technical solutions and business models for the ...ricultural mechanization services. each business...

Technical Solutions and Business Models

for the Mechanization of

Small-holder Rice Production in Nigeria Abuja, 2016

Report by

Dr Tan Van Pham

to

Green Innovation Centres for the Ag-

riculture and Food Sector - Nigeria

Special Initiative ONE WORLD – No Hunger

ii

Acknowledgements

The author is extremely grateful for the valuable advice provided by the CARI project team

leaders, particularly Dr. Stefan Kachelriess Matthess, and expresses special appreciation to

Mr. Yusuf Dollah-Fuad and Mr. Musa Ebayaya for their assistance during his two weeks of

field visits to various stakeholders of the rice value chain in Nigeria. The author also ex-

presses his sincere thanks to the GIAE project for financial support and all persons who pro-

vided him with useful information or supports to complete the report.

Lastly, the author gratefully thanks to all colleagues for reviewing the report and working

closely with him during the consultancy.

iii

Content Page

Acknowledgements .................................................................................................................. i

Executive Summary ................................................................................................................. v

Acronyms .................................................................................................................................vi

List of tables ..........................................................................................................................vi

List of figures .........................................................................................................................vii

1. Background of Nigeria rice production ........................................................................... 1

2. Current status of agricultural mechanisation in Nigeria ................................................ 1

2.1 Mechanisation level of rice production in Nigeria ................................................. 1

2.2 Availability of agricultural machinery in Nigeria .................................................... 2

2.2.1 Applied research on agricultural machinery by national institutes and centres..... 2 2.2.2 Agricultural machinery manufactured by local fabricators .................................... 2 2.2.3 Agricultural machinery supplied by international distributors ................................ 3 2.3 Utilisation of agricultural machinery in rice production in Nigeria ......................... 5

2.3.1 Utilisation of agricultural machinery in various stages of rice production .............. 5 2.3.2 Formation and activity of agricultural mechanisation service groups ................... 6 2.3.3 Mechanical services of local factories.................................................................. 8 2.3.4 Extensional activities in agricultural mechanisation ............................................. 9 2.3.5 Policies of banks towards agricultural mechanisation .......................................... 9 2.3.6 Policies of agricultural insurance companies ......................................................11

3. Solutions for mechanisation development of rice production in Nigeria ....................13

3.1 Criteria for selection of agricultural machinery for small-scale rice production ....13

3.2 Selection of sets of agricultural machinery for service provision .........................14

3.2.1 Model I: Investment in a single two-wheel power tiller of 14.5 horse power (HP) ...................................................................................................................14

3.2.2 Model II: Investment in a single two-wheel tractor of 14.5 HP + a 2-body plow ...15 3.2.3 Model III: Investment in a single two-wheel tractor of 14.5 HP + a trailer of 1.5

tons ....................................................................................................................16 3.2.4 Model IV: Investment in a single rice reaper of 1.2 meters .................................17 3.2.5 Model V: Investment in a single axial rice thresher of 1.5 tons per hour. ............19 3.2.6 Model VI: Investment in a complex model including a power tiller and a two-

body plow ...........................................................................................................24 3.2.7 Model VII: Investment in a complex model including a power tiller of 14.5 HP;

a two-body plow and a self un-loading trailer ......................................................29 3.2.8 Model VIII: Investment in a complex model including a power tiller; a self un-

loading trailer a rice reaper and an axial rice thresher ........................................30

iv

3.2.9 Model IX: Investment in a complex model including a power tiller; a two-body plow; a self un-loading trailer; a rice reaper, and an axial rice thresher...............31

3.3 Other applications with two-wheel tractor in rural areas ......................................32

3.4 Setting up of mechanisation service groups .......................................................34

3.5 Profit of farmers from application of mechanisation into rice farming ..................36

3.6 Strengthening after-sale services .......................................................................39

3.7 Organising training courses ................................................................................39

3.8 Strengthening the agricultural extension system ................................................39

3.9 Financial resources for investment in agricultural machinery ..............................39

3.10 Government policies toward agricultural mechanisation .....................................40

4. Conclusions .....................................................................................................................42

5. Recommendations ...........................................................................................................43

5.1 Recommendations for the Competitive African Rice Initiative and the Green

Innovation Centers .............................................................................................43

5.2 Recommendations for the Nigerian Government ................................................44

References ..............................................................................................................................45

v

Executive Summary

This study aims to assess the current status of agricultural mechanisation for rice production

in Nigeria and to suggest and prioritize suitable solutions to develop sustainable mechanisa-

tion services for small-holders.

Field visits and interviews were carried out with different stakeholders of the rice supply

chain in states of Kaduna, Niger, Kwara and Abuja City from 15th to 27th November 2015.

Generally, mechanization in rice production of the states is just in the first stage of develop-

ment. Although there are several machinery available in the markets, applications of the ma-

chinery to the rice production is very limited. Most of farming activities are carried out manu-

ally.

Based on the findings, this study proposes a selection of machinery or groups thereof which

could be used to mechanize various stages of small-holder rice production. Nine business

models with different sets of the machinery are proposed for investment and provision of ag-

ricultural mechanization services. Each business model fits different conditions in terms of

farming activities, financial and management capacities, ownerships and operational scopes

of the investors or service providers. However, all business models result profitable not only

to the service providers but also to the rice farmers using its services. Regardless of different

inputs or crop yields, with the same amount of farming works, machinery and their business

models give better work quality, lower farming costs and higher profit to the rice farmers. The

higher the degree of mechanization, the higher is the profit for rice farmers.

For a sustainable development of agricultural mechanisation, several measures are pro-

posed to the Nigerian government and the projects Green Innovation Centers, financed by

the Federal Ministry of Economic Development and Cooperation (BMZ), and Competitive

Africa Rice Initiative, financed by BMZ and the Bill and Melinda Gates Foundation. The Nige-

rian government should have national strategies and action plans for development of agricul-

tural mechanisation. The government should orchestrate the set-up of mechanisms for co-

operations between government organisations, credit institutions, farm machinery service

providers, farmer groups and farm machinery distributors. The government should also issue

appropriate policies to support investments and applications of agricultural machinery into

rice production. The and the GIAE projects can support this process by advising farmers and

service providers on the identification of the right machinery for investment, right credit insti-

tutions to get loans and right business models for their business. Other supporting organisa-

tions such as agricultural research institutes, agricultural extension agencies, local machin-

ery fabricators, locally mechanical factories, etc. should be strengthened to carry out ma-

chinery testing and demonstrations, to set up new business models of machinery for com-

parison with the manual farming models. This set of intervention has the potential to speed

up the application of agricultural machinery to the rice production in Nigeria.

vi

Acronyms

AGAN Agricultural Graduate Association of Nigeria

AMDA Agricultural & Mechanisation Development Authority

CARI Competitive African Rice Initiative

CORAF/WECARD West and Central African Council for Agricultural Research & Devel-opment

FAO Food and Agriculture Organisation of the United Nations

FAOSTAT Statistics Office of FAO

FRN Federal Republic of Nigeria

GIAE Green Innovation Centres for the Agriculture and Food Sector

GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

MIENL Mass International Equipment Nigeria Limited

NCAM National Centre for Agricultural Mechanisation

JICA Japan International Cooperation Agency

KAANL Kafarm Agro-Allied Nigeria Limited

LUGS Let Us Grow Sustainably

NAIC Nigerian Agricultural Insurance Corporation

NBS National Bureau of Statistics

NCAM National Centre for Agricultural Mechanization

NCRI National Cereals Research Institute of Nigeria

NGN Nigeria Naira

NSRIC Niger State Rice Investment Consortium

PPP Public Private Partnership

R&D Research & Development

TOR Term of Reference

USAID United States Agency for International Development

List of tables Page

Table1 Machinery/Equipment of models I to IX for mechanisation in small-scale rice production in Nigeria ..........................................................................................26

Table 2 Comparison of investment and financial efficiency between different models of agricultural mechanisation service .....................................................................31

Table 3 Comparison of farmer´s profit between manual rice farming and mechanized farming ...............................................................................................................47

vii

List of figures Page

Figure 1 Map of administration and rivers of Nigeria 1 Figure 2.1 Development stages of agricultural mechanisation in the world 3 Figure 2.2 Rice threshers of NCRI 4 Figure 2.3 Milling machinery of NCRI 4 Figure 2.4 Equipment made by Hanigha 5 Figure 2.5 Equipment samples 5 Figure 2.6 Three-disk plow & 7-disk harrower 6 Figure 2.7 4-wheel tractors of 60HP 6 Figure 2.8 Machinery and equipment of Dae Sung Machinery & Construction

Co. Ltd 7

Figure 2.9 Land preparation in Nigeria 8 Figure 2.10 Manual land leveling for rice transplanting in Wushishi, Niger State 8 Figure 2.11 Manual rice threshing and winnowing in Nigeria 8 Figure 2.12 A movable rice thresher in Nigeria 9 Figure 2.13 Sun-drying of paddy in Nigeria 9 Figure 2.14 Parboiled rice processing group at Doko area, Bida, Niger State 11 Figure 2.15 Small mechanical factory in Wushishi of Niger State 12 Figure 2.16 Mini power tiller with blade plow, rotary, water pump and trailer at

the AMDA 13

Figure 2.17 Impact of mechanisation on farming capacity of farmers in Asia and Africa

15

Figure 2.18 Cultivated land beside unreclaimed areas at Washi village, Niger State

16

Figure 3.1 Power tiller working in both wet fields and dried fields 19 Figure 3.2 Ploughing machines 20, 21 Figure 3.3 Self un-loading trailer of 1.5 tons 22 Figure 3.4 Rice reaper with working width of 1.2 metres and cutting capacity

of 0.25 hectares/hour 23

Figure 3.5 Rice thresher of 1.5 tons per hour 25 Figure 3.6 Model of a power tiller of 14.5 HP with a two-body plow 30 Figure 3.7 Model of a power tiller of 14.5 HP with a two-body plow and a self

un-loading trailer of 1.5 tons 35

Figure 3.8 Model of a power tiller of 14.5 HP + a self un-loading trailer of 1.5 tons + a rice reaper of 0.25 hectares/hour + a rice thresher of 1.5 tons/hour

36

Figure 3.9 Model of a power tiller of 14.5 HP + a two-body plow + a self un-loading trailer of 1.5 tons + a rice reaper of 0.25 hectares/hour + a rice thresher of 1.5 tons/hour

37

Figure 3.10 Two wheel tractor used for land leveling in Vietnam 38 Figure 3.11 Extirpator with two-wheel tractor for working in dried and wet soil in

Vietnam and Thailand 39

Figure 3.12 Two-wheel tractor used for seeding on dried fields in Thailand 39 Figure 3.13 Diesel engine of 14.5 HP used with a flat-bed dryer of 6 tons of

paddy/batch in Vietnam, Cambodia and the Philippines 40

Figure 3.14 Diesel engine of two-wheel tractor used for rice milling 40 Figure 3.15 Diesel engine of two-wheel tractor used for agricultural water

pumping in Vietnam 40

Figure 3.16 Diesel engine of two-wheel tractor used for electricity generation in rural areas

41

Figure 3.17 Co-operation mechanisms between stakeholders for develop-ments of agricultural machinery service groups and agricultural mechanisation in Nigeria

42

Technical Solutions and Business Models for the Mechanization of Small-holder Rice Production in Nigeria

1

1. Background of Nigeria rice production

Agricultural land area of Nigeria is about

718,500 square kilometers, occupying

about 79% of the country land area. Not

less than 70% of Nigerians earn their liv-

ing on agriculture (Odoemenem & Inakwu,

2011). In spite of this, agricultural produc-

tion in Nigeria occupies only about

19.65% GDP of the country (National Bu-

reau of Statistics, the Federal Republic of

Nigeria, 2014). Although Nigeria is the

largest rice producing country in the West

African region; average rice yield is still

lower than the standard of Africa; and it is

still one of the biggest rice importers in the

world. It imports annually from 2.2 to 2.6

million tons of milled rice to meet con-

sumption demand of 6.8 million tons year-

ly.

There is a large variation in annual rainfall

in Nigeria. It is very high, from 1,800mm to

2,400 mm in Southern states along Atlan-

tic Ocean. It becomes less and less in

middle states. Annual rainfall of states of

Kaduna, Niger and Kwara is about 1,100 –

1,200 mm. Three main rivers cross the

states are Niger, Kaduna and Mariga riv-

ers (Fig. 1).

