining farm power is adequately addressed. This paper analyses socio-economic factors affecting the adoption and spread of mechanisation in general for smallholder farmers with a focus on the introduction of 2WTs and its accessories. Experience from these selected countries were synthesised to draw lessons that aim to support smallholder agricultural mechanisation. Related key gaps, constraints and opportunities in smallholder mechanisation are identified to provide evidence-based recommendations to strengthen and sustain the development of small scale agricultural mechanisation in the respective countries and the region as a whole. The remainder of the paper is organised as follows. Section 3 presents the methodology; a combination of household survey data, group interviews and more in-depth cost-benefit analysis. Section 4 discusses the status of smallholder mechanisation in the three countries whilst reviewing the dynamics of changes in market demand for better performing agricultural technologies. Section 5
4 D. Kahan et al. characterises the maize based farming systems in the different study sites. Section 6 covers the costbenefit analysis after developing representative farm type models. Section 7 describes the major findings from the study with an emphasis on implications for policy makers and programme design. Conclusions from this study are offered in Section 8.
3. Methodology As a first stage, a desk study was conducted to review the available literature on agricultural mechanisation in sub-Saharan Africa, with a focus on the target countries. This was followed by a series of household and key informant surveys. Over the course of the fieldwork, 491 farmers were surveyed in locations which were representative of maize-based farming systems in the three countries. The sample of farmers was purposively selected from areas with a low penetration level of farm mechanisation, as well as from neighbouring areas where there was felt to be a higher incidence of tractor use (largely 4WTs). To complement the survey data, focus group discussions and key informant interviews were conducted across the countries in order to gather farmer perceptions around some of the key issues faced by farmers regarding the introduction of mechanisation within their farming system. Focus group discussions allowed the researchers to probe on the ‘why’ and ‘how’ questions and understand the processes around mechanisation uptake. Information was also collected from researchers, dealers and service providers on the potential market for both 4WTs and 2WTs in these countries. A review of the demand and supply of these tractors was undertaken to determine the extent of use and management of these machines in the study sites. The information collected through the survey process was supported by an in-depth analysis of the benefits and costs of using 2WTs under smallholder conditions. The technical and economic data on costs and benefits of mechanisation for the analysis was collected from surveys of 2WT operators where adoption has taken place, combined with research data on ‘best bet technologies’, work rates, fuel consumption and repairs and maintenance from experts contributing to the project in all countries. The cost-benefit analysis examined the viability of the 2WT and its accessories from various perspectives: (a) the individual farmer as owner-operator of the machinery, (b) the farmer as a parttime service provider and (c) the more entrepreneurial service provider offering a hire service as a specialised full time occupation. The cost-benefit analysis examined the financial incentives to farmers and service providers located in the study areas and the constraints that impede adoption and that need to be overcome for replication to occur.2
4. The status of mechanisation in the case study countries While the aggregate figures for the SSA indicate stagnation, the current state of mechanisation differs between the sub-Saharan countries of Kenya, Tanzania and Ethiopia – the focal countries of this paper. Large scale commercial and government farms in these countries are often fully mechanised but millions of smallholders have no access to mechanisation. In some cases, such as in Ethiopia and Tanzania, rental markets for animal traction and larger 4WTs are developing, the number of smallholder farmers reached are still low (FACASI market reports, 2013). On the one hand, the low level of mechanisation is a consequence of low levels of savings and investment by smallholders, affecting future productivity and productive capacities (Houmy et al., 2013; Vergnani, 2013). On the other hand, low mechanisation rates also reflect high (and rising) farm fragmentation which makes the use of 4W tractors difficult to manoeuvre and costly to hire. The factors impeding on the supply and demand for mechanisation are illustrated in Figure 1. In Ethiopia and Kenya, although awareness and demand for 2WTs and its accessories is low, opportunities do exist for its expansion and development, as evidenced from the Tanzania experiences. The status and dynamics of the small tractor market and accessories for the three case study countries is now discussed.
