The rapid - but from a low base - uptake of agricultural mechanization in Ethiopia: Patterns,...
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ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE
The rapid - but from a low base - uptake of agricultural mechanization in Ethiopia: Patterns, implications and challenges
Preliminary resultsGuush Berhane (IFPRI)Mekdim Dereje (EDRI)
Bart Minten (IFPRI) Seneshaw Tamru (Licos)
EDRI February 14, 2017 1
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
1. Introduction
• At policy side, two reasons for interest:1. Climate change2. Further modernization of the sector (mechanization
important; raise farm power 10-fold by 2025)• In this analysis:1. Mechanization patterns2. Changing trends in demand conditions3. Mechanization provision and policies4. Mechanization and productivity5. Implications and challenges
4
2. Data and methodology • Qualitative data: Interviews with key informants from
middle to end of 2016• Quantitative data: a. Import datab. 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)• HIMI (High and Intermediate Mechanization
Implements): tractors, combine-harvesters, threshers• LMI (Low Mechanization Implements): plows, sickles,
etc.
5
3. Agricultural growth and structural transformation
• Large growth in agricultural sector: 7.6% per year
• Increasing modernization, but from low base (fertilizer, improved seeds, agro-chemicals)
• Some changes are important for mechanization and machine use
6
3. Agricultural growth and structural transformation
A. Wages 10
2030
4050
Birr
/labo
r/day
2002m1 2004m1 2006m1 2008m1 2010m1 2012m1 2014m1 2016m1
real wage per day 95% CIlpoly smooth: real wage per day
Trends in real daily wges for unskilled labor: 2003-2016
7
3. Agricultural growth and structural transformation
A. Wages
Nepal (2010)
Sri Lanka (2012)
Myanmar (2004)
Malaysia (2012)
Bangladesh (2010)
Kenya (2015)
Tanzania (2015)
Ethiopia (2012)
0 2 4 6 8 10 12
USD/day
8
3. Agricultural growth and structural transformation
B. Livestock prices 20
0040
0060
0080
00
Birr
per
Ox
2004m1 2006m1 2008m1 2010m1 2012m1 2014m1 2016m1
real oxen price 95% CIlpoly smooth: real oxen price
Trends in real Ox price: 2004-2016
9
3. Agricultural growth and structural transformation
C. Connectivity and market improvement
D. Farm size (areas large farms increasing, from 0.5 million has in 2007 to 1 million has in 2014)
2004 2011 20150
0.2
0.4
0.6
0.8
1
1.2
mean median
ha/f
arm
10
4. Demand side analysis4.1. Current machinery use and ownership
Unit All Farm size (by quintile)Ownership Q1 Q2 Q3 Q4 Q5FTF areasAverage size of farm Mean hectares 1.6 0.3 0.7 1.2 1.8 4.2High and Intermediate Mechanization Implements (HIMI)Motorized water pump (diesel) % of households 0.1 0.0 0.0 0.0 0.0 0.3Small tractor % of households 0.3 0.0 0.3 0.1 0.7 0.5Hand-held motorized tiller % of households 0.1 0.0 0.0 0.0 0.1 0.2Total value HIMI Mean Birr 144 0 10 6 19 685
Median Birr 0 0 0 0 0 0Low Mechanization Implements (LMI)Plow yoke % of households 64.3 30.6 56.4 69.6 79.3 86.0Maresha (metal) % of households 65.1 31.4 57.4 71.0 79.8 86.0Total value LMI Mean Birr 521 229 416 516 619 829 Median Birr 425 130 347 465 535 660
11
4. Demand side analysis4.1. Current machinery use and ownership
Use Unit All Farm size (by quintile) Q1 Q2 Q3 Q4 Q5FTF areasLand preparationHoe only % of plots 20.5 33.2 19.5 15.6 16.5 16.7Animals % of plots 78.8 66.4 79.8 83.9 82.9 81.9Machine % of plots 0.7 0.4 0.6 0.6 0.6 1.5HarvestingMachine % of plots 1.20 1.10 1.00 0.80 1.10 2.00ThreshingManual % of plots 49.8 59.6 47 41.4 47.1 54.3Sheller % of plots 1.5 1.6 1.2 0.7 1 3Animals % of plots 47.9 38.2 51.1 57.4 51.4 41.2Mechanical % of plots 0.8 0.7 0.7 0.5 0.5 1.5National level (ES survey)PlowingTractor % of plots 0.9 0.4 0.6 0.5 0.8 2.8
12
4. Demand side analysis4.1. Current machinery use and ownership
Unit All Cereals
cereals Teff Barley Wheat Maize Sorghum Other FTF areasLand preparationMachine % of plots 1.1 0.2 0.4 1.1 1.4 3.7 0.4HarvestingMachine % of plots 1.6 0.8 1.1 6.5 0.4 0.5 1.6ThreshingSheller % of plots 1 0.6 0.3 0.7 1.9 0.5 0.5Mechanical % of plots 1.2 0.6 0.3 5.9 0.2 0.2 0.2National level (ES survey)PlowingTractor % of plots 0.9 0.8 0.5 0.7 1.7 5.5 0.3
13
4. Demand side analysis4.1. Current machinery use and ownership
How does Ethiopia compare to the rest of Africa?
