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Agricultural mechanization in Nigeria

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Agricultural mechanization in Nigeria

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Agricultural mechanization in Nigeria

  1. 1. Agricultural mechanization in Nigeria Hiroyuki Takeshima, Research Fellow, IFPRI Akeem Lawal, National Agricultural Extension and Research Liaison Services, Ahmadu-Bello University, Zaria, Nigeria International Conference on “South-South Knowledge Sharing on Agricultural Mechanization” Addis Ababa, Ethiopia, October 31 – November 1, 2017 1
  2. 2. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Economic structure, arable land and level of tractor and animal traction uses over time in Nigeria Variables 1960s 1970s 1980s 1990s 2000s 2010sd GDP share (%) – service 33 40 30 24 24 53 GDP share (%) – industry 13 27 34 43 40 25 GDP share (%) – agriculture 54 33 36 33 35 22 Employment Share (%) - agriculture 50 Arable land (million ha) 28 26 23 32 35 34 % of area mechanized tractors 1b 5b 9 10 9 10 + animal tractions 3 ~ 4c 25 animal tractions (Northa) 6 ~ 10 60 + Source: share of mechanized area by tractors - Dunham (1980), Ugwuishiwu & Onwualu. (2009), Azogu (2009), and section 2 of this chapter; share of mechanized area by animal tractions - Dunham (1980), Philipps et al. (1986), Jansen (1993), and section 2 of this chapter. GDP shares – Sackey et al. (2013) for 1960s and 1970s, World Bank (2016) for the rest; Arable land – FAO (2016). aNorth = North West and North East zone. bExtrapolated by authors using the number of tractors in use and arable land from FAO (2016) and the figures for 1980s by Dunham (1980). cThe proportions in 2010s are applied, using the fact that animal traction use in the South has been almost nonexistent. dThe figures in 2010s are likely to differ from the previous years due to rebasing conducted recently. • Economic transformation has progressed • Extensification of agriculture also progressed • Animal tractions have spread considerably • Area share of tractors have stagnated for 4 decades 2
  3. 3. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Key phases of mechanization growth in Nigeria 1. Pre-1973 • Focus on export crops produced by smallholders • Low population density (only 30% of today), low incentive to intensify food crop production • Low level of mechanization, including intermediate tools or animal tractions 2. 1973-late 1980s: Era of expanded government support for large-scale farming • Aftermath of Biafran War, droughts, and concern over food insecurity • Oil-shocks and increased foreign reserve • Large-scale rural development interventions, aimed at self-sufficiency of major staples • Road construction following the oil booms • Growth of tractor uses to some extent, albeit still at low level 3. Late 1980s ~: Reduced government support and the growth of intermediate mechanization • Declined agricultural share of government spending (8% => 4%) • Devaluations, increased price of imported capitals relative to labor • Significant growths of animal traction uses, moderate growth of other intermediate equipment like motorized pumps (Northern Nigeria) 3
  4. 4. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Tractor related policies have had mixed effects on overall mechanization growth in Nigeria Periods -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 Generally liberalized Import duties for spare parts raised Devaluation following SAP (8- fold increase in tractor price) Tractors often VAT-exempt Import duties; 5% for spare parts; varied between 0 ~ 25% for tractors Fuel prices (diesel) Unregulat ed Price control Enhanced domestic refinery capacity Government control of fuel imports Diesel - unregulated since 2007 Kerosene / 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) 4
  5. 5. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Tractor-adoptions are associated with reduced animal tractions, greater farm sizes, and higher household incomes Between farm households with similar characteristics, tractor adoption is associated with • 2 days fewer animal traction • 20% point lower probability of animal traction uses • 40% greater size of area cultivated • 15% higher household incomes during the post-planting period Whole sample Use of animal traction (days) Whole Country -1.91** (.86) Northern Nigeria -2.20** (1.08) Probability of using animal traction Whole Country -.20*** (.05) Northern Nigeria -.22*** (.07) Area Cultivated .410*** (.144) Real household income (post-planting period) .148† (.097) Real household income (post-harvesting period) .136 (.098) Real household income (PP and PH combined) .128† (.080) Effects of tractor adoptions on animal traction uses, area cultivated, household income Source: Propensity Score Matching applied to LSMS data 5
  6. 6. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Diversity in agroecological conditions, farming systems, can affect the determinants and roles of tractors North West North East North Central South West South East South South Taraba Pastoral Agro-pastoral millet/sorghum Cereal-root crops mixed Root crops Tree crop Coastal artisanal fishing Highland temperate mixed Source: Dixon et al. (2001) 6
  7. 7. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Mechanization is related in complicated ways to farm land endowments, farm size and farm wages 1 5 19 195 0 1 68 61 9 90 0 0 Share (%) of plowing mechanized (2010/12) Tractors Draft animals Agricultural area per capita (ha per capita) Farm size (ha, median) Farm wages (in kg of local rice grain, per day) Urban area Rural area North West, North East (excluding Taraba state) 0.60 0.8 4.0 3.5 North Central (+ Taraba state) 0.86 0.8 6.5 3.5 South 0.21 0.2 9.0 6.0 Source: Authors’ calculations as median values from LSMS Waves 1 and 2 combined. Agricultural area per capita is calculated as the sum of cropped areas and pastures (Ramankutty et al. 2008), and population obtained from Nigeria 2006 Population Census (Nigeria, National Population Commission 2010). 7