Smallholder mechanisation in Africa 5 1
Low farmer income
2
4 Low productivity
Low savings
3 Low demand for mechanization
5
7
Low level of mechanization supply (volume, spares)
High operating costs of mechanization
6
High capital costs of mechanization
Figure 1. Factors conditioning the demand and supply of agricultural mechanisation services. Source: Houmy et al. (2013)
4.1. Ethiopia Despite efforts made to introduce mechanised forms of power in the country, the mainstream practice has been for farming households to use mainly human and animal power sources with very low energy requirements and output. The development of agricultural mechanisation in the country has been slow. Although data shows an increase in the total number of 4WTs, from 4772 in 2009 to 9560 by 2012 and 12,500 by 2013, the increase is largely attributable to the growing number of foreign private investors, mainly from China, India and Saudi Arabia, engaged in large commercial agriculture (World Bank, 2012). Many large commercial farms are being established by foreign investors as a result of investment incentive packages of the Government. The demand for mechanisation has also been driven by an increase in rural wages, a result of broad based economic transformation in the country at large (Berhane et. al, 2016). These dynamics have also impacted on the procurement and use of 2WTs. Current estimates show that there are around 4100 units in the country, of which 3000 have been imported by Metals Engineering Corporation (METEC), a parastatal corporation under the ownership of the Ministry of Defence. The remainder are imported by private importers/dealers and are distributed commercially to private operators. The majority of imported 2WTs are from China. In 2014, the level of farm power availability was calculated at 0.52 horsepower per hectare (Mechanization Strategy, 2014). With approximately 12 million smallholders in the country (2014) the figure shows a ratio of one tractor for every 1000 smallholders, reflecting low levels of tractor use. The primary source of mechanisation is oxen power and the most common implements utilised are animal-drawn ploughs. Some 36 per cent of these smallholders have limited purchasing power as they are engaged in subsistence farming living off less than 2 USD per day. The remaining 64 per cent of
6 D. Kahan et al. farmers (small, medium and commercial) have significantly greater purchasing power, allowing them greater access to advanced machinery. 4.2. Kenya Mechanisation is also on the rise in Kenya but with an emphasis on 4WTS. According to data available from the Kenya Revenue Authority (KRA), 4WT tractor ownership has risen gradually since 1961, from 6420 units then to 12,840 units in 2002 to around 18,000 units by 2012. Most of the 4WTs operating in the country are, however, concentrated on larger scale commercial farms (both Government and private) cultivating plantation and commercial crops – sugarcane, rice, wheat/barley, tea and maize. Land tenure laws have encouraged a rapid degree of land fragmentation resulting in smallholders in the more densely populated areas cultivating on average less than one hectare of land. Mechanisation levels among this category of farmer is low. Since 2005 only around 512 units of 2WTs were imported, and most of these tractors are mainly used in the horticultural industry to transport flowers from farms to pack-houses. These numbers have since then declined as dealers cut back on imports owing to low market demand. This can largely be attributed to the relatively high cost of imports and low awareness among smallholder farmers, in addition to reasons discussed above. Although demand is low, the fragmented nature of land sizes in Kenya’s smallholder farming sector suggest that there might be opportunity for this adapted tractor type. 4.3. Tanzania As of 2015 data from the Ministry of Agriculture show that for land preparation tractors were used on only 14 per cent of cultivated land, draught animal power on 24 per cent with the remaining 62 per cent relying entirely on hand-tool technology. Current agricultural machinery use shows that 4WT numbers declined from a peak of over 18,500 operational units in 1985 to about 7200 units by 2005 when the nation-wide Tanzania Agricultural Mechanisation Strategy (TAMS) survey was undertaken. Since then numbers of 4WT have increased to 10,200 by 2015. However, the TAMS survey also shows that the 4WT fleet is quite old with over 73 per cent in excess of 15 years old, well beyond the useful design life.3 The level of tractorisation is low at 14 per cent. Animal traction lies at 24 per cent, and hand hoe, 62 per cent, dominating the farming system. As of 2014 there has been a total of around 6000 units of 2WTs (called power tillers or walking tractors in Tanzania) in the country with the numbers steadily rising since 2005. In 2005 there were only 100 2WTs, peaking to a level of 3325 in 2010 but dropping slightly since then. This decline can be explained by the erratic government support and changes in policy towards engaging the private sector. The stimulus for the 2WT imports in Tanzania was the severe droughts of 2009 and 2010 which decimated 50 per cent of the cattle in the country and Government subsequently promoted mechanisation as a substitute for draught oxen. The spread of 2WTs and ancillary equipment, since 2005, has been catalysed through government subsidies and a policy to waive VAT and tariffs on agricultural machinery. More recently, government has withdrawn from taking the lead and the private sector is driving the market. To summarise; in none of the case study countries has the introduction of 4WTs and 2WTs been strictly linked to smallholder market demand and an adequately organised supply system. In general, government has driven the process through (non-market) interventions and support for large scale commercial farming initiatives requiring larger scale mechanisation. Field evidence in the context of this study shows that farmers, and in particular smallholders with market access, are interested and eager to know more about appropriate farm mechanisation technologies. The challenge is to transform the current low levels of mechanisation by adapting these technologies to the needs of small scale farmers. Introducing 2WTs and its accessories has proved interesting in this respect. In view of the evidence, the question then becomes: why is the adoption of mechanisation so slow, and what would be the opportunity here for an adapted form of mechanisation that is suited to local East African
Smallholder mechanisation in Africa 7 conditions? We will discuss in more detail this issue within the context of the maize based farming systems that are the focus of this study.