Burkina FasoGhanaKenya
MozambiqueNigeria
RwandaSouth-Africa
TanzaniaTunisiaZambia
ZimbabweEthiopia
-10 10 30 50 70 90 110 130 150
Tractors per 100 sq km of arable land (World Bank, 2014)
14
4. Demand side analysis4.2. Changes over time
20012002
20032004
20052006
20072008
20092010
20112012
20132014
0102030405060708090
Imports of agricultural machines (3-year MA)
TractorsCombine-harvestersPedestrian tractorsThreshers
Mill
ion
USD
15
4.2. Changes over time
2005 2006 2007 2008 2009 2010 2011 2012 2013 20140
500
1000
1500
2000
2500
3000
Imports of four-wheel tractors (3-year MA)
16
4.2. Changes over time
Tractor sales by AAMI (METEC)
2012/13 2013/14 2014/15 2015/160
500
1000
1500
2000
2500
3000
Walking (HP 8 -15) Small (HP 18-30)
Medium (HP 40-80) High (HP 90-375)
17
4.2. Changes over time
20012002
20032004
20052006
20072008
20092010
20112012
20132014
0123456789
10
Import value of combine-harvesters (3-year MA)
Mill
ion
USD
18
Strong spatial patterns in mechanization. High intensity in:- Western Tigray- Parts of Somali region- Arsi/Bale- Tractors also in West Gojjam/South Gondar/East
Shewa
19
4.2. Changes over time
Tractors/combine-harvesters especially taking off in South-east of the country. Some reasons:- Commercial farms; 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
20
4.2. Changes over time
Average Plot size (in ha) Slope of the plot (%)Zone Mean Median Plain Hilly ValleyMechanization-intensive zonesArsi 0.39 0.25 76% 23% 1%Bale 0.51 0.41 79% 21% 0%West Arsi 0.38 0.25 79% 19% 1%Jijiga 0.57 0.33 97% 3% 0%W/Tigray 0.75 0.38 90% 9% 1%Other zonesAll other FTF zones 0.25 0.15 71% 28% 2%
Total 0.28 0.19 72% 27% 2%
21
5. Supply side analysis • No manufacturers of combine-harvesters or tractors
in the country• Taxation similar to other investment goods• Access to foreign exchange has been important hurdle• Might be alleviated a bit recently: 1/ priority sector;
2/ AAMI• Most important private dealers: GEDEP, ADEP, AMNIO,
Caleb, and Ries Engineering• Local assembly of tractors (only done by AAMI)• Tractors of private dealers more expensive but
perceived to be of higher quality as well (John Deere 120 HP: 1.8 million Birr; AAMI: 1.2 million Birr)
22
5. Supply side analysis
• 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
23
5. Supply side analysis
Unit All Farm size (by quintile) Q1 Q2 Q3 Q4 Q5FTF areasLand preparationOf those that used machine (=100%)Rented % of hhs 71.9 88.1 50.2 68.8 73.6 79.1HarvestingOf those that used machine (=100%)Rented % of hhs 58.7 52.5 54.8 66.5 47.9 63.1ThreshingOf those that used machine (=100%)Rented % of hhs 95.9 100 96.2 100 90.6 94.8National level (ES survey)PlowingOf those that used machine (=100%)Rented % plots 68.6 31.0 45.9 55.2 60.0 83.9
24
5. Supply side analysis
• 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
25
5. Supply side analysis
Burkina Fa
soGhana
Kenya
Mozambique
Nigeria
Rwanda
Tanzania
Zambia
Ethiopia0
20406080
100120140160180
Cost of plowing (USD/ha)
26
5. Supply side analysis
• Typical costs of combine-harvester:
Jul. 1st
half
Jul. 2nd half
Aug.1st half
Aug. 1st
half
Sep. 1
st half
Sep. 1
st half
Oct. 1st
half
Oct. 2nd half
Nov. 1st
half
Nov. 2nd half
Dec. 1st
half
Dec. 2nd half
Jan. 1st
half
Jan. 2nd half
Feb. 1
st half
0102030405060708090
100
Birr
/qui
ntal
27
5. Supply side analysis
• Typical costs of combine-harvester depend on:1. Type of soil (sandy soils higher)2. Yields3. Religion4. Temperature5. Location of farm6. Slope of land
28
5. Supply side analysis
• Cost comparisons (quarter ha; close to Assela):1. Combine-harvesters: 50 Birr/q.*15=750 Birr2. Traditional:- Harvesting: a. labor: 5 person-days*80Birr=400 Birr; b.