Rice is becoming a major staple food of

Nigerians. It is a unique crop grown virtu-

ally all over 5 ecological regions of the

country. Despite this, the gap between

potential and practical productions of rice

is still very wide, 4.6-4.9 mil. hectares and

1.7 mil. hectares (about 35% of the poten-

tial), respectively.

Main rice producing states of Nigeria are

Kaduna (occupying 22%), Niger (16%),

Benue (10%) and Taraba (7%). There are

3 main prevalent rice farming systems in

Nigeria, being rainfed upland, rainfed low-

land and irrigated lowland (Singh et al.,

1997). Due to lack of irrigation systems,

rainfed rice production is the main rice

system in Nigeria. It occupies up to 77%

of the total land area for rice production in

which 47% is lowland and 30% is upland

(FAO, 2013). There is mostly one rice

crop/year with average yield of 3.0-3.5

tons of paddy rice/hectare. Most of rice

farms in Nigeria are small with farm size

ranging from 0.2 to 3 hectares. However,

small-holder farmers produce up to 80%

of food for Nigeria.

Figure 1 Map of administration and rivers of Nigeria


1

2. Current status of agricultural mechanisation in Nigeria

2.1 Mechanisation level of rice production in Nigeria

Generally, there are main stages in rice

farming as follows: Soil preparation (in-

cluding land leveling, soil ploughing and

soil harrowing), rice establishment (seed-

ing or planting), rice management (water-

ing, weeding, fertilizing and spraying),

harvesting (including cutting, collecting

and threshing/winnowing), drying and

storage of the paddy rice. Mechanization

plays a very important role as it increases

labour productivity, crop yield, efficiency of

agricultural production and reduction in

crop losses, especially in intensive, la-

bour-consuming stages such as soil prep-

aration, planting and harvesting. Because

of small household and field size with un-

even terrain, together with poverty in rural

areas, development of mechanization in

rice production in Nigeria is facing many

difficulties. Mechanization level for rice

production in Nigeria is quite low. It is just

0.27HP/hectare compared with Vietnam

(2.2HP/hectare), Thailand (4 HP/hectare),

China (8HP/hectare) and South Korea

(10HP/hectare). Only 7% of the farming

activities are mechanized; 15% by draft

animal and the other 78% carried out

manually. As other Africa countries, Nige-

ria is also in the dawn stage of develop-

ment in agricultural mechanization (Fig.

2.1).

Figure 2.1 Development stages of agricultural mechanisation in the world. The black star marks the status quo of the Nigerian stage Source: Adapted from Japan International Cooperation Agency – JICA


2

2.2 Availability of agricultural machinery in Nigeria

2.2.1 Applied research on agricul-tural machinery by national insti-tutes and centres

There are some research institutes study-

ing on agricultural machinery such as Na-

tional Centre for Agricultural Mechaniza-

tion (NCAM) in Ilorin of Kwara State or

Mechanisation Department of the National

Cereal Research Institute in Bida of Niger

State. The institutes have researched and

fabricated various machinery and equip-

ment for rice farming and processing such

as drum seeders, rice threshers (Fig. 2.2),

rice sorters and cleaners, rice parboiling

equipment, rice milling machinery, etc.

Although most of them are still prototypes,

some equipment also meet market re-

quirement at acceptable selling prices like

rice threshers and rice milling machinery

(Fig. 2.3). Selling prices of rice thresher of

2 tons/hour and rice milling machine of

900-1,200kg/hour using electrical motor of

11 kW are 300,000 NGN and 750,000

NGN, respectively. Annually, the institutes

usually organize training courses on use

of farm machinery for machinery users

and rice farmers.

Figure 2.2 Rice threshers of NCRI

Figure 2.3 Milling machinery of NCRI

2.2.2 Agricultural machinery manu-factured by local fabricators

Some locally mechanical factories fabri-

cate and supply agricultural machinery

and equipment. For examples, Hanigha

Nigeria Limited in Kaduna State. It has

enough facilities, equipment and skilled

workers to make simple machinery.

Equipment for mechanical manufacturing

consists of welders, cutters, drillers,

lathes, grinders, bending equipment, etc.

It supplies a wide range of products to the

local markets such as pedal rice trippers,

rice/corn threshers, flat bed dryers, small

column dryers, bucket elevators, crew

conveyors, animal feed grinders and mix-


3

ers, pelleting machines, etc. (Fig.2.4).

However, most of the locally mechanical

factories could not fabricate machinery or

equipment with complicated structures

and technologies or needing high manu-

facture accuracy such as disk plough, rice

transplanting machine, rice reaper, rice

combine harvester, grinder, etc. Selling

prices of the machinery or equipment are

quite acceptable for high income farmers.

For instances, 1.5 ton- and 2.5 ton-rice

threshers are at prices of US$1,500 and

US$ 2,500, respectively. Besides, the fac-

tory also has cooperation programs with

national projects to make equipment sam-

ples for testing and demonstrations like

weeding tools or seeding tools (Fig. 2.5).

Most of customers of the factory are from

private sectors, rarely from public sectors.

Although the factory usually organizes

short-training courses of 2-3 days for us-

ers right after sales; due to limitation of

capacity, it could not provide any guaran-

tees to its purchaser. Besides, to avoid

possible risks of no payment, it often re-

quires a single payment to buyers, right

after taking the machinery. These caused

limitation for investments in agricultural

machinery. The company complained that

it hardly get supports from the govern-

ment.

Figure 2.4 Equipment made by Hanigh

Figure 2.5 Equipment samples

2.2.3 Agricultural machinery sup-plied by international distributors

Some international companies also partic-

ipate in the market of agricultural machin-

ery in Nigeria. These are Mass Interna-

tional Equipment Nigeria Ltd (MIENL) and

Kafarm Agro-Allied Nigeria Limited

(KAANL) from Turkey, located in Kaduna

State; Metagro Nigeria Limited from

Ukraine, located in Minna Town of Niger

State; and Dae Sung Machinery & Con-

struction Co. Ltd. (Agricultural Machin-ery)

from South Korea, based in Abuja.

Exception of Dae Sung Machinery & Con-

struction Co. Ltd., the other distributors


4

supply mainly big machinery such as 4-

wheel tractors of 60HP, 3-disk plow, 7-

disk harrowers (Fig. 2.6), 3-ton trailers,

seeding machines, mowing machines, 1.2

m rice reapers, etc. Machinery having

good markets in Nigeria are 4-wheel trac-

tors of 60HP (Fig. 2.7), 3-disk plow, 7-disk

harrowers, 3-ton trailers. These are used

mostly for crops grown in up-land such as

sugarcane, cassava, bean or sorghum,

but not much for rice in lowland. Prices of

the machinery are quite high. For instanc-

es, 4.3 million NGN for a 60HP 4-wheel

tractor, 450,000 NGN for a 3-disk plow,

700,000 NGN for a 3-ton trailer, 1.2 million

NGN for a self un-loading 5-ton trailer or

750,000 NGN for a 1.2m rice reaper etc.

Because of higher investment cost, almost

supplying contracts are with government

projects. According to the Chairman/CEO

of KAANL, the company can sell about 8

Four-wheel tractors, 5 Three-disk plows, 4

Seven-disk harrowers and many 5-ton

trailers per year. The companies also

supply spare-parts to customers after

sales.

Figure 2.6 Three-disk plow & 7-disk harrower

Figure 2.7 4-wheel tractors of 60HP

On the other hand, Dae Sung Machinery

& Construction Co. Ltd. supplies smaller

machinery and equipment, mostly for rice

farming and postharvest handling such as

power tillers, rice transplanters, rice reap-

ers, rice threshers, rice mills, rice de-

stoners, etc. (Fig. 2.8). Selling prices of

Korea machinery are quite high compared

with those from other country companies.

For examples, Korea power tiller is US$

7,500; Korea 4-row rice transplanter with

row spacing of 35cm is US$ 10,000; Ko-

rea rice reaper with working width of 1.2 m

is US$ 9,000; Korea dial rice thresher with

capacity of 300kg/hour is US$ 8,000; Ko-

rea rice milling machine with capacity of

220kg/hour is US$ 8,000; Korea rice mill-

ing machine with capacity of 300kg/hour is

US$ 10,000; Korea rice de-stoner with ca-

pacity of 300kg/hour is US$ 3,500. How-

ever, the company offers customers up to

one year warranty, one year free spare-

parts and free maintenance, free installa-

tion and 3-week training.


5

Figure 2.8 Machinery and equipment of Dae Sung Machinery & Construction Co. Ltd

2.3 Utilisation of agricultural machinery in rice production in Nigeria

2.3.1 Utilisation of agricultural ma-chinery in various stages of rice production

Due to small field size, small land holding,

uneven terrain and low investment capaci-

ty, small machinery and equipment are

more suitable to rice farming, post-harvest

handling and processing in Nigeria. For

soil preparation like ploughing and harrow-

ing, power tillers are used quite popularly

in somewhere of Nigeria (Fig. 2.9). Ac-

cording to Niger State Rice Investment

Consortium (NSRIC project, Bida, Niger

state; mechanization in soil preparation for

rice farming in Washi village is about 60-

70%. In spite of this, the activity particular-

ly land leveling is mostly performed by

human power with simple tools. It is hard

work with low capacity (Fig. 2.10).

Figure 2.9 Land preparation in Nigeria

Figure 2.10 Manual land leveling for rice transplanting in Wushishi, Niger State

Rice transplanting is mostly by human

power. Snap-sack sprayers are used pop-

ularly for diseases and weed controls in

rice farming. Rice cutting and threshing in

Nigeria are still mainly manual. After being

cut, paddy grains are separated from rice

straw by beating the rice stems onto wood

sections or on an empty drum (Fig. 2.11).

Then, winnowing of the paddy rice is done

manually by women. These activities need

large amount of labours. Besides, these

also cause higher physical and quality

losses for the rice.


6

Figure 2.11 Manual rice threshing and win-nowing in Nigeria

In recent years, some rice threshers with

threshing capacity ranging from

1,000kg/hour to 1,500kg/hour were tested

and demonstrated in Nigeria. After being

separated from their rice stems by the

threshing drum, paddy grains are cleaned

by a radial fan and a screen underneath.

After being separated out of the cut stem,

chaff, dust, etc. cleaned paddy grains are

collected into a bag or a basket through a

chute on a side of the thresher. The rice

threshers are quite light and could be

movable manually from farms to farms for

provision of the threshing service

(Fig.2.12).

Figure 2.12 Movable rice thresher in Nigeria

Although there are some prototypes of

flat-bed dryer at research institutes or me-

chanical factories, sun-drying is still the

most popular drying method for paddy rice

in Nigeria (Fig.2.13). This traditional drying

method also causes higher losses and

contamination with foreign materials such

as soil, sand, gravels, or other foreign ma-

terials for the rice.

Figure 2.13 Sun-drying of paddy in Nigeria

2.3.2 Formation and activity of ag-ricultural mechanisation service groups

In recent years, due to requirement of ag-

ricultural mechanisation, some service

groups have been formed to provide

mechanisation services in soil preparation,


7

water pumping, pesticide spraying, etc. in

some regions of Nigeria. According to the

Agricultural Graduates Association of Ni-

geria (AGAN) in Bida, the AGAN in co-

operation with Bishorps Limited under new

initiative called the “Let Us Grow Sustain-

ably (LUGS) Initiative” through an inte-

grated rice project set up 167 centres in

which each centre was financed to invest

2 tillers, 10 weeding tools, 1 rice reaper

(known as mini harvesters) and 1 rice

thresher. Each centre formed a group of

30 farmers in which 4 farmers were se-

lected to participate in training courses on

use of the agricultural machinery. The

group of 4 farmers worked as an agricul-

tural mechanization service group. It pro-

vides mechanization services to the 30

farmers and other outsiders of the group

at different fees. For example, service of

land preparation using power tiller for

farmers in the group are only NGN

15,000/hectare, but for outsiders are up to

NGN 20,000/hectare. NGN 15,000 is di-

vided as follows: NGN 8,000 is paid to the

centre for repayment of the investment

cost, maintenance and repair costs; NGN

4,000 is paid to the equipment operator

(the 4 selected farmers), other NGN 3,000

is for purchasing petrol for operation of the

power tiller. Besides, the farmers are also

supplied inputs by the LUGS and have to

pay back to the LUGS by their in-

come/output from the rice production.