5. The maize based farming system This section describes the prevailing smallholder maize farming system for the sample respondents in the case study countries. The vast majority of respondents reported growing maize over the last season as expected within the maize-based cropping system. Maize is followed by beans as the second most frequently grown crop. The frequency of other crops grown was mostly related to district (agroecological) specificities. For example, among maize producing households, potato is common in the Kenyan and Ethiopian highlands, while pigeon pea is widely found in Mbulu, Tanzania. Fodder crops are still common in Ethiopia (not just for dairy cows in zero grazing systems, but also for draught oxen), enset is widely grown in Hawassa Zuriya and Shashamane and wheat is the most common crop found in Tiyo. In Tanzania those farmers with smaller land parcels are increasingly looking to put more of their land under higher value crops, such as horticulture. Over the 2014–2015 season, most households grew four to seven crops in each of the three case study countries. Farm models were constructed in the selected sites in the three countries as the basis for the cost-benefit analysis. The models represent ‘typical’ farm households found in the project sites, illustrating differences in the cropping pattern and crop combinations on lands of varying soil fertility (summarised in Table A1). In Ethiopia, Tullo district is characterised by a maize based system together with tomatoes and cabbage. The vegetables are irrigated and grown over an annual cycle of four months. The median area under maize – the main use of the machinery and equipment – is 0.25 ha. and 0.55 ha. for Tullo and Dorebafena, respectively. The season for maize extends from April to November. In contrast, in Kenya, the study areas are relatively densely populated, and the population is growing fast. The average land area is around 1.4 ha of which 40 per cent is allocated to maize. Bungoma shows a land holding size ranging from 0.6 to 3.2 hectares with an average size of 1 hectare. The most common crops found are maize, beans, cassava, potatoes, ground nuts, bananas, rice, soya beans and sugar cane. In Laikipia, the other selected site, the predominant crops found were maize, potatoes, wheat and beans/peas. Based on the prominent crops grown in the sites, seasonal calendars were developed for the major farm operations, illustrating the duration during which mechanised field operations may be conducted. Finally, in Tanzania, representative farm models were constructed for Mbulu and Arumeru districts. Arumeru incorporates a system of maize and beans based together with tomatoes. The bean crop is double cropped at three to four month cycles throughout the year. In Mbulu the farm holdings are larger with a median size of around 2.8 hectares and the cropping pattern comprises maize together with higher value cash crop such as beans. The area under maize is 2 ha and beans 0.8 ha over a single four month cycle. In Tanzania, the study focussed on relatively densely populated areas and population increases and subsequent land subdivision into smaller sized plots (with an average of 2.8 ha.) has affected the availability of land and was reported as a problematic issue in focus group discussions. For this reason, land under maize was said to be in decline. Finally, in Ethiopia, land sizes averaged 0.75 ha, and the area under maize averaged about 0.4 hectares. Farmers grew around six different crops last season, again illustrating farm diversity. With smaller land parcels in all countries, farmers said they are increasingly looking to put more of their land under higher value crops. The mean land sizes for all countries is given in Table A1. The study sites were also differentiated according to soil type (clay – heavy vertisols; silty/loams; sandy soils), topography (steep, flat, undulating) and awareness and practice of minimum tillage (Figure 2). Crop budgets, estimating the costs and returns per hectare, were prepared for each of these farm types. The budgets were derived from individual and farmer group interviews, and corroborated by technical experts in the districts. The gross margin analysis was conducted for the whole farm under ‘with mechanisation’ and ‘without mechanisation’ scenarios, indicating the viability of 2WT mechanisation from the perspective of the user.
8 D. Kahan et al. 70% 60% 50% 40% 30% 20% 10% 0% 1
2
3
4 Kenya
5 Tanzania
6
7
8
9
10+
Ethiopia
Figure 2. Number of crops grown per household, (%).
6. Economic analysis: the case for hire service business models The economic analysis of the small scale mechanisation options was conducted, from the perspective of the farmer and service provider. Three business models were analysed: 1) farmer owner operators employing a range of mechanisation technologies solely on their farms; 2) farmer owner operators utilising 2WT based machineries on their farmers whilst providing hire services on a part-time capacity to neighbouring farmers; and 3) entrepreneurs providing specialised 2WT based services in a full time capacity (that is, not farming their own land).4 The business models included different combinations of 2WT based technologies: ploughing, ploughing and transportation, ploughing, transportation and shelling. In some cases planting and minimum tillage (ripping) operations were studied as an alternative to ploughing.5 The findings show that in all of the project sites the cost of the 2WT and its accessories proved not to be viable for farmers as individual owners, operating solely on their own farms. A summary of the results for different combinations of machinery in different locations under varying soil conditions is given in Table 1, and the detailed results of the analyses are given in Appendix Tables A2, A3 and A4. The results show that the farmer/service provider business model is profitable, albeit suggesting variations depending on the size of the catchment area of market demand.6 2WTs are attractive as investments for individual smallholder farmers if they can provide services at commercial rates to neighbouring farmers and can increase their coverage to extend up to calculated break-even points for the number of customers and area covered. The extent to which this is profitable, however, varies considerably between countries and sites depending on topography, soil type and feeder road accessibility for transport services. The break-even points varied between 20–40 customers for packages of operations that include ploughing and transportation and ploughing, shelling and transportation.7 This is a generalised finding that doesn’t take into account the size of land holding, the extent and quality of the feeder road network and the volume of output to be processed. The findings, however, suggest that it is likely to be challenging for smallholder farmers with less than 2ha of land (and no cash crops) to provide hiring services on a part time or ad hoc basis. As the size of holding increases and the farming system is more commercially oriented, the hire service provider model becomes more attractive. Indeed, the economic analysis as illustrated in the Appendix, shows that the rate of return on investment – represented by the IRR – is most attractive in the case of a full-time specialised service provider offering a combination of ploughing, transport and shelling services.