  8. 8. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Mechanization (tractors) also plays different roles in farming systems in different regions • Northern Nigeria: • Tractors mainly used to substitute labor and animal traction for land preparation • Transitions from manual labor to tractor use within each cropping system • Central Nigeria • More distinct differences between tractor-using farms and other farms • Concentrated among the large-scale rice system Takeshima, Nin Pratt & Diao (2013) Tractor Animal traction Labor Tractor Animal traction Labor Coarse grain- system Maize- system Rice- System Cereal- root crop Rice- system (Small) Rice- System (large) 8
  9. 9. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 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 farm households, 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. 9
  10. 10. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Key adoption factors and regional variations 1 5 19 195 0 1 68 61 9 90 0 0 Share (%) of plowing mechanized (2010/12) Tractors Draft animals Labor Animal traction Farm size Farming system North West, North East Low real wage (-) Suitability for animal traction (-) Spread of animal traction (-+) Cereal / grain-based (+) North Central No availability of animal traction (+?) Large farm size (+) Cereal / grain-based (+) South Small farm size (-) Root-crop based (-) For each agroecological belt, different factors become more / less important for tractor adoptions 10
  11. 11. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 11 Among various types of tractor-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 Distribution in 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
  12. 12. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 12 Key characteristics of farmer-to-farmer, tractor-hiring-service providers from small survey Government- sourced (GS) owners Obtained tractors only through government scheme Market-sourced (MS) owners Obtained tractors through private market, private individuals EE E E EEE EEE EEE E E EEE EEE E E E EEE E EE EE EEE E EE E E E E E E EE EEE EE EEE E EE E E E EE E E EEEE E E E Kaduna Nasarawa Abuja Two types of tractor owners identified based on the sources of tractors Takeshima et al. (2015)
  13. 13. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE • We need to be careful in comparing the market-sourced owners with government-sourced owners, because their characteristics may differ • However, simple comparisons revealed that market-sourced owners • use tractors more extensively than government-sourced owners (longer hours, larger areas) • earn more profits than government-sourced owners • operate more days per month all-year around, despite seasonality • may have better knowledge of soil types and appropriate horsepower • These results suggest that, private sector can more effectively select efficient custom- hiring service providers in Africa than we think • Government may not need to select which types of service providers to support Private-sector can identify efficient hiring-service providers by themselves 13
  14. 14. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Government can play more roles in providing information on available mechanization technologies • Most tractors used by service providers are four-wheel tractors of 50 ~ 80 hp, and more expensive • Government-sourced owners: government distributed higher hp tractors • Market-sourced owners: second-hand tractors that have been traded in domestic market • This is so even in the Northern Nigeria, where soils may be less heavy • Most tractors are purchased using personal savings • personal savings are generally dominant source of tractor finance • the dominance of expensive, high horsepower tractors aggravate this condition • Mobility of tractor is limited, except small clusters of long-distance travelers • Half of service providers interviewed provide hiring-services only within their villages • Accessibility of custom-hiring service can be limited to areas where tractor owners are present 14
  15. 15. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Concluding Remark • In Nigeria, spatial variations in tractor adoption rates are largely consistent with theories • Farm size • Substitutes (Animal traction) • Farm wage • However, relative importance of these factors vary across regions • In the private sector, farmers with sufficient wealth emerged as efficient custom-hiring-service- providers of tractors • However, tractors are large (above 50 hp) and expensive • Accessibility to hiring-service may be improved with a larger number of smaller, less expensive tractors • Demand for mechanization in Nigeria has evolved gradually • Animal traction in Northern Nigeria; from less than 10% in 1980s to 60% in the 2010s • However, average demand for tractors may still be insufficient • Tractors, where adopted, are used to substitute animal tractions • However, animal traction intensity, where used, is still generally low (in days / ha) • Returns from intensive farm-power use for plowing may be limited 15
  16. 16. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Concluding Remark - Policy implications • Recognize that support for mechanization is more effective if demand is strong • Invest in R&D to better understand the demand for mechanization • Farming systems, overall production technologies, characterize the nature of demand for farm power • Marginal returns to farm power use may be high initially, but declines rapidly, under the existing production system • Example: High returns from first tillage, but much lower returns from second tillage (?) • Overall demand for tractor may be insufficient, even though the demand for cheaper farm power is substantial • Further research is needed in Nigeria to understand the nature of demand for mechanization in different farming systems • Invest in understanding the diverse mechanization potential across locations; to identify where the support can have impact • Enhance the public-sector capacity to gather required information • Government may not have to select which service providers to be supported • Government can trust the private sector to play such roles • Instead, invest in gathering and providing information to the private sector • Types of machines and mechanization technologies used abroad, including smaller tractors 16
  17. 17. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Thank you very much ! H.Takeshima@cigar.org 17

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