Xiaobo Zhang BOOK LAUNCH An evolving paradigm of agricultural mechanization development: How much can Africa learn from Asia? FEB 9, 2021 - 09:30 AM TO 10:30 AM EST

1. An Evolving Paradigm of
Agricultural Mechanization
Development
How Much Can Africa Learn from Asia?
Xinshen Diao, Hiroyuki Takeshima and Xiaobo Zhang
Development Strategy and Governance Division
International Food Policy Research Institute
Washington DC | February 9, 2021

2. Background
Growing interest among governments
and other stakeholders in Africa
• Mechanization has been integrated into
agricultural development strategy
documents at continental and country
levels
“Africa’s agriculture will be modern and
productive, using science, technology,
innovation and indigenous knowledge. The
hand hoe will be banished by 2025 …”
(Agenda 2063, p3, 2015)
“Goal #5 commits countries to banish the
hand hoe by 2025 …” (Malabo Montpellier
Panel, p24, 2018)

3. Research Questions
• Has demand reached the level necessary to justify public support for
mechanization?
• Can that demand be met through the mechanization market (particularly
hiring market)?
• Are there market failures in the mechanization market and what are they?
• What can governments do to support mechanization?
• Should we be concerned about a repeat of government failures that
happened in the 1970s?

4. Structure of the Book
▪ Part 1 develops an updated theoretical framework that is used to
synthesize past lessons
• The framework integrates Pingali, Bigot, and Binswanger’s 1987
hypothesis, which centers around the theory of farming systems
developed by Boserup (1965), with the induced innovation theory
of Hayami and Ruttan (1970, 1985)
• The framework is expanded to account for market failures in both
agricultural machinery investment and mechanized service
provision
▪ Parts 2 through 4 are devoted to country studies, covering 8 Asian
countries (Parts 2-3) and 5 African countries (Part 4)

5. The Theoretical Framework
▪ Demand for plowing with animals or tractors is the result of farming systems evolution
• With a shortened fallow period, burning to remove emergent grasses between seasons becomes infeasible
• Land preparation labor requirements become too high for manual hoeing alone (Boserup 1965; Ruthenburg 1980)
▪ Driving factors for farming system evolution
• Population growth
• Rising market demand for agricultural products
▪ Induced technological and institutional changes with farming systems evolution
• Agricultural intensification through adopting modern inputs – improved seeds, fertilizers, and agrochemicals
• Labor saving technology through mechanization
• Institutional innovations, including agricultural R&D, changes in property rights, and land tenancy
Sequential adoption of mechanization according to Pingali, Bigot, and Binswanger (1987)
Intensification
level
Low (forest
and bush fallow)
Medium (short
fallow)
High (annual
cultivation)
Industrialization
Source of power Human
Human and
animal
Animal and
machine
Machine
Functions
mechanized
None
Plowing
(animal)
Seeding, weeding,
winnowing,
harvesting
Plowing,
threshing,
harvesting, milling

6. Rising Ruthenburg’s R-value, Population Growth,
Urbanization & Expansion of Nonagricultural Economies
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
ZMB MOZ KEN SEN NER ETH UGA GHA TZA BFA CMR MWI NGA RWA
R-value: Harvested areas / Arable land +
permanent pasture & meadows
1960s 2000s 2010s
0.0
10.0
20.0
30.0
40.0
50.0
60.0
0
20
40
60
80
100
120
140
RWA SEN ZMB MWI BFA NER CMR MOZ GHA UGA KEN TZA ETH NGA
Urban
share
(%)
Population,
million
Total population and urban share
Population, 1970 Population, 2019
Urban share, 1970 Urban share, 2019
0
20
40
60
80
100
Share of agricultural employment
(Employment in total economy = 100)
1970s 2010s

7. Supply of Mechanization and Market Failures
▪ Hiring market in smallholder dominant agriculture
• Hiring in services – the only way for many farmers to access mechanization
• Hiring out services – some medium and large farmers who own tractors want to hire out
services to help them recoup their machinery investment as their farm sizes are not large
enough to fully utilize their machinery
▪ Market failures in machinery investment
• Available financial instruments for a lump-sum investment
• Size of tractors highly associated with the price
• Knowledge gap in appropriate machinery
• Opportunities for multi-functionality
▪ Market failures in hiring service provision
▪ Coordination among small farmers in a community
▪ Infrastructure and logistical conditions and information coordination for migratory services