Another example of a successful service

provider, a service provider in Wushishi of

Niger State reported that he was supplied

a combine including one 4-wheel MF trac-

tor of 60HP linked with a 3-disk plow by a

local government in cooperation with the

AGRO Corporation.

To provide service of land preparation to

farmers, the service provider has to buy

diesel for operation of the combine. The

service provider has to also pay NGN

20,000 per day to the local government as

a renting cost of the combine. The local

government is responsible to pay for costs

of maintenance and repair of the combine.

Service cost of land preparation paid by

farmers is about NGN 40,000-50,000 per

day (land preparation capacity of the

combine is about 2.5-3.5 hectares per

day, and service cost of land preparation

is about NGN15,000/ hectare). Cost of

diesel for operation of the combine paid by

the service provider is NGN10,000 per

day. As a result, income of the service

provider is about NGN10,000-NGN20,000

per day. The tractor operator was very

pleased with the profit sharing.

Mechanisation services were also ex-

panded to post-harvest handling activities

such as parboiled rice processing, rice

milling or grinding of farm crops for animal

feed. It was reported that a group of peo-

ple at the Mechanization Department of

the National Cereal Research Institute in

Bida, Niger State used their own equip-


8

ment consisting of paddy cleaners, boil-

ers, soaking tanks, steaming pots, flatbed

dryer/or sun-drying and rice mills for par-

boiled rice processing service. There are

two main service seasons. The group

serves almost every day in high season of

dry season from November to May of the

following year. For low seasons lasting

from June to October annually, the group

has 2 to 3 services a week. Service cost

for parboiling with drying of paddy rice and

milling of the rice is about NGN15/kg of

paddy rice.

Thanking to the project on ‘Improving

Post-harvest Quality & Packaging of Rice

and Rice Products to Enhance Marketabil-

ity in West Africa’ donated by SONGHAI,

CORAF/ WECARD and USAID; Awomana

Women Cooperative of parboiled rice pro-

cessing was established in Doko area,

Bida of Niger State. It has 6 groups of 15-

22 women. Each group was donated with

a paddy cleaning machine, 4 boiling pots

of 75kg paddy, a cement yard for sun-

drying of the parboiled paddy (Fig 2.14), a

milling machine, a rice de-stoner of

300kg/hour and a sewing machine. Maxi-

mum service capacity of each group is

about 600kg of parboiled rice per day in-

cluding parboiling, milling, de-stoning and

packaging. The women cooperative is

providing the parboiled rice processing

service successfully to the community.

Figure 2.14 Sun-drying of parboiled paddy rice and product of the group: parboiled milled rice

2.3.3 Mechanical services of local factories

In comparison with Asian countries, me-

chanical services of local factories in Nige-

ria are very poor. There are very few local-

ly mechanical factories existing in Nigeria.

Beside lack of skilled workers, facilities

and equipment of the locally mechanical

factories are not good enough for fabrica-

tion, maintenance or repair of agricultural

machinery (Fig.2.15). These cause low

quality for machinery made by the facto-

ries.

Figure 2. 15 Small mechanical factory in Wushishi of Niger State


9

2.3.4 Extensional activities in agri-cultural mechanisation

For development in agricultural mechani-

sation, Niger State established an Agricul-

tural & Mechanization Development Au-

thority (NAMDA) several years ago. It is a

public institution based in Mina City of Ni-

ger State. Its main function is to dissemi-

nate modern technologies and machinery

to the agriculture of the state. However, it

seems that its activities were not very effi-

cient. The organization has only about 10

extension workers for agricultural mecha-

nization, but they are not professionally

trained. Sometimes, it organizes training

courses for farmers or demonstrations of

farm machinery. While the farmers have

no machinery for their farming, there are

still a lot agricultural machinery abundantly

at the headquarter (Fig 2.16).

Figure 2.16 Mini power tiller with blade plow, rotary, water pump and trailer at NAMDA

Although sometimes, agricultural institutes

such as National Centre for Agricultural

Mechanisation (NCAM), international dis-

tributors of agricultural machinery like

Mass International Equipment (Nigeria)

Ltd., Kafarm Agro-Allied Nigeria Limited or

Dae Sung Machinery & Construction Co.

Ltd also organized technical training

courses for their customers; in general,

these were usually very short and not

enough for machinery operators and

farmers. Besides, access of information

and services of agricultural mechanisation

is quite difficult for farmers. As a result,

these caused misusing of machinery for

farmers, leading to reduction in serving

time of the machinery, increases in repair-

ing cost and production cost in the agricul-

ture.

2.3.5 Policies of banks towards ag-ricultural mechanisation

A meeting with director of the Bejin-Doko

Microfinance Bank (Nig) Limited was car-

ried out at the bank office, in Bida, Niger

State, Nigeria. This is known as a bank for

farmers. Because of limitation of fund for

lending and avoiding risks of no repay-

ment of loans, the regulation of the bank is

providing only small amount loans with

short term loans. Normally, loans are pro-

vided on 6 month basis, from June-July of

the first year to February-March of the fol-

lowing year. The later corresponds to the

harvesting seasons of rice crops. The

bank could lend up to a maximum amount

≤ 1% of the investment cost for individual

farmers; or up to maximum amount ≤ 5%

of the total investment cost for group of

farmers. However, bank interest rate is

very high, up to 25%/year. The bank also


10

provided short term loans to women

groups of Awomana Women Cooperative

in Doko area, Bida, Niger state, Nigeria for

parboiled rice processing.

Bank of Agriculture Ltd. located in Minna

town, Niger State, Nigeria was visited and

interviewed. According to a manager of

the bank, the bank provided loans to dif-

ferent stakeholders of the rice supply

chain such as private companies, individ-

ual farmers, groups of farmers and rice

cooperatives. Conditions of loans are (1)

the customers have to open a bank ac-

count at the bank and deposit at least

25% of the total loan into the account; (2)

repayment to the bank progressively.

Bank interest rate of loans is about

5%/year. For commercial program, bank

interest rate is 9%/year. The bank provid-

ed loans to 5 groups of service providers

to buy 50 tractors.

The bank of agriculture has two schemes

of lending: (1) Micro loans: It are 6 or 12-

month term loans and not for owning trac-

tors or machinery but for hiring the ma-

chines. Amount of loans are calculated

based on hiring cost per hectare. Maxi-

mum amount of loans are not higher than

NGN 250,000 (US$ 1,250). Despite of

this, according to advice of the manager,

to buy power tillers or agricultural machin-

ery, one can apply for the micro loans;

and a loan amount could be up to

NGN1.2-1.5 million (US$6,000-7,500).

However, the borrowers must be legally

registered in a group of 5-10 persons. (2)

Macro loans: Borrowers must be also le-

gally registered in a group of 5-10 per-

sons. The group has to deposit at least

10% of the total loan by house of used

land. Depending on project feasibility, loan

term could last up to 3 years. Processing

time of loans is dependent on seasonal

time in which the loans are necessary to

be provided.

According to a State officer of Bank of In-

dustry in Minna, Niger State, Nigeria, the

mandate of the bank is to provide loans to

agricultural processing sectors but not to

the agricultural production sectors. There

are two models of lending: (1) For borrow-

ing, bank, farmers and an agricultural pro-

cessor must sign a common agreement in

which the processor has to guarantee to

repay the loan amount together with its

bank interest to the bank. Mechanization

service providers can get loans to buy

farm machinery such as power tillers, rice

threshers, etc. Similar to that condition;

the bank, the farmers and the service pro-

vider must have a common agreement in

which the mechanization service provider

has to guarantee to repay to the bank. (2)

Besides, a group of farmers who like to

buy 1 or 2 machines like power tiller, rice

thresher, etc. for service provision can al-

so borrow money from the Bank of Indus-

try. Conditions for lending are that (a) the

group must be legally registered or certi-

fied by the farmer association; (b) the

group must deposit a certain amount of

money at the bank to ensure their repay-


11

ment. Maximum amount of loans is up to

NGN1-5 million (US$5,000-25,000). Be-

cause it is a commercial bank, bank inter-

est rate of the Industry bank is quite high,

9%/year. However, the period of repay-

ment can last longer, at least 3-5 years

and only begins to repay from the second

year.

2.3.6 Policies of agricultural insur-ance companies

Policies on agricultural insurance are dis-

cussed with a manager of the Nigerian

Agricultural Insurance Corporation (NAIC).

NAIC provides insurance to Plant all risks

(PAR) due to accidents like fire, damages

caused by uncertain climate, etc. (1) In-

surance fee is 1% of the total capital value

for no limitation of insurance; (2) Insur-

ance fee is 0.5% of the total capital value

for not covering breakdowns of machinery;

(3) Insurance fee is 0.5% of the total capi-

tal value for only breakdowns of the ma-

chinery breakdown (MBD).

Because of constraints above, exploitation

of land for crop farming is still limited.

There is a big gap between harvested

land area and arable land area in Africa

countries, compared with that of Asian

countries (Fig.2.17).

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Predominantly handpower

Hand power / DAP Tractors Significant Tractors Dominant

He

ctar

es Asia - Harvested area

cultivated / person

Asia -Arable area cultivated/ person

Africa - Harvested areacultivated / person

Africa - Arable cultivated /person

Figure 2.17 Impact of mechanization on farming capacity of farmers in Asia and Africa (Source: FAO Agriculture towards 2015-2030 & FAOSTAT)


12

Similarly, due to lack of agricultural ma-

chinery, Nigeria has more than 12 million

hectares of land potential for rice produc-

tion, but only less than 5 million hectares

are under rice farming (Fig.2.18).

Figure 2.18 Cultivated land beside unre-claimed areas at Washi village, Niger State


13

3. Solutions for mechanisation development of rice pro-duction in Nigeria

Based on the information collected from

the field visits, it can be seen that to de-

velop mechanisation for rice production in

Nigeria, it is necessary to carried out a set

of various measures including technical

aspects, management in production and

business, and government policy.

3.1 Criteria for selection of agricultural machinery for small-scale rice production

Selection of machinery plays a very im-

portant role in agricultural mechanisation.

Right selection could increase efficiency

and profit of the investment. By contrast,

wrong selection could cause huge losses

for the investors and fails for mechanisa-

tion programs. For Nigeria, based on in-

formation collected during the field visits,

criteria for selection of agricultural ma-

chinery for small holder rice producers

could be prioritized in the order as follows:

Because rice farms in Nigeria are

mostly small with fragmented land and

uneven terrain, machinery for mecha-

nisation of the rice farming must be

small in size and light in weight to

be more convenient and efficient in

their operations;

Rice in Nigeria could be grown

throughout five different ecological re-

gions of the country. Therefore, ma-

chinery for each ecological region

must be suitable to specific condi-

tions of climate, weather, topography,

soil types and other conditions of the

ecological region in which the ma-

chinery will be used;

Each machine or a group of machinery

invested must bring in higher profit

and benefit to the farmers in compared

with the traditionally manual and exist-

ing farming methods.

To shorten payback period and to in-

crease efficiency of investments, agri-

cultural machinery for the rice mecha-

nisation should be applicable as much

as possible for multi-purposes in the

farming activities. Besides services for

their own farm, the machinery should

be also used to provide services for

neighbor farms in the region or regions

nearby. Experience in agricultural

mechanisation for small-scale rice

production of developing countries in

South-Eastern Asia showed that a

power tiller including a two-wheel trac-

tor should be the first selection for in-

vestment. It has been recognised as a

core machine in groups of machinery.

The two-wheel tractor facilitates effi-

ciently using of the other machin-

ery/equipment in the groups. A two-

wheel tractor can provide power

source to run various types of equip-


14

ment linked with it for performance of

different farming activities. Therefore,

the two-wheel tractor is the most im-

portant machine to increase efficiency

of investment in different equipment in

the group. Various groups of machin-

ery or equipment in which a two-wheel

tractor plays a role as a core power

source are often very successfully.

Therefore, setting up models of agri-

cultural machinery should follow this

approach.

The machinery should be convenient

and easy in use, maintenance and

repair for users, service providers or

farmers;

Each machine or a group of machinery

invested should be based on specific

needs and practical farming condi-

tions, operational scope of the ma-

chinery as well as financial and man-

agement capacities of the inves-

tors/service providers, but not on sub-

jective wills of political leaders.

3.2 Selection of sets of agri-cultural machinery for service provision

Based on the criteria specified, different

models were established for mechanisa-

tion of small farms of rice production in

Nigeria. Models from I to V are single

models which have only one function in

rice farming such as harrowing (Model I),

ploughing (Model II), transporting (Model

III), rice cutting (Model IV) and rice thresh-

ing (Model V). Models VI to VIII are inte-

grated models which are a combination of

2 or more equipment to carry out two or

more activities.