+ A ++
Plough (x, y) Plough, transport (x,y) Combinations of socio-ecological conditions Plough, transport, shelling (x, y, z) B +
Low
C ++
High
High
Low
High
D +
+ ++ E +++ F ++
+ G ++ H ++
Low
Weak
Combinations of technologies
Low
Good
+ +++ A ++++
High
B +++
Low
Good
+ ++ C +++
High
D ++
Low
Weak
Heavy soils
++ +++ E ++++
High
F +++
Low
Good
++ ++ G +++
H ++
Low
Weak High
Light soils
Model 2: Entrepreneur (full time)
Notes: The larger the number of plus signs the higher the level of profitability. Soil conditions: 1. Heavy soils 2. Light soils; Feeder road access: 1. Good access 2. Weak access. Potential area for maize shelling: 1. High 2. Low. Combinations of site characteristics: A. Heavy soils, good access, high potential; B. Heavy soils, weak access, low potential; C. Heavy soils, weak access, high potential; D. Heavy soils, good access, low potential E. Heavy soils, good access, high potential F. Heavy soils, weak access, low potential G. Heavy soils, weak access, high potential H. Heavy soils, good access, low potential. Business models: 1: Farmer hire service provider; 2. Entrepreneur hire service provider. Combination of technologies: 1. Plough; 2. Plough/trailer; 3. Plough/trailer/sheller.
High
Weak
Light soils
Model 1: Farmer to farmer (part-time) Heavy soils Good
Road conditions (y) Maize potential (z)
Soil conditions (x)
Hire service provider models
Composite indicators of profitability
Table 1. Generalised results from the economic analysis for the hire service provider models.
Smallholder mechanisation in Africa 9
10 D. Kahan et al. Notwithstanding these findings, the survey data suggests that there is certainly a subset of smallholder farmers who have comparatively higher capacity for maize farming within a farming system that includes cash crops. This is particularly true for farmers in Kenya and Tanzania, where they use more sophisticated production methods (for example, row planting, proper fertiliser use, timeliness of weeding and so forth) and improved inputs (improved varieties of seed, quality fertilisers and so forth) on larger farm areas (above 3 ha) with above average yields. Moreover, their maize based farming system often include higher value cash crops with better access to markets. Such farmers are generally on their way to ‘farming as a business’, rather than subsistence farming with the intention of selling limited surpluses. These higher capacity farmers are more likely to invest in ‘new’ technologies and mechanisation and are likely to offer hire services to neighbours. While mechanisation has considerable potential benefits, most smallholder farmers and those especially located in marginal areas, are not likely to be in the position to afford to buy tractors and their accessories. To provide access to mechanisation for these smallholder farmers, the focus needs to be placed on promoting the hire service business. The benefits of custom hiring are that there are no demands for the initial investment and repair and maintenance cost from farmers. The most lucrative form of service provision is for entrepreneurs to regard custom hire as a full time business venture. 4WT service providers tend to be the larger farmers hiring out their tractor and operator after they complete their own farm operations. Farmers often mentioned in the focal group interviews that they had to actively seek out these larger farmers offering 4WT services and were often located in other districts. Another 4WT hire service model examined was the Farm Cooperative, in Ethiopia, which tends to own few tractors for a membership that could run to several thousand farmers. Moreover, the large distances needed to provide service to smallholders and the consequently high costs of operations were seen as a further limiting factor for expanded outreach.