8. Small
harvester in
China
Larger
harvester in
Ethiopia
Large tractor
in Ethiopia
Smaller tractor in Myanmar
Large tractor
in Ghana
Power tiller
in rainfed
area of
Bangladesh

9. The Role of the Public Sector and Policy
▪ Avoid repeating historical failures of direct government interventions
• At least 11 African countries have supported government-run or highly subsidized tractor hiring services in recent years
▪ Emphasize private-sector-led market development
▪ Broaden agricultural R&D to identify appropriate mechanization technology
• Increase knowledge for diverse soil types – a crucial knowledge gap for promoting appropriate machinery
• Adapt imported mechanization models to local conditions, develop new designs, and educate service providers
• Support small local manufacturers in developing simple equipment complementary to large imported machinery
▪ Policies should prioritize market-led hiring services
• Minimize market distortions when subsidies are necessary
• Cherry-picked subsidies often create rent-seeking behavior and compete with the private sector rather than supporting it
• Create better conditions for migratory mechanization services
• Encourage coordination among farmers (e.g., via farmer-based organizations)
▪ Promote better mechanization practices
• Some mechanization practices (e.g., harrowing or second-plow) can benefit farmers with higher
yields and create more demand for tractors beyond primary plowing
• Promote smaller tractors appropriate for local conditions through demonstrations and a small
subsidy at the early stages

10. Asian Experiences

11. Mechanization in Asian countries has taken off
despite small farm size
0
10
20
30
40
50
60
70
80
90
100
0.21 0.4 0.47 0.6 2.4 2.5 3.1
China Viet Nam Sri Lanka Bangladesh Nepal
(Terai)
Myanmar Thailand
%
of
Mechanization
Farm Size and Country
Land preparation
Harvesting
Average 444 ha in the US
About 3 ha in Ghana
Mechanization in Land Preparation and Harvesting
(Paddy production, by farm size and country)
Land consolidation and the re-design of the
rice land to form large contiguous fields are
essential for the adoption of combine
harvesters …
– Pingali (2007) on Southeast Asian countries
Average farm
size (ha)
NA

12. Machinery is widely used in different stages of crop
production, but machinery ownership is low
Winnowing
Rental thresher Combine harvesting service
Power tiller
Photos taken in Myanmar
Power tiller ownership:
India: 0.21%
Nepal: 1.67%
Viet Nam: 2.40%
Myanmar: 4.10% in Delta
1.90% in dry zone
Bangladesh: 4.00%
Sri Lanka: 7.14%
China: 9.02%
Thailand: 26.50%

13. The use of machinery has little to do with farm size
thanks to the active ploughing and harvesting service
market – Myanmar
Only 1% of households owned
4WT or combine harvesters in
Myanmar, suggesting most
farmers rely on hiring services
Share of Households Using Machinery for Land Preparation and Harvesting in Myanmar
by Farm Size Group (2015/16)

14. A Rice Harvesting Route
Taken in Sichuan, Point B Traveling 1,079 miles (about from NYC to Orlando)
Cross-regional mechanization harvest services
become popular – China
▪ Form cooperatives: 3–4 operators per team; travel in convoys with combines on
trucks (average 10 trucks)
▪ Chase production seasons for up to 8 months (average half year)
▪ Charge service fee half of the labor hiring cost (about US$200 per hectare)

15. Rising wages are a key driver
–– an example from Myanmar
▪ Growing migration
• Very recent phenomenon — since 2010
• Migration to Thailand and other neighboring countries
• Domestic migration (within Myanmar), urban areas
▪ Surge in real agricultural wages
• 2011: MMK 2,600 ($1.8)
• 2013: MMK 2,800 ($2.0) (↑ 8%)
• 2016: MMK 3,700 ($2.6) (↑ 32%)

16. Infrastructure and policy: Myanmar experience
▪ Wherever there is road
access, there are combine
harvesters and tractors
▪ No tariff on agricultural
machinery imports
▪ Farmers can use Land
Form 7 as collateral to get
bank loans with an interest
rate between 12 and 14
percent