3.2.1 Model I: Investment in a sin-gle two-wheel power tiller of 14.5 horse power (HP)

The purpose of harrowing is to make soil

softer and smaller in size before seeding

or planting of crops. Harrowing could be

carried out after plowing or directly to the

soil without plowing (minimum soil prepa-

ration method) in wet or dried land. Model

I is a single model of a power tiller includ-

ing a two-wheel tractor of 14.5 HP and a

harrower linked behind it (Fig.3.1). Its sin-

gle function is land harrowing. Manufactur-

ing of two-wheel tractors is very compli-

cated; besides fabricating of the soil cut-

ting blades of the harrower requires metal

annealing. Therefore, the power tiller

could not be manufactured in Nigeria. It

needs to be imported from Japan, Vi-

etnam, Thailand or China. Technical spec-

ifications, original countries and selling

prices of the power tillers are shown in

Table 1. Initial investment cost of the

model is estimated at 750,000NGN

(US$3,750). Average working capacity of

the power tiller is 0.25 hectares/hour. The

investment is very efficient because the

power tiller can work very well both in wet

and dried fields. Therefore, beside land

preparation for rice farming, it can expand

the service to other crops in dried land


15

such as cassava, sorghum, beans, etc.

Depending on served regions, seasons

and soil conditions, service price of land

preparation could vary from 18.000NGN

(US$90) to 25,000NGN/hectare (US$125/

hectare). In average, it is 20,000NGN/

hectare (US$100). It means that the farm-

ers have to pay 20,000NGN (US$ 100)

per hectare for the mechanized service of

land preparation using of the power tiller.

Figure 3.1 Power tiller working in both wet fields and dried fields

Result of the calculations for investment in

Model I revealed a Net Present Value

(NPV) > 0 in case financing the machine

with own capital as well as financing it with

a loan (100%). A positive NPV means that

the investment is acceptable. The sensitiv-

ity analysis shows that the investment is

relatively insensitive to price and effective

use of service changes. The break-even

point is reached after 5 respectively 12

hectare depending on the financing op-

tion. The detailed calculations for Model I

are displayed in the Annex.1

3.2.2 Model II: Investment in a sin-gle two-wheel tractor of 14.5 HP + a 2-body plow

Purposes of ploughing are to create a

deeper soil layer with good texture, to im-

prove soil aeration for better activities of

micro-organisms and plant roots, to de-

stroy weeds, grasses; and to prevent soil

erosion. These enable the rice plants to

absorb fertilizer more effectively and to

grow more evenly leading higher quality

for the rice grains and higher yield for the

rice crop. Model II is also a single model

which is a combination of a two-wheel

tractor of 14.5 HP and a two-body plow

(Fig. 3.2a &b). It has only one function of

land ploughing. Making of two-body plows

needs metal molding and annealing tech-

nologies; therefore, the plows could not be

fabricated in Nigeria. The two-body plows

(moldboard or disk plows) should be im-

ported from Thailand or China. Technical

specifications, original countries and sell-

ing prices of the plows are described in

Table 1. Initial investment cost of the

model is 750,000NGN (US$3,750). Aver-

age ploughing capacity of the combination

1 The calculations of the other models will be made avail-

able on the CARI website http://cari-project.org.


16

is about 0.15 hectares/hour. The machine

can plow both in dried fields (using two-

moldboard plow or two-disk plow) (Fig. 3.2

a, b & c) or wet fields (using two-

moldboard plow) (Fig. 3.2 a &d) for not

only rice farming but also for other crops

such as cassava, sorghum, beans, etc.

Service price of land ploughing is ranging

from 10,000NGN to 15,000NGN/hectare

(US$50 to75/hectare) depending on re-

gions, seasons and land conditions. In av-

erage, farmers have to pay about

12,000NGN/ hectare (US$60/hectare) to

get the mechanized land ploughing ser-

vice.

a) Two-moldboard plough

b) Two-disk plough

c) Ploughing in dried field

d) Ploughing in wet field Figure 3.2 Ploughing machines

Calculations for investment in Model II re-

vealed that the investment in Model II is

acceptable, NPV > 0 as it could bring in

profit to the investor. In summary, model II

satisfied all criteria for selection of the ma-

chinery above.

3.2.3 Model III: Investment in a sin-gle two-wheel tractor of 14.5 HP + a trailer of 1.5 tons

Most of transportations of input materials

like fertilizer, seeds, pesticides and agri-

cultural commodities in Nigeria are not

mechanized but manual. These are heavy

works and intensive time consumption. It

also increases production cost of crops.


17

Therefore, mechanisation in rural trans-

portation is very necessary. A single mod-

el of transportation consists of a two-

wheel tractor of 14.5 HP and a self un-

loading trailer of 1.5 tons linked behind it

(Fig. 3.3). Function of the model is only

rural transportations. Although simple two-

wheel trailers could be made in Nigeria,

self-unloading two-wheel trailers should

be imported from China or Thailand. Self-

unloading trailers require a hydraulic

pump from the tractor, a hydraulic cylinder

underneath the carriage and hydraulic

lines connecting from the hydraulic pump

and the hydraulic cylinder. These compo-

nents must be imported to Nigeria. Tech-

nical specifications, original countries and

selling prices of the trailers are shown in

Table 1.

Figure 3.3 Self un-loading trailer of 1.5 tons

Investment cost of the model is

800,000NGN (US$4,000). The model

could be used for transportation of agricul-

tural input materials and commodities all

the years. Depending on type and amount

of commodities, requirements and dis-

tance of transportation, road conditions,

seasons, etc. service price of transporta-

tion could range from 1,500 NGN to

3,500NGN/hour (US$ 7.50 to 17.50/hour).

For investment calculation, in average;

service price of transportation could be

2,000NGN/hour (US$10/hour).

However, depending on capacity and cre-

ation in marketing of service providers, it

can be used for rural transportation up to

280 days per year. Compared with the cri-

teria specified above, model III satisfied all

the criteria.

3.2.4 Model IV: Investment in a single rice reaper of 1.2 meters

Harvesting cost often occupies a high per-

centage of the total production cost of rice.

Experience from Asia countries showed

that mechanisation in rice cutting using

rice reaper contributed significantly to re-

ductions in harvest loss, labor intensity

and production cost. A business model

consisting of the rice reaper has only one

function, that of rice cutting. The cutting

knives of the rice reaper need metal an-

nealing technologies, reciprocating motion

speed of cutting bar of the rice reaper is

quite high and clearance between the cut-

ting knives and the cutting blades is very

narrow. These require accurately mechan-

ical manufacturing. Therefore, rice reapers

could not be made in Nigeria, but imported

from other countries such as Vietnam,

Thailand, China, etc. Technical specifica-


18

tions, original countries and selling prices

of the rice reaper are shown in Table 1. It

often has working width of 1.2 metres with

cutting capacity of 0.25 hectare per hour

(Fig.3.4). It requires a gasoline engine of

5.5 horse powers with fuel consumption of

0.7 to 1.0 litres/hour. Initial investment

cost of the rice reaper is about

400,000NGN (US$2,000). The rice reaper

can replace up to 20-25 labors in rice cut-

ting. Besides, it can reduce cutting loss to

only 1% compared with hand cutting of 2-

3%. Cutting height of the machine can be

adjusted from 7cm to 35cm to cut rice

plants with height ranging from 50cm to

90cm. It can work in both dried and wet

fields. However, it works easier and faster

in dried fields. Therefore, for more con-

venience in harvesting, farmers should

drain up field water from 7 to 10 days be-

fore cutting.

Figure 3.4 Rice reaper with working width of 1.2 metres and cutting capacity of 0.25 hec-tares/hour

Depending on number of rice crops per

year and marketing capacity of the service

provider; operating time of the rice reaper

can vary widely from 20 days to 200 days

per year. An average value of 100 days

was taken for investment analysis. On the

other hand, depending on regions, sea-

sons and rice conditions, service price of

rice cutting could be also vary from

14,000NGN/hectare (US$70/hectare) to

17,000NGN/hectare (US$85/hectare). On

average, a cutting service price of

15,000NGN/hectare (US$75/hectare) was

taken for investment analysis.

The result of economic analysis shows

that the investment in the rice reaper for

service of rice cutting is acceptable be-

cause it is very efficient (NPVs > 0). Model

IV also satisfied all the criteria for selec-

tion of agricultural machinery mentioned

previously. It can bring in profit to the in-

vestor and pay back to the investment

within 0.33 years.


19

3.2.5 Model V: Investment in a sin-gle axial rice thresher of 1.5 tons per hour.

Rice threshing with winnowing is the

hardest work in rice harvesting. It con-

sumes a lot of labours and occupies a

highest percentage of the harvesting cost.

Mechanisation in rice threshing can re-

duce not only harvesting cost but also

harvesting loss of rice. A single model of

axial rice thresher has two functions being

threshing and winnowing (cleaning) of the

rice grains. Owing to training courses on

fabrication of agricultural machinery car-

ried out by the previous projects, rice

thresher could be manufactured at some

mechanical factories in Nigeria. However,

it could be also ordered and imported from

other South-East countries such as Vi-

etnam, Thailand, etc. Technical specifica-

tions, original countries and selling prices

of the rice threshers are described in Ta-

ble 1. It often requires a diesel engine of

at least 7.5 horse powers (Fig. 3.5). In-

vestment cost of the rice thresher is about

NGN 350,000 (US$1,750). Its capacity is

1.5 tons of paddy rice per hour including

threshing and cleaning of the paddy, re-

placing up to 30 labours. It consumes

about 2 liters of diesel per hour. Depend-

ing on number of rice crops per year and

marketing capacity of the service provider,

operating time of the model could be tak-

en from 20 days to 200 days per year.

Moreover, dependent on yield of rice crop,

field conditions and seasons; service price

of rice threshing could be also varied from

1,500 NGN to 6,400NGN/hectare

(US$7.5-32/hectare). For investment

analysis, average values of the two data

taken were 100 days and

4,000NGN/hectare (US$20/hectare), re-

spectively.

Figure 3.5 Rice thresher of 1.5 tons per hour made at Hanigha workshop, Nigeria

Result of investment analysis showed that

it is acceptable to invest the rice axial

thresher of 1.5 tons of paddy rice per hour

for service of rice threshing & winnowing

as NPV > 0. The investment is quite effi-

cient. Similar to the other models, model V

also satisfied all the criteria. It can bring in

profit to the investor.

Based on individual service prices of soil

ploughing, harrowing, transportation, rice

cutting and rice threshing in the Model I, II,

III, IV and V, the total cost of mechanized

farming activities per hectare could be de-

termined. This corresponds to the service

price that the rice farmers have to pay to

service providers to get their mechanized

farming activities (Table. 3).


20

Table 1. Machinery/Equipment of models I to IX for mechanisation in small-scale rice pro-

duction in Nigeria

No. Agricultural machinery/equipment Technical specifications Original country & selling prices

I. PLOUGH

1

+ Type: Two-disk plough + Model: 1LS-215 + Number of disks: 2 + Net weight of plow (kg): 40 + Ploughing width (cm): 40 + Ploughing depth (cm): 12-18 + Required power: 2-wheel tractor of 12-18HP.

+ Product of Yuching Heng-Shing Machin-ery Co. Ltd-YCHS (China) + Selling price in Chi-na: US$70-80 (NGN14,000 - 16,000)

II. POWER TILLER

2

+ Type: Power tiller + Overall dimensions (LxWxH) (cm): 275x90x125 + Weight without engine (kg): 265 + Tilling width (cm): 600-750 (600) + Required power: Diesel engine of 7.72 kW; type: 4 cycle, 1 cylinder, hor-izontal position.