7. Implications for policy makers and programme design 7.1. Niche targeting for 2WT hire services During implementation of the FACASI project, it became apparent that there is some debate over 4WTs or 2WTs as the most appropriate form of mechanisation to support smallholder farmers. Some proponents in SSA are convinced of the need for 4WTs to support commercial farming (Houssou, Diao, Cossar, & Kolavalli, 2013; Mrema et al., 2008. PrOpCom, 2012). Others see low cost 2WTs as the only way to reach the multitudes of smallholder farmers (Biggs & Justice, 2015). This research recognises the place for both forms of mechanisation depending on a number of factors: landholding size, degree of fragmentation, soil types, topography, availability of labour and access to support services. In effect it’s not only the demand and suitability of the power source for smallholder farming but the specific services offered. Land preparation and tillage are more effectively conducted by ploughing with 2WTs on light and stone free soils and within localities where the topography is suitable. Moreover, 2WTs may make inroads in areas where the costs of maintaining draught animals are high (for example, because of animal health concerns and feed shortages). Transportation services require a favourable feeder road system and high concentrations of people and goods and shelling services are most likely to perform favourably in high potential maize areas. 7.2. Machinery operations and utilisation The results of the economic analysis show that the costs of machinery and equipment could be greatly reduced by extending their use over a large number of hours annually. Given the highly seasonal and time bound nature of land preparation and planting operations, extending 2WT hire services to different districts and localities with varying isohyets to exploit peak land preparation seasons is technically and managerially difficult (Mrema et al., 2008). More efficient utilisation of 2WT based mechanisation depends on greater intensity of use and as seen from the analysis conducted, the viability of 2WTs can be enhanced when the machinery is used as a combined package for multi-
Smallholder mechanisation in Africa 11 purpose use. In areas with a short time frame for land preparation, utilisation rates are likely to be constrained. Using the machines for operations that are less time-bound, such as shelling and milling can be conducted over a much greater time period. The most common and practical approach for further increasing utilisation rates is through the use of tractors for transport and other non-agricultural tasks. This, however, is only likely to occur in the project areas on a limited basis given feeder road accessibility. This suggests the careful planning of machinery and equipment bearing in mind the seasonality of demand for different operations. 7.3. Multi functionality and bundling There are many opportunities to extend 2WT hire services to smallholders, especially in planting, water pumping, milling and transport. However, at present not all of these operations are available because of unavailability of the requisite accessories. Seeders that can be operated with the 2WT are not commonly found, maize is rarely irrigated and shellers and threshers are not widely available. All these implements together also add to the investment package needed to ensure higher profits. Nevertheless, as discussed before, multi-functionality ensures that the tractor does not stay idle for much of the year and has the potential to reduce labour demands in both farm and off farm activities. Whilst ‘bundling’ machineries is economically advantageous the extent to which this is a realistic option depends on the capacity of hire service providers to purchase the accessories and the timing and sequencing of acquisition. Farmers who rent 4WTs in SSA have been seen not to bundle services but to specialise in land preparation operations (Diao et al., 2014). But for 2WTs, given the lower unit costs of accessories, this is not an inappropriate recommendation. The findings show that bundling need not be comprehensive and can take a limited form to include combinations of equipment such as ploughing and transportation, or ploughing and shelling, or shelling and transportation and that offer potential use throughout the year. These more limited bundles of technologies may be the only options available if Service Providers (SPs) have limited equity and access to finance. The optimum packages, however, are likely to vary depending on the socio-ecological conditions of different sites. Further research is needed to match the different packages with specific site conditions. 7.4. Derived demand The economic analysis shows higher levels of profitability in maize based systems when they include cash and high value crops. Farmers located in higher potential areas with cash or high value crops are likely to be in a better position to afford the machinery or demand hire services. The sale of these crops are likely to generate the necessary cash flow to cover capital costs, repay loans and/or pay for tractor hiring services. Key to the adoption and scaling-up of 2WT mechanisation is the effective demand for agricultural produce. Market demand for final produce translates into demand for equipment and machinery services if farming is profitable. For there to be sufficient and sustainable effective demand for mechanical technologies, efficient marketing and distribution systems need to be in place to ensure that whatever is produced on the farm can be transported and marketed. 7.5. Supply side issues For the profitability of 2WT mechanisation to be enhanced and the technology scale out, ways should be sought to reduce the costs of the machines and implements imported. Attention could be given to the local fabrication of 2WTs and accessories to a level that is more affordable for smallholder farmers. An example is to locally manufacture tool-bar based attachments that could reduce costs considerably. Maintenance is also a key issue as is the availability of repair services. In interviews conducted with those service providers owning 2WTs it was clear that the capacity of repairers was constrained by lack of availability of spare parts, the distance they had to travel for repairs, and the waiting time for repairs to be made. The ploughing season is the time when tractor hire service providers need to be working non-stop in order to turn a profit and repay debts and in