17. Conclusion and Implications
▪ Agricultural mechanization has taken off in Asia mainly through hiring
service markets despite small farm size
▪ Rising wages are a key driver behind the rapid mechanization
▪ Rural road and other infrastructural conditions facilitate hiring market
development and the spread of mechanization
▪ Ability to produce low-price agricultural machinery domestically or
proximity to such neighboring countries may be an important factor
for technology spillover in Asian countries

18. African Experiences

19. Growing mechanization adoption in certain pockets and
among certain types of farms in some African countries
Source: Tanzania Chapter
Draft animal 4-wheel tractor 2-wheel tractor
Tanzania
Low adoption
（& with root / tree crop system）
Low adoption
（& low rural wages）
High adoption
（& higher rural wages with cereal-
based system）
Low High
Source: Ghana / Nigeria Chapters
(Ghana) (Nigeria)

20. Significant effects of mechanization in early adopting areas
=> Suggests robust (albeit gradual) growth in demand
Household income
NGA
Modern inputs
(chemical fertilizer)
NGA
Animal saving
NGA
Yield
(combine harvesters)
ETH
TZN
Land cultivated
NGA
GHN
TZN
Labor displacement –
insignificant
NGA
TZN

21. 0.2
0.7
6.2
12.9
2006 2013
Ghana
% owning tractors
% renting in agricultural machinery
(most are tractors)
Nigeria
0.1
4.0
2010-2012
% owning tractors
% using tractors
Custom hiring services are meeting growing demand
Combine harvesters in Ethiopia
(movement for migratory services)
Source: Ethiopia Chapter
Source: Ghana Living Standard Survey Source: Nigeria LSMS-ISA

22. Example: Ghana under AMSEC Phase I (2007-
2015)
▪ Low machine utilization rate, profitability, & loan
repayment rate to government
• Short peak season with limited coverage areas
• Limited tractor use other than primary plowing
• Required a large tractor fleet per center
▪ Insufficient supply in parts, repairs / maintenance, lack of
after-sale support, and lack of skilled tractor operators
▪ Frequent change in imported tractor brands
=> Most service centers cannot reach break-even utilization
rate (horizontal axis)
Governments’ efforts in supporting service providers
continue to face challenges

23. Efficiency gaps between government-selected and other
service providers (an example from Nigeria)
Gov’t selected
service
providers
Other
service
providers
Gross revenue 8 13*
Own-farm use (market-value) 2 4
Hiring out 6 9
Cost 4 6
Operators 1 2
Fuels 2 3
Repairing 1 1
• Improving tractor markets is important
• The efficiency of government-selected service providers must increase
Profitability of tractor use (US$1,000 / 12 months)
(Average per surveyed service provider)
3439
33
65
75
111
80
43
242427
34
63*
5559*
104*
119*
147*
126*
65
44*
57*
66*
72*
1 2 3 4 5 6 7 8 9 101112
Month
Government-sourced
Market-sourced
434037
44
61
85
73
52
42
3633
42
63*
58*
59*
78*
89*92
84
67
49
56*
67*
68*
Operation time per tractor (hours /
month） % time operated a month
* = statistically significant difference
Source: Nigeria chapter

24. ▪ Inclusiveness
• AMSEC I : A center required to purchase at least 5 tractors
• AMSEC II: Offers opened to any would-be buyers at the same price without
requirement in minimum # of tractors
▪ Maintenance
• Free tractor maintenance services (at 1,000 engine-hours or 1 year of use)
• Mobile workshop vans
• Spare parts supply for two years
▪ Mandatory training provided by the public institutions
▪ Multiple uses of a tractor: complementary equipment
▪ Diverse tractor brand options
A room for improvement within existing programs
––An example of AMSEC Phase II (~ 2016 ) in Ghana

25. Concluding remarks
▪ Mechanization as part of Africa’s agricultural transformation driven
by urbanization, increased food demand, and rising rural wages
▪ Evolving paradigm of agricultural mechanization
• The paradigm shift in Africa led by farming-system evolution with induced
technological and institutional innovations
• The recent Asian experiences offering lessons to Africa
Challenges and opportunities
• How can private sector’s potential be maximized?
• How can government address market failures while avoiding government failures?
• What more research needed?
These questions cannot be resolved overnight. Our book tries to contribute to a
broader effort for searching better solutions toward mechanization in Africa.