+ Product of Thailand + Selling price in Ni-geria: NGN 750,000 (US$3,750)

3

+ Type: Power tiller + Model: MK 120 (MK 120S) + Overall dimensions (LxWxH) (cm): 229x71x120 + Weight without engine (kg): 257 (271) + Tilling width (cm): 600-750 (600) + Speeds: - Forward: 6 speeds - Reverse: 2 speeds - Tilling: 4 speeds + Wheel tread (cm): 42-83 + Required power: Diesel engine RV125-2 (LX), type: 4 cycle, 1 cylin-der, horizontal position - Weight of engine (kg): 105 - Rated output: 10.5 HP/2,200 rpm - Max output: 12.5HP/2,400 rpm - Cooling system: Radiator

+ Product of Sveam (Vietnam); + Selling price at Sai-gon sea port in Vi-etnam (FOB price): US$1,500 (NGN300,000)


21


4

+ Type: Diesel engine + Model: RV145-2LX + Overall dimensions (LxWxH) (cm): 77.2 x 37.8 x 47.7 + Weight of engine (kg): 115 + Bore x Stroke (mm): 100 x 94 + Rated output: 12.5 HP/2,200 rpm + Max output: 14.5HP/2,400 rpm + Cooling system: Radiator; + Diesel consumption (g/HP.hr): 175

+ Product of Sveam (Vietnam) + Selling price at Sai-gon sea port in Vi-etnam (FOB price): US$ 1,200 (NGN240,000)

5

+ Type: Power tiller + Model: MX-3300 + Overall dimensions (LxWxH) (cm): - With cage wheels: 325 x 225 x 160 - With rubber wheels: 325 x 170 x 160 + Weight with engine (kg): 1,100 + Speeds (Gear box made in China): - Forward: 6 speeds, 3-5 km/hr - Reverse: 2 speeds - Tilling: 4 speeds + Tilling width (cm): 120 (+20) + Tilling capacity: - In wet field (hectares/hr): 0.3-0.5 - In dried field (hectares/hr): 0.2-0.3 + Required power: Diesel engine of 28-30HP, VIKYNO (Sveam) Vietnam, type: 4 cycle, 1 cylinder, horizontal position

+ Product of Tu Sang Mechanical Enter-prise (Vietnam); + Selling price at Sai-gon sea port in Vi-etnam (FOB price) in Vietnam: - With engine: US$ 5,000 (NGN1,000,000) - Without engine: US$3,500 (NGN700,000)

III. TWO-WHEEL FARM TRAILER

6

+ Type: Hydraulic self-unloading + Kind: Rear unloading + Number of rubber wheels: 02 + Overall dimensions (LxWxH) (cm): 280 x 160 x 150 + Size of carriage (cm):200 x 100 x 45 + Weight of trailer (kg): 380 + Transporting capacity (tons): 1.5 + Max. transporting speed (km/hr): 25 + Scopes of application: Plains, moun-tain areas, wet lands, rural areas, etc. + Required power: Two-wheel tractor of 12-18 HP.

+ Product of Shan-dong Tiansheng Ma-chinery Co.Ltd (Chi-na) + Selling price in Chi-na (FOB): US$ 800-1,000 (NGN 160,000-200,000)

7

+ Type: Hydraulic self-unloading + Kind: Rear unloading + Model: 7C-1.5T (7CX-1.5T) + Number of rubber wheels: 02 + Tire/number: 6.5-16.2 wheels + Overall dimensions (LxWxH) (cm): 315 x 155 x 188 + Size of carriage (cm):210 x 150 x 45 + Weight of trailer (kg): 390 (470) + Loading capacity (tons): 1.5-2.0 + Unload form: No tipping (back tip-

+ Product of Tian-chang Machinery Co. Ltd -TICH (China); + Selling price in Chi-na (FOB): US$1,000-1,500 (NGN 200,000-300,000)


22


ping) + Required power: Tractor of 12-25HP.

IV. RICE REAPER

8

+ Type: Rice reaper + Model: VPR-120 + Overall dimensions (LxWxH) (cm): 220 x 148 x 70 + Weight of rice reaper (kg): 175 + Cutting width (cm): 120 + Cutting height (cm): 10-30 + Cutting capacity (m

2/hr): 2,500 –

3,000 + Required power: 4 Cycle – air cooled gasoline engine of 4kW/3,600rpm + Travelling speed: - Forward (km/hr): 3.5-10.3 - Reverse (km/hr): 2.5

+ Product of Sveam (Vietnam); + Selling price at Sai-gon sea port in Vi-etnam (FOB price): US$ 2,000 (NGN 400,000)

9

+ Type: Rice reaper + Overall dimensions (LxWxH) (cm): 199 x 190 x 110 + Weight of rice reaper without engine (kg): 160 + Cutting width (cm): 120 + Cutting height (cm): 7-25 + Cutting capacity (m

2/hr): 3,000 –

4,000 + Required power: 4 Cycle – air cooled gasoline engine of 6.5-7HP/3,600rpm; + Fuel consumption (litre/hr): 0.7-1.0

+ Product of An Giang Mechanical Company (Vietnam); + Selling price at Sai-gon sea port in Vi-etnam (FOB price): US$ 2,000 (NGN 400,000)


23

V. RICE THRESHER

10

+ Type: Axial rice thresher + Overall dimensions (LxWxH) (cm): 250 x 130 x 200 + Weight of thresher (kg): 275 + Threshing capacity (kg/hr): 2,000 + Required power: 4 cycle – water cooled diesel engine of 10HP.

+ Product of The Na-tional Cereal Re-search Institute (Nige-ria); + Selling prices in Nigeria: NGN350,000 (US$ 1,750)

11

+ Type: Axial rice thresher + Overall dimensions (LxWxH) (cm): 165 x 160 x 150 + Weight of thresher (kg): 185 + Threshing capacity: a) 1,500 kg/hr; required power of 4 Cycle – water cooled diesel engine of 7 HP. b) 2,500 kg/hr required power of 4 cycle – water cooled diesel engine of 15 HP.

+ Product of Hanigha (Nigeria); + Selling prices in Nigeria: a) US$ 1,750 (NGN 350,000); b) US$ 2,200-2,700 (NGN 440,000 – 540,000)

12

+ Type: Axial rice thresher + Overall dimensions (LxWxH) (cm): 320 x 130 x 200 + Weight with engine (kg): 700 + Threshing capacity (tons/hr): 1 – 2 (including threshing & winnowing) + Required power: Sveam Diesel en-gine of 10.5-12.5 HP made in Vietnam

+ Product of Tu Sang Mechanical Enter-prise (Vietnam); + Selling price at Sai-gon sea port in Vi-etnam (FOB price) in Vietnam: - With engine: US$ 2,300 (NGN 460,000) - Without engine: US$2,000 (NGN 400,000)

Note: Exchange rate between Nigerian Naira (NGN) and US Dollar is 200NGN/US$


24

3.2.6 Model VI: Investment in a complex model including a power tiller and a two-body plow

For models of VI, VII, VIII and IX; these

are complex models which integrated two

or more equipment into a complex model.

Advantages of the complex models com-

pared with single corresponding models

are that these have the same functions

(for example ploughing activity) and ca-

pacity (hectare/hour) of services but these

have lower investment cost, higher profit

(NGN/year) and shorter payback period

(year). Model VI is a complex model which

is an additional investment of the two-

body plow to model I (Fig.3.6).

Figure 3.6 Model of a power tiller of 14.5 HP with a two-body plow

Although model VI has the same functions

and capacity as model I with model II; it

has lower investment cost compared with

the total investment cost of model I with

model II (Table 2). Lower investment cost

is due to a combination of different equip-

ment. For example, if we compare model

VI with model II, we can see that the in-

vestment of ploughing equipment (only 2-

body plow) of model VI was only 150,000

NGN (US$750) while the investment of

two-wheel tractor of 14.5 HP with a two-

body plow were: 600,000 NGN + 150,000

NGN = 750,000 NGN (US$3,750). How-

ever, profit, breakeven point and payback

period of model VI were 1,070,400

NGN/year (US$5,352/ year) 6.25 hectares

and 0.05 years, respectively; while these

of model II were only 196,750 NGN/year

(US$983.75/ year), up to 24.87 hectares

and up to 0.52 years, respectively. It is

clear that model VI is better than model II.

25

Table 2. Comparison of investment and financial efficiency between different models of agricultural mechanisation service

MODEL MODEL I MODEL II MODEL III MODEL IV MODEL V MODEL VI MODEL VII MODEL VIII MODEL IX

Core ma-

chinery

A power tiller of

14.5 HP (in-

cluding a two-

wheel tractor +

a harrower

linked behind it)

with working

capacity of 0.25

hectares/hour

A two-wheel

tractor of 14.5

HP

A two-wheel

tractor of 14.5

HP

A power tiller of

14.5 HP (in-

cluding a two-

wheel tractor +

a harrower

linked behind it)

with working

capacity of 0.25

hectares/hour

A power tiller of

14.5 HP (in-

cluding a two-

wheel tractor +

a harrower

linked behind it)

with working

capacity of 0.25

hectares/hour

A power tiller of

14.5 HP (includ-

ing a two-wheel

tractor + a har-

rower linked

behind it) with

working capacity

of 0.25 hec-

tares/hour

A power tiller of

14.5 HP (includ-

ing a two-wheel

tractor + a har-

rower linked

behind it) with

working capacity

of 0.25 hec-

tares/hour

Additional

equipment

A two-body

plow with

ploughing ca-

pacity of 0.15

hectares/hour

A self un-

loading trailer

with transport-

ing capacity of

1.5-tons

A single rice

reaper with

cutting width

of 1.2 metres

and cutting

capcacity of

0.25 hec-

tares/hour

A single axial

rice thresher

with capacity

of 1.5-tons of

paddy/hour

including

threshing and

cleaning of the

paddy

A two-body

plow with

ploughing ca-

pacity of 0.15

hectares/hour

A two-body

plow with

ploughing ca-

pacity of 0.15

hectares/hour

A two-body plow

with ploughing

capacity of 0.15

hectares/hour

A self un-

loading trailer

with transport-

ing capacity of

1.5-tons

A self un-loading

trailer with

transporting

capacity of 1.5-

tons

A self un-loading

trailer with

transporting

capacity of 1.5-

tons

A rice reaper

with cutting

width of 1.2 me-

tres and cutting

capcacity of 0.25

hectares/hour

A rice reaper

with cutting

width of 1.2 me-

tres and cutting

capcacity of 0.25

hectares/hour

An axial rice

thresher with

capacity of 1.5-

An axial rice

thresher with

capacity of 1.5-

26


tons of pad-

dy/hour including

threshing and

cleaning of the

paddy

tons of pad-

dy/hour including

threshing and

cleaning of the

paddy

Pictures

Picture of mod-

el 1 & Picture

model 2

Pictures of

models 1,2 & 3

Pictures of mod-

els 1,3,4 & 5

Pictures of mod-

els 1,2,3,4 & 5

Initial in-

vestment

cost

600,000 +

150,000 =

750,000 NGN

(US$ 3,750)

600,000 +

150,000 =

750,000 NGN

(US$ 3,750)

600,000 +

200,000 =

800,000 NGN

(US$ 4,000)

400,000 NGN

(US$ 2,000)

350,000 NGN

(US$ 1,750)

750,000 +

150,000 =

900,000 NGN

(US$4,500)

750,000 +

150,000 +

200.000 =

1,100,000 NGN

(US$5,500)

750,000 +

200.000 +

400,000 +

290,000 =

1,640,000 NGN

(US$8,200)

750,000 +

150,000 +

200.000 +

400,000 +

290,000 =

1,790,000 NGN

(US$8,950)

Total profit

(NGN/year)

1,348,250 NGN (US$6,741) (pre-financed)

1,220,750 NGN (US$6,104) (post financed)

924,000 NGN

(US$4,620)

594,800 NGN

(US$4,774)

2,616,800

NGN

(US$13,084)

1,119,100

NGN

(US$5,596)

3,764,000 +

1,070,400 =

4,834,400 NGN

(US$24,172)

3,764,000 +

1,070,400 +

741,200 =

5,575,600 NGN

(US$27,878)

3,764,000 +

741,200 +

2,616,800 +

1,135,540 =

8,257,500 NGN

(US$41,288)

3,764,000 +

1,070,400 +

741,200 +

2,616,800 +

1,135,540 =

9,327,940 NGN

(US$46,640)

Breakeven

point (hec-

tare)

4.7

11.8

21.55

105.91

24.16

38.56

10.20 & 6.25

10.20; 6.25 &

34.88

10.20; 34.88;

11.50 & 33.43

10.20; 6.25;

34.88; 11.50 &

33.43

NPV 4,061,994 NGN (pre-financed) 3,951,124 NGN (post financed)

4,842,168.75 3,202,361.0 7,916,935.50 3,742,450.50 19,096,128.75

+ 5,427,585.75

19,096,128.75

+ 5,427,585.75

+ 3,787,778.00

19,096,128.75 +

3,787,778.00 +

8,853,999.20 +

3,798,498.30

19,096,128.75 +

5,427,585.75 +

3,787,778.00 +

8,853,999.20 +

27


3,798,498.30

Proper

programs

& banks to

apply for

loans to

invest agri-

cultural

machinery

Applying for

Micro loans at

the Bank of

Agriculture

which can lend

up to NGN1.2-

1.5 mil.