12 D. Kahan et al. case of a breakdown this not only disadvantages smallholder farmers who are booked in for the service, but also threatens the hiring businesses if repairs extend to several weeks. For the introduction of any new tractor type (and implements) the capacity of repairers to maintain these machines and access parts is critical. Another issue is access to finance for smallholder hire service providers. Most of the microfinance packages on offer in the project sites were between US$50–$300 per lendee. The normal conditions for microfinance apply, such as group lending and short repayment periods (usually within six months but sometimes up to one year). This means that finance for 4WTs is all but out of the question for smallholders. 4WT procurement would only be in the domain of unions, cooperatives, businesses, and medium to large scale farmers. In contrast, 2WTs were seen to lie within the reach of smallholders if they pooled together their resources, or rural entrepreneurs who are likely to have financial capacity from other income generating activities. Some serious thinking and piloting is required to see how formal lenders can be brought on board, and how loans can be structured, and how they can be securitised with terms that can be realistically met by farmers interested in investing in 2WT based machineries. Government trade policies can either support or stymie mechanisation. The case study countries variously apply import tariffs on assembled tractors, import tariffs on parts, VAT, or other forms of import restriction and licensing on smallholder mechanisation. Usually the purpose of such trade policy is to generate revenues rather than to protect domestic industries. However, the effect of these policies is to stymie the growth of smallholder mechanisation as such trade and tax policies increase the final cost to smallholders and/or reduce import volumes. In some cases, investor licenses can be obtained to waive tariffs, however this is not realistic for smallholders. There has been some movement towards more liberalised trade policy for mechanisation in Kenya and Tanzania over the past 10 years, however less so in Ethiopia. Trade policies are thought to be a contributing factor in the observed differences in tractor use between the three countries. The private sector is an important driver for increased mechanisation at scale. Poor infrastructure, especially in rural areas, increases delivery costs of machinery and services. Rural roads (and often main trunk roads) in the study sites are in a state of poor repair, which adds to distribution costs. Furthermore, registration can be an issue if the owner wishes to transport 2WTs to expand the market for hire services. Research institutes, public extension and other agencies have an important role to play to demonstrate and promote smallholder appropriate technologies. Farmers need guidance to know what machinery they should invest in and which makes and models are cost effective, robust and relatively easy to service. Such knowledge is very much lacking among most smallholders.
8. Conclusions Mechanisation needs to be understood as a complex and dynamic process that responds to systemic changes that often do not take place simultaneously nor impact on all smallholder farmers and rural entrepreneurs in the same way. Some of the critical barriers to successful mechanisation by smallholders is its profitability and their ability to afford the purchase of machinery and equipment. This is compounded by the availability of finance, the structure and profitability of the farming system, access to markets and development of the entire value chain. For smallholder mechanisation to be successful, appropriate scale mechanisation is needed and the efforts to promote 2WTs with their multi-functional use through hire service provider business models has potential. Its use, however, has to be strategically targeted to take into account the capacity of the hire service provider and the context within which they function. Although the potential exists for ploughing in coordination with transport and shelling this has to be targeted to locations where soils and topography are suitable for land preparation and feeder road accessibility fosters the development of transportation services. 2WT led mechanisation needs to be earmarked towards niches where landholding size is small and fragmented, the machinery can be
Smallholder mechanisation in Africa 13 effectively used, in combination with higher value crops systems and finally, where feeder roads provide ease of access. Critical for adoption of small mechanisation technologies is to look beyond the plot and farm level and to view small mechanisation from a systems perspective embracing the involvement of the supply chain actors and in particular local manufacturers, local dealers and repair and maintenance workshops. Development of the supply chain, however, will only come about as a response to the demand for mechanisation which can only come about by creating awareness of the potential of these new technologies. Once demand is secured, the private sector will be in the position to drive the transformation to mechanised farming among smallholders. In conclusion, a broader perspective is needed that views mechanisation as part of an integral system that includes both public and private sector actors with the understanding that ‘transformative’ change is required investing not only in smallholder agriculture but the development of the mechanisation industry and supply chain as a whole to boost not only agricultural production and productivity but also value addition and employment. For mechanisation to take off in SSA attention must be given not only to the land-labour ratios but also the distribution of services and packages. Disclosure statement No potential conflict of interest was reported by the authors.
Notes 1. The project is entitled ‘Farm Mechanization & Conservation Agriculture for Sustainable Intensification (FACASI)’ and is funded by the Australian Center for International Agriculture (ACIAR). The project is implemented by CIMMYT and has a four-year duration, 2013–2017. See http://facasi.act-africa.org/ 2. In conducting the financial analysis a number of assumptions were made: i) Gross margins of the predominant farm type in the maize based system were calculated for with and without mechanisation. Detailed input and cost estimations were made showing a reduction in labour and energy use on a per hectare basis as a result of mechanisation; ii) constant prices were used as of November 2014, the prices prevailing during the data collection period (separate input and output prices were not considered in the ‘with-project’ and ‘without-project’ situations, as it was assumed that any additional crop yield is unlikely to substantially influence prices locally); iii) a time horizon of 10 years was taken for the analysis to capture the full benefits and costs of 2WT mechanisation and its accessories; iv) varying discount rates were taken for the financial analysis reflecting the opportunity cost of capital in the case study countries, that is, the average interest rates of public sector lending institutions. 3. Mechanization Department of the Ministry of Agriculture, Food Security and Cooperatives (MAFC). 4. The vast majority of the operators fell into the second category. For category 3, individual hire service providers were identified in Kenya and Tanzania and the findings are based on case study analyses. 5. Three indicators were used for measuring the profitability of 2WT mechanisation investments over time: The Net Present Value (NPV), the Cost-Benefit Ratio and the Internal Rate of Return (IRR). The analysis covers a ten-year period taking into account the incremental net benefits and investment schedules. The mechanisation investments were phased in over a period of three years in line with the capacity of the farmer/service provider to pay. As such the combined implement of the ripper/ seeder was introduced in year three. 6. Data on typical catchment areas for the various operations (ploughing, transportation and shelling) was collected from surveys of hire mechanisation service providers in the different locations. 7. The findings do not imply that each customer has to demand a full package of services but rather the service provider has to find a minimum of 20 customers for ploughing, 20 for shelling and 20 for transportation. Some of these customers may demand more than a single service.
