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The rapid - but from a low base - uptake of agricultural mechanization in Ethiopia: Patterns, implications and challenges

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The rapid - but from a low base - uptake of agricultural mechanization in Ethiopia: Patterns, implications and challenges

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The rapid - but from a low base - uptake of agricultural mechanization in Ethiopia: Patterns, implications and challenges

  1. 1. ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE The rapid - but from a low base - uptake of agricultural mechanization in Ethiopia: Patterns, implications and challenges Guush Berhane (IFPRI/ESSP) Mekdim Dereje (EDRI/ESSP) Bart Minten (IFPRI/ESSP) Seneshaw Tamru (EDRI/LICOS) Hilton, Addis Ababa October 31, 2017 1
  2. 2. 2 1. Introduction • Ethiopia’s economy quickly transforming; double-digit average growth rates in last decade • Agricultural sector also shows large changes: - Modernization and increasing yields - But also increasing wages and increasing costs of animal traction • As relative factor costs change, typical pattern towards higher use of machinery • Little recent empirical evidence on mechanization and its uptake in Ethiopia
  3. 3. 3 2. Data and methodology • Qualitative data: Interviews with key informants from middle to end of 2016 • Quantitative data: a. Import data b. Household data (2015) of the FtF program (7,000 hhs, representative of 9 million hhs) c. Ethiopia Socio-economic Survey (ESS) 2013/14 (5,262 hhs representative of 6 regional strata/nation)
  4. 4. 4 3. Current machinery use Use Unit All Farm size (by quintile) Q1 Q2 Q3 Q4 Q5 FTF areas Land preparation Hoe only % of plots 20.5 33.2 19.5 15.6 16.5 16.7 Animals % of plots 78.8 66.4 79.8 83.9 82.9 81.9 Machine % of plots 0.7 0.4 0.6 0.6 0.6 1.5 Harvesting Machine % of plots 1.2 1.1 1.0 0.8 1.1 2.0 Threshing Manual % of plots 49.8 59.6 47 41.4 47.1 54.3 Sheller % of plots 1.5 1.6 1.2 0.7 1 3 Animals % of plots 47.9 38.2 51.1 57.4 51.4 41.2 Mechanical % of plots 0.8 0.7 0.7 0.5 0.5 1.5 National level (ES survey) Plowing Tractor % of plots 0.9 0.4 0.6 0.5 0.8 2.8
  5. 5. 5 4. Changes in rural factor markets A. Wages 1020304050 2002m1 2004m1 2006m1 2008m1 2010m1 2012m1 2014m1 2016m1 real wage per day 95% CI lpoly smooth: real wage per day Trends in real daily wges for unskilled labor: 2003-2016
  6. 6. 6 4. Changes in rural factor markets B. Livestock prices 2000400060008000 2004m1 2006m1 2008m1 2010m1 2012m1 2014m1 2016m1 real oxen price 95% CI lpoly smooth: real oxen price Trends in real Ox price: 2004-2016
  7. 7. 7 5. Changes in imports 0 10 20 30 40 50 60 70 80 90 MillionUSD Imports of agricultural machines Tractors Combine-harvesters Pedestrian tractors Threshers
  8. 8. Increase in agricultural machinery imports – also by private dealers
  9. 9. 9 5. Changes in imports Tractor sales by AAMI (METEC) 0 500 1000 1500 2000 2500 3000 2012/13 2013/14 2014/15 2015/16 Walking (HP 8 -15) Small (HP 18-30) Medium (HP 40-80) High (HP 90-375) However, demand for locally assembled tractors declining; seemingly unsold stock…
  10. 10. 10 5. Changes in imports 0 1 2 3 4 5 6 7 8 9 10 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 MillionUSD Import value of combine- harvesters
  11. 11. 11 5. Changes in imports Tractors/combine-harvesters especially taking off in South-east of the country. Some reasons: - Commercial farms and relatively bigger smallholder farms - History of interventions (ARDU/CADU) - Rural wages on the high side - Two harvests (belg/meher): time pressure - Terrain is contiguous, flat, and stone-free
  12. 12. 12 6. Current functioning • Ownership tractors: 60% commercial farmers/state farms; 40% service providers • Ownership combine-harvesters: 10% commercial farmers/state farms; 90% service providers (about 200 of them; typically 3 per owner) • Service providers: - Mostly live in towns where mechanization used - Other businesses (cereal trade; consumer shops; flour factories); however, no integration of these activities
  13. 13. 13 6. Current functioning • Typical costs of tractor (Arsi/Bale) in 2016: 1. 1,200 Birr/ha first plowing (2 to 2.5 hours) 2. 650 Birr/ha harrowing (30 minutes) 3. 500 Birr/ha covering up soil (30 minutes) • Sometimes second plowing (in vertisols): 900 Birr/ha • Some areas more expensive if soil harder (Ginir) • Plowing costs higher if after fallow • Also distance to town might matter • Less seasonal movement of tractors than for combine-harvesters – more activities in one place
  14. 14. In Ethiopia, animal traction often combined with tractors
  15. 15. 15 6. Current functioning • Typical costs of combine-harvester: 0 10 20 30 40 50 60 70 80 90 100 Jul.1sthalf Jul.2ndhalf Aug.1sthalf Aug.1sthalf Sep.1sthalf Sep.1sthalf Oct.1sthalf Oct.2ndhalf Nov.1sthalf Nov.2ndhalf Dec.1sthalf Dec.2ndhalf Jan.1sthalf Jan.2ndhalf Feb.1sthalf Birr/quintal
  16. 16. 16 6. Current functioning • Typical costs of combine-harvester depend on: 1. Type of soil (sandy soils higher) 2. Yields 3. Religion 4. Temperature 5. Location of farm 6. Slope of land
  17. 17. 17 6. Current functioning • Cost comparisons (quarter ha; close to Assela): 1. Combine-harvesters: 50 Birr/q.*15=750 Birr 2. Traditional: - Harvesting: a. labor: 5 person-days*80Birr=400 Birr; b. food and drinks = 220 Birr - Threshing: a. oxen: 300 Birr; b. labor: 4 person- days*50 Birr=200 Birr; c. food and drinks: 150 Birr - Total: 1270 Birr Profitability can quickly change depending on costs combine-harvester and wage levels
  18. 18. 18 6. Current functioning • Seasonal movement combine-harvesters
  19. 19. 19 7. Implications for agricultural transformation • No strong association between use of modern inputs and mechanization. • Strong positive association between yield and use of threshing/harvesting machines (mostly combine- harvesters); No strong association between yield and tractor use. • Yield effects of combine-harvesters seemingly relate to reductions in harvesting & post-harvesting losses.
  20. 20. Losses due to poor transportation, winnowing & consumption by animals…
  21. 21. …and poor harvesting structures
  22. 22. 22 8. Take-away messages • Animal traction still very important • Mechanization is taking off, even among smallholders, albeit from a low base (only 1% of plots) • 1/4th of wheat area harvested by combine-harvesters • Government (METEC) intervention but decreasing demand • Private sector rental service provision growing • Strong association between combine-harvester use and yield, not for tractor use
  23. 23. 23 8. Take-away messages • Incentives for mechanization: 1/ Increasing wages and 2/ Costs keeping livestock • Barriers for mechanization: 1/ farm structures (e.g. farm and plot size, fragmentation, crop diversity) 2/ physical constraints (e.g. topography, soil types, stones) 3/ economic and financial constraints (e.g. access credit, access foreign exchange, low wages less commercial zones) • A lot remains unknown

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