(US$6,000-

7,500) with

interest rate of

only 5%/year

within up to 12

months

Applying for

Micro loans at

the Bank of

Agriculture

which can lend

up to NGN1.2-

1.5 mil.

(US$6,000-

7,500) with

interest rate of

only 5%/year

within up to 12

months

Applying for

Micro loans at

the Bank of

Agriculture

which can lend

up to NGN1.2-

1.5 mil.

(US$6,000-

7,500) with

interest rate of

only 5%/year

within up to 12

months

Applying for

Micro loans at

the Bank of

Agriculture

which can

lend up to

NGN1.2-1.5

mil.

(US$6,000-

7,500) with

interest rate of

only 5%/year

within up to 12

months

Applying for

Micro loans at

the Bank of

Agriculture

which can

lend up to

NGN1.2-1.5

mil.

(US$6,000-

7,500) with

interest rate of

only 5%/year

within up to 12

months

Applying for

Micro loans at

the Bank of

Agriculture

which can lend

up to NGN1.2-

1.5 mil.

(US$6,000-

7,500) with

interest rate of

only 5%/year

within up to 12

months

Applying for

Micro loans at

the Bank of

Agriculture

which can lend

up to NGN1.2-

1.5 mil.

(US$6,000-

7,500) with

interest rate of

only 5%/year

within up to 12

months

- Legally regis-

tered groups of

5-10 farmers can

use their houses

or used land for

deposit of at

least 10% of the

total loan to ap-

ply for Macro

loans at the

Bank of Agricul-

ture which can

lend more than

NGN1.5 mil.

(US$7,500) at

interest rate of

5%/year within

up to 3 years.

- Legally regis-

tered groups of

farmers have to

sign an agree-

ment with Bank

of Industry and

have a certain

deposit for en-

suring their re-

payment in order

to apply for long

term loans of

NGN1-5 mil

(US$5,000-

25,000) at inter-

est rate of

9%/year within

3-5 years. Re-

- Legally regis-

tered groups of

5-10 farmers can

use their houses

or used land for

deposit of at

least 10% of the

total loan to ap-

ply for Macro

loans at the

Bank of Agricul-

ture which can

lend more than

NGN1.5 mil.

(US$7,500) at

interest rate of

5%/year within

up to 3 years.

- Legally regis-

tered groups of

farmers have to

sign an agree-

ment with Bank

of Industry and

have a certain

deposit for en-

suring their re-

payment in order

to apply for long

term loans of

NGN1-5 mil

(US$5,000-

25,000) at inter-

est rate of

9%/year within

3-5 years. Re-

28


payment can

begin in the sec-

ond year.

payment can

begin in the sec-

ond year.

Scale of

service

Within a farm or

with neighbor

farms

Within a farm or

with neighbor

farms

Within a farm or

with neighbor

farms

Within a farm

or with neigh-

bor farms

Within a farm

or with neigh-

bor farms

Within a farm or

with neighbor

farms

Within a coop-

erative or Inter-

villages

Within a big

cooperative or

inter-regions or

inter-states of

Nigeria

Within a big

cooperative or

inter-regions or

inter-states of

Nigeria

Proper

owners

Big farmers or

individual ser-

vice provider

Big farmers or

individual ser-

vice provider

Big farmers or

individual ser-

vice provider

Big farmers or

individual ser-

vice provider

Big farmers or

individual ser-

vice provider

Big farmers or

individual ser-

vice provider

Cooperative or

a group of ser-

vice providers

Big group of

farmers, cooper-

atives or service

providers

Big group of

farmers, cooper-

atives or service

providers

Operational

scopes of

the ma-

chinery

- For soil prepa-

ration before

sowing or

transplanting;

- For soil prepa-

ration in both

dried and wet

fields for rice,

vegetables or

other crops.

- For soil prepa-

ration before

harrowing;

- For soil prepa-

ration in moist

land.

- For rural

transportation

of agricultural

inputs like ferti-

lizer, seeds,

etc. and agri-

cultural com-

modities like

rice, animal

feed, other crop

products or

farming ma-

chinery/

Equipment.

- For rice cut-

ting,

- For rice

threshing &

winnowing

- For land

preparation of

rice or other

crops in low

land or up-land

- For farming

and transporta-

tion within and

outside of

farms.

- For farming

and service on

agricultural

mechanisation

inter-villages or

inter-regions.

- For farming

and service on

agricultural

mechanisation

inter-villages or

inter-regions.

Note: Exchange rate between Nigeria Naira (NGN) and US Dollar is 200NGN/US$


29

In addition, if we compare total investment

of model VI with the total investment of

model I + model II, we can see that model

VI has the same functions of harrowing

and ploughing as model I + model II.

However, the former requires a lower in-

vestment than the latter; 750,000NGN

(US$3,750) + 150,000 NGN (US$750) =

900,000 NGN (US$4,500) compared with

750,000NGN (US$3,750) + 750,000NGN

(US$3,750) = 1,500,000 NGN (US$7,500)

(Table 2). However, total profit of model VI

(3,764,000 NGN/year (US$18,820/year) +

1,070,400 NGN/year (US$5,352/year) =

4,834,400 NGN/year (US$24,172/year)) is

higher than that of Model I with model II

(3,764,000 NGN/year (US$18,820/year) +

924,000NGN/year (US$4,620/year) =

4,688,000NGN/year (US$23,440/year).

Comparison of the other criteria such as

breakeven point, payback period and NPV

between the two models gives the same

results (Table 2). So, it is clear that model

VI is more beneficial and profitable than

model II or model I + model II.

Similarly, with the same functions and ca-

pacity; model VII has less investment cost

but higher profit than a set of model I +

model II + model III; model VIII has less

investment cost but higher profit than a set

of model I + model III + model IV + model

V; model IX has also less investment cost

but higher profit than a set of models I + II

+ III + IV+ V (Table 2).

Comparison of investment cost, total prof-

it, breakeven point, payback period and

NPV between the 9 models give the same

results.

3.2.7 Model VII: Investment in a complex model including a power tiller of 14.5 HP; a two-body plow and a self un-loading trailer

This model is a combination of models I, II

& III. It requires a bigger investment capi-

tal compared with single investments of

each model I, II & III. In comparison with

model III (a single investment in a two-

wheel tractor of 14.5 HP with a self un-

loading trailer of 1.5 tons), the additional

investment of the self un-loading trailer of

1.5 tons becomes more efficient. Result of

calculations from Table 2 reveal that profit

of model VII increased NGN292,800/year

(US$1,464/ year) compared with the total

profit from 3 models of I, II & III

(NGN5,282,800/year (US$26,414/year)) in

the same conditions of production.


30

Figure 3.7 Model of a power tiller of 14.5 HP with a two-body plow and a self un-loading trailer of 1.5 tons

3.2.8 Model VIII: Investment in a complex model including a power tiller; a self un-loading trailer a rice reaper and an axial rice thresher

This model has high investment cost. Due

to the 1.5 tons trailer, it can help expand

services of the land harrower, the rice

reaper and the rice thresher wider. The

three machineries could be put onto the

trailer for transporting to service sites easi-

ly. Therefore, annual service time of the

machinery increases. It leads to increases

in financial efficiency of investment and

profit for the investors compared with sin-

gle investments of the machinery.

Figure 3.8 Model of a power tiller of 14.5 HP + a self un-loading trailer of 1.5 tons + a rice reaper of 0.25 hectares/hour + a rice thresher of 1.5 tons/hour


31

3.2.9 Model IX: Investment in a complex model including a power tiller; a two-body plow; a self un-loading trailer; a rice reaper, and an axial rice thresher

This is a complex model. It needs the big-

gest investment, and therefore needs bet-

ter business management. It can provide

mechanisation services to not only rice

farmers in low land but also to farmers of

other crops in up-land such as cassava,

sorghum, beans, sugarcane, etc. in inter-

villages or inter-regions. In comparison

with model V (a single axial rice thresher

with capacity of 1.5 tons of paddy rice in-

cluding threshing and winnowing), the ad-

ditional investment in the axial rice thresh-

er of 1.5 tons per hour without including a

diesel engine of 7.5 HP becomes more

efficient and profitable. Table 2 showed

that in the same conditions of rice produc-

tion, model IX brought in the biggest profit

compared with the other models.

Figure 3.9 Model of a power tiller of 14.5 HP + a two-body plow + a self un-loading trailer of 1.5 tons + a rice reaper of 0.25 hectares/hour + a rice thresher of 1.5 tons/hour


32

3.3 Other applications with two-wheel tractor in rural are-as

Beside models mentioned above, the two-

wheel tractor and its diesel engine could

be also used for various purposes in rural

areas in Nigeria such as land leveling,

field cleaning, seeding, water pumping,

paddy rice drying, rice milling, electrical

generation, etc.

A simply wood board attached behind a

two-wheel tractor could be used for land

leveling in wet fields before rice seeding or

transplanting (Fig. 3.10).

Figure 3.10 Two wheel tractor used for land leveling in Vietnam

Purposes of land leveling are to make the

rice field even; leading to saving of water

supply and energy, better weed control

using water level, higher efficiency in use

of fertilizer, reduction in chemical uses,

even growth of the rice field, increases in

quality and yield of the rice. The equip-

ment is only about US$100 (NGN 20,000)

and used popularly in South-East Asia

countries such as Vietnam, Thailand, In-

donesia, the Philippines, etc. Because the

equipment is very simple, it could be also

made easily at locally mechanical facto-

ries in Nigeria.

An extirpator linked behind the two-wheel

tractor could be used for making the soil

finer, more even or for collecting rice

straw, grass or other foreign materials re-

mained in the fields in order to make it

cleaner before seeding or transplanting.

The equipment could work easily both in

wet or dried fields (Figure 3.11). It is about

only US$50 (NGN 10,000) and could be

fabricated easily in locally mechanical fac-

tories in Nigeria.

Figure 3.11 Extirpator with two-wheel tractor for working in dried (a) and wet (b) soil in Vi-etnam and Thailand


33

Depending on specific conditions of soil,

seed and crop requirements, various grain

seeders could be designed and fabricated

to connect behind two-wheel tractors for

seeding of cereal grain seeds such as

paddy, maize, peanut, soybean or other

grain seeds on dried soil (Fig. 3.12). De-

pending on size of the seeder, working

principle and structure of the seeding

component and number of seeding rows;

selling prices of seeding machines could

vary from US$ 500 (NGN 10,000) to

US$3,750 (NGN 750,000). Simple grain

seeders could be also designed and fabri-

cated in Nigeria for local use.

Figure 3.12 Two-wheel tractor used for seed-ing of cereal grains in South-East Asia

Figure 3.13 Diesel engine of 14.5 HP used with a flat-bed dryer of 6 tons of paddy/batch in Vietnam, Cambodia and the Philippines

Nigeria is very rich with oil. Diesel and

gasoline are very cheap. However, the

national electricity network does not cover

throughout the country and being not sta-

ble, especially rural areas. To solve the

problems, a diesel engine of 8-14.5 HP

from the two-wheel tractor could be used

very efficiently for powering an axial fan in

paddy rice drying (Fig. 3.13), rice milling

(Fig. 3.14), animal feed processing, agri-

cultural water pumping (Fig. 3.15) or elec-

tricity generation for various purposes in

rural areas (Fig. 3.16).

Figure 3.14 Diesel engine of a two-wheel trac-tor used for rice milling


34

Figure 3.15 Diesel engine of a two-wheel trac-tor used for agricultural water pumping in Vi-etnam, Thailand, Indonesia

Figure 3.16 Diesel engine of a two-wheel trac-tor used for electricity generation in rural areas of developing countries such as Cambodia and Laos

All the equipment for combinations with

two-wheel tractors above could be import-

ed from Japan, Vietnam, Thailand or Chi-

na.

3.4 Setting up of mechanisa-tion service groups

Lessons drawn from the development of

agricultural mechanisation in developing

countries point out that small farmers with

low income cannot afford to buy machin-

ery for all their own farming activities. It is

not efficient if machines are used only

several days a year within a farm. There-

fore, besides serving their own farm, the

machinery have to expand their services

to neighbour farms within the village or

outside the village in order to increase

number of service days per year, reduce

the service cost and repayment time. On

the other hand, individuals or private

groups perform better and more efficiently

in the provision of agricultural mechanisa-

tion services than public organisations.