References Baudron, F. (2014). Farm Power: The ‘forgotten resource’ of Sustainable Intensification programs in Africa? Food Security, 7(4), 889–904. August 2015. doi:10.1007/s12571-015-0476-3 Berhane, G., Hirvonen, K., & Minten, B., (2016, February). Agricultural mechanization in Ethiopia: Evidence from the 2015 feed the future survey, ESSP Research Note 48. Biggs, S., & Justice, S. (2015). Rural and agricultural mechanization: A history of the spread of small engines in selected Asian countries. IFPRI Discussion Paper 01443.
14 D. Kahan et al. Biggs, S., Justice, S., Gurung, C., Tripathi, J., & Sah, G. (2002, November 2). The Changing Power Tiller Innovation System in Nepal: An Actor-Oriented Analysis Paper prepared for a Workshop on Agricultural and Rural Mechanization, Bangladesh Agricultural University, Mymensingh, Bangladesh. Binswanger, P. (1974). A cost function approach to the measurement of elasticities of substitution. Amer Journal of Agricultural Economics, 56, 377–386. doi:10.2307/1238771 Binswanger, P. (1978). The economics of tractors in south Asia: An analytical review. Agricultural Development Council and ICRISAT. Collinson, M. (Ed.). (1999). A history of farming systems research. Rome, FAO and Oxon, UK: CABI Publishing. Diao, X., Cossar, F., Houssou, N., & Kolavalli, S. (2014). Mechanization in Ghana: Emerging demand, and the search for alternative supply models. Food Policy, 48, 168-181. Eicher, C. K., & Baker, D. (1982). Research on agricultural development in sub-Saharan Africa: A critical survey. MSU International Development Paper Number 1. Department of Agricultural Economics, Michigan State University, USA. Ethiopian Agricultural Transformation Agency. (2014). Ethiopian national agricultural mechanization strategy. Ethiopia: Ethiopian Agricultural Transformation Agency FACASI, Farm Mechanization & Conservation Agriculture for Sustainable Intensification. (2013). Market Research Reports (Unpublished project reports). FAO. (2011). The state of food and agriculture: Women in agriculture: Closing the gender gap for development. Rome: FAO. FAO. (2014). Innovation in Family Farming, the State of Food and Agriculture. Hazell, P., Poulton, C., Wiggins, S., & Dorward, A. (2007). The future of small farms for poverty reduction and growth, IFPRI Discussion Paper 42. Houmy, K., Clarke, L. J., Ashburner, J. E., & Kienzle, J., (2013). Agricultural Mechanization in Sub-Saharan Africa. Guidelines for preparing a strategy. Integrated Crop Management Vol. 22-2013. Plant Production and Protection Division. Food and Agricultural Organisation. Rome. Houssou, N., Diao, X., Cossar, F., & Kolavalli, S. (2013). Agricultural mechanization in Ghana. Is specialization in agricultural mechanization a viable business model. Discussion Paper, IFPRI. IFAD. (2011). Sub-Saharan Africa: The state of smallholders in agriculture. Conference on New Directions for Smallholder Agriculture. ILO. (1973). Mechanization and employment in agriculture: Case studies from four continents. Geneva, Switzerland: International Labour Organization. Jayne, T. S., Muyanga, M., Chamberlin, J., & Nkonde, C. (2014, October 30, 2). Conneting land policy to Africa’s agricultural, employment and poverty reduction challenges. Presentation at Kenya Land Alliance Conference, Nairobi, Kenya. Masters, W., Djurfeldt, A., DeHaan, C., Hazell, P., Jayne, T., & Reardon, T. (2013). Urbanization and farm size inAsia and Africa:Implications for food security and agricultural research, Global Food Security. Mrema, G. C., Baker, D., & Kahan, D. (2008). Agricultural mechanization in Sub-Saharan Africa: Time for a new look. Agricultural Management, Marketing and Finance Occasional Paper 22. Food and Agriculture Organization of the United Nations, Rome, Italy. Pingali, P. (2007). Agricultural mechanization: Adoption patterns and economic impact. In Handbook of agricultural economics. Oxford: North– Holland. Pingali, P., Bigot, Y., & Binswanger, H. P. (1987). Agricultural mechanization and the evolution of farming systems in SubSaharan Africa. Baltimore: The Johns Hopkins University Press. PrOpCom, (2012). Making tractor markets work for the poor in Nigeria, funded by Department for International Development, UK. Sims, B., & Kienzle, J. (2006). Farm power and mechanization for small farms in sub-Saharan Africa. Rome, Italy: Food and Agriculture Organization of the United Nations. Vergnani, L. (2013). Muscle to machines: cutting labour drudgery in Africa, Partners in Research and Development, Issue Winter. Vorley, B. (2012). Tipping the Balance: Policies to shape agricultural investments and markets in favour of small-scale farmers, IIED. World Bank. (2012). Economic and sector work: Agribusiness indicators, Ethiopia, Report, No. 68237.