Costs and foods = 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
29
5. Supply side analysis
• Seasonal use of combine-harvesters:
Jul. 1st
half
Jul. 2nd half
Aug.1st half
Aug. 1st
half
Sep. 1
st half
Sep. 1
st half
Oct. 1st
half
Oct. 2nd half
Nov. 1st
half
Nov. 2nd half
Dec. 1st
half
Dec. 2nd half
Jan. 1st
half
Jan. 2nd half
Feb. 1
st half
0
100
200
300
400
500
600
700
Num
ber o
f com
bine
-har
vest
ers
30
5. Supply side analysis
• Seasonal movement combine-harvesters
31
5. Supply side analysis
• Seasonal movement combine-harvesters
32
5. Supply side analysis
• Coordination travel plans done by brokers (2 Birr/quintal)
• Maintenance/servicing crucial:- AAMI and private dealers provide warranty for up to
1,000 hours- They have mobile workshops- Commonly switch to independent private mechanics
after 1,000 hours
33
6. Mechanization and agricultural transformation
0.1
.2.3
-2 0 2 4 6 8Log of total labor use per Hectare
Users Non-users
Difference in labor use by use of Combine Harvestors
0.1
.2.3
.4
0 2 4 6 8log (total labor per Hectare)
Users Non-users
34
6. Mechanization and agricultural transformation
UnitAdoption
tractor T-test yes no t-value sign.Land productivity By cropBarley Quintals/hectare 11.7 15.4 1.86 *Wheat Quintals/hectare 14.0 19.3 3.29 ***Maize Quintals/hectare 6.1 16.2 8.38 ***Sorghum Quintals/hectare 8.4 7.3 -1.44Sesame Quintals/hectare 2.2 2.7 1.37Modern input use no positive influence of tractor useLand rentalShare rented-in % 1.2 2.8 1.85 *Sharecropped-in % 1.0 2.1 1.43
35
6. Mechanization and agricultural transformation
UnitAdoption combine-
harvester T-test yes no t-value sign.Land productivity (wheat)Mean Quintals/hectare 20.1 18.5 -1.61Median Quintals/hectare 20.0 16.0Modern input useDap kgs/ha 99.1 97.3 -0.22UREA kgs/ha 20.6 29.4 1.60Herbicide l/ha 1.5 1.1 -1.61Improved seeds % of plots 41% 47% 1.32Land rentalShare rented-in % 3.9 2.9 -0.64Sharecropped-in % 1.5 4.7 2.20 **
36
6. Mechanization and agricultural transformation
• Yield effects of combine-harvesters seemingly due to reduction in post-harvest losses:
- Losses because of untimely rain- Theft- Transport from field to threshing floor- Losses during threshing- Consumption animals during threshing- Losses during winnowing
7. Conclusions
• Major findings:- Use mechanization is low but important recent
dynamics- Rapid uptake in the wheat sector; quarter of the wheat
area harvested by combine-harvesters- Commercial service providers for plowing, harrowing,
and harvesting rapidly emerging- Large effect on labor productivity- No effect of tractors on yields- Some (weak) evidence of combine-harvesters on yields
7. Conclusions
• Rapid uptake in south-east/wheat:1. Commercial farmers very active2. Large clusters of wheat growers3. Flat-contiguous areas4. Bi-modal rainfall5. Appropriate soils for mechanized plowing• Challenges:1. Physical constraints (sandy, stones, slope)2. Farm structure (small farms, small plots, crop diversity)3. Economic constraints (foreign exchange, credit, low wages)
7. Conclusions
• Messages for further upscaling:1. Prices matter- Improve access to credit- Improve access to foreign exchange- Those with investment license only allowed to import
duty free; others face higher prices- Potential of cheap two-wheel tractors (2-wheel
tractor: 25,000 Birr; 40 HP tractor: 400,000 Birr)? Need further piloting: Where? Which tasks? Etc.
7. Conclusions
2. Maintenance and after-sale service matters- Only selling machines is not enough- After-sale service matters; Access to spare parts
often an issue- Changes in models makes spare parts a big issue- Might become easier when mechanization markets
grow- Make sure that private mechanics are there and can
function well
7. Conclusions
3. The role of the public sector- Success story in upscaling has arguably been the take-up by
the private sector - Role of public sector:a. Capacity building and improve knowledge/awareness in
potential areas (training; study tours)b. Create enabling environment for private supply chains to
take off (help in access to credit)c. Help in the development of appropriate technology
(encouraging innovation in multi-functional tractor use; R&D)
d. Monitoring and evaluation