To develop agricultural mechanisation,

first beneficiaries of the machinery service

have to be the farmers, then service pro-

viders themselves. Service provider could

be individual persons or groups of people.

Because they are professional units, the

scope of their service could be expanded

widely; and the mechanisation service

could be provided very efficiently and

timely to each of small rice farmers.

For setting up agricultural mechanisation

service groups in the early stage when the

groups have no capital for investment in

agricultural machinery; the government

could allocate some funds to credit institu-

tions which on behalf of service groups

will pay investment cost of the machinery

to farm machinery distributors or suppli-

ers. The government could also subsidize

some percentage of the investment or

bank interest rate to the service groups.

After taking the machinery from the dis-

tributors or suppliers, the service groups

will provide mechanisation services to the


35

rice farmers to get service fees in order to

repay gradually the investment cost and

bank interest to the credit institutions. The

service groups also have to pay after sale

services such as maintenance and repair

to the farm machinery distributors or sup-

pliers. During getting the machinery ser-

vices, the rice farmers will have require-

ments and feedbacks to the machinery

distributors or suppliers for improvement

of the machinery. The rice farmers can

also take part into the service groups via

an investment as shareholders in order to

share profit from the services. Farm ma-

chinery distributors can also suggest the

government to issue better policies to

speed up and scale out the agricultural

mechanisation of the country. Cooperation

mechanisms between the stake-holders

for the developments of agricultural ma-

chinery service groups and agricultural

mechanisation are shown in Fig. 3.17.

Depending on technical specifications of

machinery, size of the investment, number

of the machinery and management capac-

ity of service groups; corresponding oper-

ational scopes of the machinery, service

owners and scales of the service provision

are described in Table 2.

Figure 3.17 Co-operation mechanisms between stakeholders for developments of agricultural ma-chinery service groups and agricultural mechanisation in Nigeria


36

To support for setting up service groups,

local farmer association should provide

guarantee to banks so that the service

groups can get bigger loans with longer

terms and softer interest rates for their in-

vestment in machinery. Besides, the gov-

ernment should also subsidize some per-

centage of the investment for the groups.

In return, the group has to pay credit to

the local farmer associations for the guar-

antee. The groups have to prioritize their

mechanisation service to members of their

co-operatives other than outsiders of the

co-operatives. Members of the service

groups should be given training on tech-

nical and management knowledge.

For sustainable development, service

groups have to do the business efficiently,

provide good service to the rice farmers,

bring in and share profit properly to mem-

bers of the group. For Nigeria, agricultural

mechanisation service groups should be

formed from people who have good

knowledge in agricultural production and

machinery as well as skills in business

management. Members of the group

should be shareholders or workers of the

service business. Main contractor should

be one of the biggest shareholders or ap-

pointed by all members of the group. He is

known as a chief of the group, who has

highest responsibilities and the most pow-

erful right in issuing decisions during doing

the business.

3.5 Profit of farmers from application of mechanisation into rice farming

Application of machinery into rice farming

in Nigeria can bring in profit not only to the

service providers (Table 2) but also to the

rice farmers (Table3). Profit for the rice

farmers is calculated based on normal

conditions of rice production in Nigeria as-

suming the following:

Working capacity of the machinery remains the same in all situations;

operating time of the machinery is a medium figure, 100 days/year;

bank interest rate is 25%/year; in-flation rate is 11%/year;

selling price of diesel and gasoline are 140NGN/litre and 87NGN/litre, respectively;

depending on type of the machin-ery, period of ownership is 10 years or 5 years.

Profit of the rice farmer from application of

machinery in each stage of rice farming is

a subtraction between the manual farming

cost and mechanized farming cost of the

farming stages. Manual farming cost of

each farming stage is a multiplication of

number of man-day (MD) for the farming

stages and daily labour cost (See Column

no.9 of Table3). Mechanised farming

costs are a sum of fixed costs and running

cost of the machinery which are computed

based on the assumptions.

Table 3 revealed clearly that no need to

consider effects of other inputting costs

and yield of the rice; with the same


37

amount of work, machinery in all stages of

the rice farming can give the rice farmers

better quality of work and higher profit

compared with manual farming method.

The more the farming machinery were ap-

plied into rice production, the more the

profit is for the farmers. On the other

hand, compared with single investments in

machinery such as models I, II, III, IV & V;

complex investments in sets of the ma-

chinery like models VI, VII, VIII & IX bring

in more profit not only to the inves-

tors/service providers (See Table2) but

also to users of the services (farmers).

Besides, Table 3 also indicates that ma-

chinery needs less labour than the tradi-

tionally manual method in rice farming.

The more the machinery is applied into

rice farming, the more the labour is liber-

ated out of the farming. Because of much

higher working capacity compared with

human power, the machinery can help

farmers reclaim more land areas for culti-

vation to improve their income and living

standard. People liberated from the rice

fields, especially young people can partic-

ipate to develop rural agro-industries or

get in cities for jobs with higher income.

38

Table 3. Comparison of farmers' profit between the manual rice farming and mechanized farming

Mechanized models

Labour cost: 800 NGN/MD Farming structure and structure of labour requirement (%) Farming cost (NGN/ha) and cost structure (%)

Farmers' profit from mechanized ser-vices

Manual farming Mechanized farming

Labour cost

Manual farming Structure

Mechanized farming Structure

Reduction in labour requirement

Reduction in farming cost Labour Structure Capacity

Operation time Labour Structure

Rice farming stages MD/ha % ha/hr days/yr MD/ha % NGN/day NGN/ha % NGN/ha % MD/ha % NGN/ha %

Model I Land preparation (harrowing) 11.5 20.91 0.25 100 1 22.68 800 9200 20.91 3230 25.17 10.5 91.3 5970 64.89

Model II Land ploughing 18.5 33.64 0.15 100 1.66 37.64 800 14800 33.64 5383.33 41.95 16.84 91.03 9416.67 63.63

Model III Transportation 5 9.09 0.5 100 0.25 5.67 800 4000 9.09 1025.5 7.99 4.75 95 2974.5 74.36

Model IV Rice cutting 10 18.18 0.25 100 1 22.68 800 8000 18.18 1966 15.32 9 90 6034 75.43

Model V Rice threshing and winnowing 10 18.18 0.5 100 0.5 11.34 800 8000 18.18 1227.25 9.56 9.5 95 6772.75 84.66

Total 55 100 4.41 100 44000 100 12832.08 100 50.59 91.98 31167.92 70.84

Model VI Land preparation 11.5 20.91 0.25 100 1 22.68 800 9200 20.91 3230 25.17 10.5 91.3 5970 64.89

Land ploughing 18.5 33.64 0.15 100 1.66 37.64 800 14800 33.64 4163.33 41.95 16.84 91.03 10636.67 71.87

Transportation 5 9.09 0.5 100 0.25 5.67 800 4000 9.09 1025.5 7.99 4.75 95 2974.5 74.36

Rice cutting 10 18.18 0.25 100 1 22.68 800 8000 18.18 1966 15.32 9 90 6034 75.43

Rice threshing and winnowing 10 18.18 0.5 100 0.5 11.34 800 8000 18.18 1227.25 9.56 9.5 95 6772.75 84.66

Total 55 100 4.41 100.01 44000 100 11612.08 100 50.59 91.98 32387.92 73.61

Model VII Land preparation 11.5 20.91 0.25 100 1 22.68 800 9200 20.91 3230 25.17 10.5 91.3 5970 64.89

Land ploughing 18.5 33.64 0.15 100 1.66 37.64 800 14800 33.64 4163.33 41.95 16.84 91.03 10636.67 71.87

Transportation 5 9.09 0.5 100 0.25 5.67 800 4000 9.09 194.07 7.99 4.75 95 3805 95.15

Rice cutting 10 18.18 0.25 100 1 22.68 800 8000 18.18 1966 15.32 9 90 6034 75.43


Total 55 100 4.41 100.01 44000 100 10780.65 100 50.59 91.98 33218.42 75.5

Model VIII Land preparation 11.5 20.91 0.25 100 1 22.68 800 9200 20.91 3230 25.17 10.5 91.3 5970 64.89

Land ploughing 18.5 33.64 0.15 100 1.66 37.64 800 14800 33.64 5383.33 41.95 16.84 91.03 9416.67 63.63

Transportation 5 9.09 0.5 100 0.25 5.67 800 4000 9.09 194.07 7.99 4.75 95 3805.94 95.15

Rice cutting 10 18.18 0.25 100 1 22.68 800 8000 18.18 1966 15.32 9 90 6034 75.43


Total 55 100 4.41 100.01 44000 100 11959.55 100 50.59 91.98 32040.46 72.82

Model IX Land preparation 11.5 20.91 0.25 100 1 22.68 800 9200 20.91 3230 25.17 10.5 91.3 5970 64.89

Transportation 5 9.09 0.5 100 0.25 5.67 800 4000 9.09 194.07 7.99 4.75 95 3805 95.15

Rice cutting 10 18.18 0.25 100 1 22.68 800 8000 18.18 1966 15.32 9 90 6034 75.43


Total 55 100 4.41 100.01 44000 100 11959.55 100 50.59 91.98 33259.52 75.59


39

3.6 Strengthening after-sale services

Existing maintenance culture of ma-

chinery users in Nigeria is not good

enough. This causes higher operating

cost, lower efficiency and service time

of the machinery. Therefore, to mini-

mize the costs, Figure 3.17 showed

that suppliers or distributors of agri-

cultural machinery should provide

good after-sale service to buyers

such as periodic maintenance and

repair or supplying spare parts of the

machinery immediately right after a

telephone calling. For a sustainable

development in agricultural mechani-

sation, it is necessary to build up a

system of locally mechanical factories

in each production region to provide

services of maintenance and repair of

the agricultural machinery to the us-

ers.

3.7 Organising training courses

Knowledge of agricultural production

and machinery is very important to

increase operational efficiency of ma-

chinery, yield and quality of agricul-

tural crops. Therefore, farmers should

participate in training courses on rice

quality, rice crop establishment and

management; and agricultural mech-

anisation. Machinery operators and

mechanisation service providers

should also join training courses on

mechanical techniques, operation

skills; maintenance and repair of agri-

cultural machinery; and business

management.

3.8 Strengthening the ag-ricultural extension system

For agricultural extension agencies,

the government should strengthen

their organization and activities.

Mechanisation section of the NAMDA

should disseminate widely inform-

ation of agricultural machinery and

mechanisation to farmers and other

stakeholders in the rice value chain. It

should also conduct training courses

for farmers, machinery operators and

service providers and organize

demonstrations on agricultural ma-

chinery more frequently.

3.9 Financial resources for investment in agricul-tural machinery

Although Bejin-Doko Microfinance

Bank (Nig) Limited has been known

as bank of farmers, it has very tough

conditions and very high interest rate

(25%/year) for lending. It often pro-

vides farmers with very small loans

within only 6 months. Its maximum

loans are smaller than 1% of the total

investment cost for individual farmers;

or smaller than 5% of the total in-

vestment cost for groups of farmers.


40

Because of very small amount of

loans at very high interest rate within

very short time of repayment, the

loans are not suitable for investments

in agricultural machinery.

Although Bank of Industry is special-

ized in lending money to the agricul-

tural processing sector, it can also

provide loans for investments in agri-

cultural machinery. If legally regis-

tered groups of farmers sign an

agreement with the bank and have a

certain deposit at the bank to ensure

their repayment of the loans together

with the bank interest, they can apply

for loans up to NGN1-5 mil.

(US$5,000-25,000) with interest rate

of 9%/year. Repayment can last up to

3-5 years and can begin from the

second year. In comparison with

lending conditions of Bejin-Doko Mi-

crofinance Bank (Nig) Limited in

terms of loan amount, interest rate

and repayment time period; those of

the Bank of Industry are softer and

more convenient to borrowers for in-

vestments in agricultural machinery.

Based on initial investment costs of

the machinery, groups of farmers

running models of VIII & IX can apply

for larger amount of loans to invest

their agricultural machinery (Table 2).

Compared with Bejin – Doko Micro-

finance Bank (Nig) Limited and the

Bank of Industry, Bank of Agriculture

requires lowest interest rate for loans.