Smallholder mechanisation in Africa 15 Appendix Table A1. Median land size and crop patterns (in hectares) Ethiopia Tullo
Kenya Dorebafena
Bungoma
Tanzania Laikipia
Maize 0.25 ha. Maize 0.55 ha Maize 0.4 Maize 0.4 Wheat Tomatoesa 0.125 ha Cabbage 0.25 ha. Wheat 0.25 ha. Sugar cane 0.2 Potatoes Cabbagea 0.125 ha Onion Sugar bean Total 0.5 ha Total 1.05 ha 1.0
Arumeru 0.4 Maize 0.4 Tomatoes* 0.2 Beans* 0.4 1.4
Mbulu 1.5 Maize 2.0 0.5 Beans 0.8 1.0 2.5
2.8
Notes: a Two cycles per year (four months each).
Table A2. Profit model for maize farming in Kenya, Tanzania and Ethiopia, per hectarea Kenya
Labour: land preparation (3 ploughs) Labour: Planting Labour: Fertilizer application Labour: Weeding Labour: Harvesting Labour: Threshing Subtotal labour costs Input: Oxen plough Input: Seed Input: Fertilizers (DAP + urea) Input: Pesticides Input: Herbicides Transport to threshing point/homestead Sacks Subtotal input costs Total costs Yield/hectare Average price kg Additional: Cobs, stems, ears Total revenue (yield*price)+additional Profit Profit ex labour costs
Tanzania
Ethiopia
KSH
$US
TZS
$US
ETB
$US
5471.1 3779.1 684.2 7871.9 4883.2 5473.5 28162.9 7410.0 3272.8 9759.0 973.2 454.5 1976.0 2964.0 26809.4 54972.3 2104.4 31.0 7674.3 72911.9 17939.6 46755
59.9 41.3 7.5 86.2 53.4 59.9 308.2 81.1 35.8 106.8 10.6 5.0 21.6 32.4 293.3 601.5 2104.4 0.3 84.0 799.5 198.0 512
105194.8 78694.2 14696.5 192835.4 121143.6 117572.0 630136.5 74100.0 57002.7 45554.2 9968.9 1509.2 37050.0 37050.0 262235.0 892371.5 2178.5 350.0 151942.1 914431.1 22059.6 652199
58.1 43.5 8.1 106.6 67.0 65.0 348.3 41.0 31.5 25.2 5.5 0.8 20.5 20.5 144.9 493.2 2178.5 0.2 84.0 497.9 4.7 360
1225.1 778.1 123.5 1719.1 1699.4 1000.4 6545.5 1976.0 644.7 1499.3 88.9 59.3 249.5 400.1 4917.8 11463.3 4231.1 5.0 1729.0 22884.6 11421.3 16146
60.2 38.3 6.1 84.6 83.5 49.2 321.9 97.1 31.6 73.8 4.3 3.0 12.3 19.7 241.8 563.7 4231.1 0.2 85.0 1015.9 452.2 794
Notes: a The data was collected from household and key informant surveys.
Table A3. Cost-benefit analysis results for the farmer owner operator – working on the farm and providing hire services Ethiopia
Kenya
Tanzania
Indicators
Tullo
Dorebafena
Bungoma
Laikipia
Aremeru
Mbulu
NPV ($) C/B ratio IRR (%)
4020 0.63 14
4476 0.64 13
3256.1 1.06 18
842.6 1.02 14
730.4 1.3 20
835.4 1.4 22
16 D. Kahan et al. Table A4. Cost-benefit analysis for full time service provider Ethiopia
Kenya
Tanzania
Indicators
Tullo
Dorebafena
Bungoma
Laikipia
Aremeru
Mbulu
NPV ($) C/B ratio IRR (%)
1450 1.23 18.0
1240 1.10 17.0
5242.6 1.38 32
1014.6 1.02 22
870.5 1.91 25
970.7 1.85 24