It is only 5%/year. Based on initial

investment costs, models I, II, III, IV,

V, VI & VII owned by legally regis-

tered groups of 5-10 farmers can ap-

ply for Micro loans ranging from NGN

1.2-1.5 mil (US$6,000-7,500) to in-

vest the machinery. The groups of

farmers can ask their farmers associ-

ation to deposit at least 25% of the

total loan at the bank for guarantee of

their gradual repayment within 6 to 12

months. For complex models such as

models VIII & IX, these need bigger

amount of loans for initial investment

costs. The groups of farmers can use

their houses or used land for deposit

at least 10% of the total loan to apply

for Macro loans in order to invest the

agricultural machinery of the models.

Interest rate is also 5%/year, the

same as the Micro loans. However,

time of repayment can last longer, up

to 3 years. The Bank of Agriculture

could be the most suitable bank for

the rice farmers because it has pro-

vided loans to 5 groups of service

providers to buy 50 tractors previous-

ly.

3.10 Government policies toward agricultural mecha-nisation

Although there are also some certain

promotions, the government has no

separately national policies on devel-


41

opment in agricultural mechanisation.

A system of locally mechanical facto-

ries is weak. It could not meet re-

quirements of maintenance and re-

pair of agricultural machinery in the

future. Systems of agricultural exten-

sion, research and application of ma-

chinery are also weak. It is quite diffi-

cult for farmers and other rice stake-

holders to access information of agri-

cultural machinery. Lessons from

Asia countries like Japan, South Ko-

rea and India showed that to have a

modern agriculture, in initial stages,

the governments need to have na-

tional strategies for development in

agricultural mechanisation. It plays

very important role to reduce produc-

tion cost, increase yield and produc-

tivity of the crops and minimize post-

harvest losses. Agricultural mechani-

sation also helps liberate a large

amount of agricultural labours for de-

velopment of agro-industries in rural

areas, improve income and living

standard of the rural people.


42

4. Conclusions

There are many challenges and con-

straints for development in agricultur-

al mechanisation in Nigeria such as a

low level of mechanisation, lack of

skilled mechanics and machinery op-

erators, a weak service system for

maintenance and repair of the ma-

chinery after sale, in-efficient infor-

mation and agricultural extension sys-

tems of agricultural machinery, low

capacity of investment in machinery

of small rice farmers, lacks of national

strategies and appropriate policies for

agricultural mechanisation, etc. How-

ever, there is also a high potential for

development in agricultural produc-

tion in Nigeria. Conditions of climate,

weather, land and soil are quite fa-

vorable for application of agricultural

machinery into small-scale rice pro-

duction in the country.

9 groups of farm machinery together

with 9 business models of agricultural

mechanisation service have been

identified as suitable to the existing

conditions of small-scale rice produc-

tion in Nigeria. Some groups of farm

machinery and business models like

Model I, II, III, VI, VII and IX can pro-

vide mechanisation services not only

for rice production but also for other

crop productions in upland like cas-

sava, beans, sorghum, sugarcane,

etc. The business models are suitable

to the currently technical and man-

agement capacities of the people. All

the business models can create profit

not only for the service providers but

also for the rice farmers who use the

services. Regardless of different in-

puts and crop yields, with the same

amount of farming works, all machin-

ery and the models gave higher quali-

ty of work, lower production cost and

higher profit to the rice farmers com-

pared with the currently manual farm-

ing methods. For sustainable devel-

opments in agricultural mechanisation

and rice production in Nigeria; mech-

anisms for co-operations between

government organisations, credit in-

stitutions, farm machinery service

providers, farmer groups and farm

machinery distributors; national poli-

cies and management measures

were also proposed for implementa-

tion. These can help speed up appli-

cation of farm machinery into the ag-

ricultural production, exploit more un-

reclaimed land for the agricultural

production, bring in more profit to the

investors and the service providers;

and improve income of the farmers,

especially small rice farmers.


43

5. Recommendations

5.1 Recommendations for the Competitive African Rice Initiative and the Green Innovation Centers

Depending on needs and require-

ments of the practical production, ca-

pacities of investment and business

management of service providers, the

projects can advise service providers

to select one of the nine business

models for investment and service

provision.

Application of agricultural machinery

is successfully only when the farmers

recognise clearly their actual benefit

such as increase in the rice yield and

improvement in their income and liv-

ing standard; and only when machin-

ery investors or service providers can

get profit from their mechanisation

services. Therefore, the CARI project

should advise farmer groups to get

loans from Banks of Agriculture or

Banks of Industry which have softer

conditions for lending. Based on spe-

cific conditions of rice farming in the

project areas, technical specifications

and selling prices of the proposed

machinery, the CARI project should

provide appropriate assistance to

farmers to select right machinery for

their uses. After buying the machin-

ery, the CARI project should organise

demonstrations of the machinery to

rice farmers in the project areas.

Manually practical production models

and the new mechanized production

models should be set up for compari-

sons. Technical and economic criteria

should be analysed and compared

between manual farming methods

and the mechanized farming method.

For efficient management of mecha-

nisation service groups, the groups

should be organized as a share-

holding company in which all mem-

bers of the group must be responsible

for their own capital investment and

activities. Chief of the group should

be a member having highest capital

investment in the machinery or one of

the biggest investors appointed by all

members of the group. Profit from the

service must be shared properly

among members of the group.

The CARI project should send some

of the CARI project staff and other

agricultural machinery fabricators to

Vietnam or Thailand for sharing expe-

rience on manufacture, maintenance

and repair of farm machinery at local-

ly mechanical factories, and sharing

lessons on development of agricul-

tural mechanisation for small-scale

rice production.


44

5.2 Recommendations for the Nigerian Government

The Nigerian government should

have national strategies and action

plans to develop agricultural mecha-

nisation not only for rice but also for

other crop productions. The govern-

ment should play a role as a chief of

an orchestra to establish mechanisms

for co-operations between govern-

ment organisations, credit institutions,

farm machinery service providers,

farmer groups and farm machinery

distributors (See Fig. 3.17) to speed

up application of machinery into agri-

cultural production.

The government should have appro-

priate policies to provide financial

supports to the farmers or mechani-

sation service providers for invest-

ments in agricultural machinery; for

examples subsidizing 30% of the total

investment cost of machinery or

100% of bank interest rates for the

first two years of the investment and

50% of the bank interest rates from

the third year onward of the invest-

ment. The government should en-

courage establishment and strength-

en locally mechanical factories for

services on maintenance and repair

of the agricultural machinery. The

government should also provide more

financial supports for R&D projects to

research and apply machinery into

agricultural production. It is also nec-

essary to provide training courses on

design, modification and manufacture

of agricultural machinery to the tech-

nical workers of locally mechanical

factories.

The NAMDA should be enforced. The

NAMDA should have more efficient

co-operation with the other agricultur-

al research institutes or national cen-

tres in research and transfer new ma-

chinery into agricultural production.

Testing, demonstrations and training

on agricultural machinery should be

organized more frequently for the

farmers and local fabricators. Infor-

mation of agricultural machinery and

mechanisation services should be

accessed easier for farmers. In order

to increase the rice yield and number

of rice crops per year, the govern-

ment should provide budget to main-

tain better the existing irrigation sys-

tems or investments in new irrigation

systems for the rice production.


45

References

FAO, 2013. Analysis of incentives and disincentives for rice in Nigeria. Monitor-

ing African Food & Agricultural Policies – SPAAA. 42 pages.

Odoemenem, I.u. & Inakwu, J.A. 2011. Economic analysis of rice production in

cross river state, Nigeria. Journal of Development & Agricultural Econom-

ics. 3 (9), 469-474.

Nigerian Gross Domestic Product Report. 2014. National Bureau of Statistics,

the Federal Republic of Nigeria. Quarter One, issue 01, 2014.

Singh, M.O. & Mowa, Y.A. 1997. Rice growing environments and biophysical

constraints in different agro-ecological zones of Nigeria. Met, I. 2(1): 35-44.


46

Annex2: Business Model 1

SINGLE TWO-WHEEL POWER TILLER of 14.5 HP

General information Unit Quantity

Capacity hectare/hour 0.25 No. hour/day 8 Quantity of units 1 Operating time days/year 40 Annual working capacity hectare/year 80 Estimated life time (service time) years 10

1. Calculation of Service Cost

Financing with own capital

Financing with loan

1.1. Fixed costs (ownership costs) Unit Quantity Quantity

Purchase price NGN/unit 750,000 750,000

Resale value machine NGN/unit 150,000 150,000

Period of ownership Years 10 10

1.1.1 Average annual depreciation 0

Average annual depreciation of machine NGN/year 60,000 60,000

Depreciation cost (fix cost per hectare) NGN/hectare 750 750

1.1.2 Cost of financing

Bank interest rate (nominal) p.a. 0.25 0.25

Inflation rate p.a. 0.10 0.10

Bank interest rate (real) p.a. 0.15 0.15

Cost of bank interest NGN/year 112,500

NGN/hectare 1,406

1.1.3 Purchasing tax % of the price 10 10

NGN/year 75,000 75,000

NGN/hectare 938 938

2 More business models to be provided online under http://cari-project.org


47

Cost of purchasing tax NGN/year 11,250

NGN/hectare 141

1.1.4 Insurance % of the price 0.01 0.01

Insurance cost NGN/year 3,750 3,750

NGN/hectare 47 47

1.1.5 Shelter (hangar for equipment) NGN 100,000 100,000

Resale value NGN 10,000 10,000

Servicing period years 10 10

Average annual depreciation NGN/year 9,000 9,000

NGN/hectare 113 113

Cost of bank inter rate NGN/year 15,000

NGN/hectare 188

Total fixed annual cost (ownership cost )

pre-financing post-financing

NGN/year 84,000 211,500

NGN/hectare 1,050 2,644

1.2. Running costs (operating costs) Unit 1.2.1 Diesel consumption litres/hour 2.50

litres/hectare 10

Current price of diesel fuel NGN/litres 130

Diesel fuel cost NGN/hectare 1,300

1.2.2 Total electricity consumption kWh 0

kWh/hectare 0

Current price of electricity NGN/kWh 30

Cost of electricity NGN/hectare 0

1.2.3 Maintenance cost % of the price 2.5

Total maintenance cost over total service time NGN 18,750

Maintenance cost per year NGN/year 1,875

Maintenance cost per hectare NGN/hectare 23

1.2.4 Repair cost % of the price 2.5

Total repair cost NGN 18,750

Repair cost per year NGN/year 1,875

Repair cost per hectare

NGN/hectare

23

1.2.5 Labor required person/machine 2

Working capacity hectare/day 2


48

Labor cost per hectare 750

Total operating cost

per year 167,750 167,750

per hectare 2,097 2,097

Cost of service pre-financing post-financing

Effective cost (ownership + operating costs) NGN/hectare 3,147 4,741

Profit margin % of the cost 84% 76%

Cost of service to clients NGN/hectare 20,000 20,000

Profit NGN/hectare 16,853 15,259

NGN/year 1,348,250 1,220,750

2. Sensitivity Analysis

Switching values Initial value Value for NPV =0 Change

Purchase price (NGN/unit) 750,000 5,233,980 5.98

Cost of service to clients (NGN/ha) 20,000 4,900 -0.76

Effective use of service (ha/year) 80 12 -0.85

3. Break Even Point

Breakeven point = ownership cost (NGN/year) / (service charge (NGN/ha) - operating costs (NGN/ha))

Ownership cost NGN/year 84,000 211,500

Service price of land preparation NGN/hectare 20,000 20,000

Operating cost NGN/hectare 2,097 2,097

Breakeven hectare 4.7 11.8


49

4.a Cash Flow with own Capital

Outflow

Fix cost Unit NGN/unit Quantity Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Purchase price NGN/unit 750,000 1 750,000

Cost of bank interest NGN/year 0 1

Shelter (hangar for equipment.) NGN 100,000 1 100,000

Cost of bank inter. rate (shelter) NGN/year 0 1

Total operating cost NGN/hectare 2,097 80 167,750 167,750 167,750 167,750 167,750 167,750 167,750 167,750 167,750 167,750

Total outflow NGN/year 1,017,750 167,750 167,750 167,750 167,750 167,750 167,750 167,750 167,750 167,750

Inflow Unit NGN/unit Quantity Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Cost of service to clients NGN/hectare 20,000 80 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000

Resale value machine NGN/unit 150,000 1 0 0 0 0 0

Resale value shelter NGN 10,000 1 0 0 0 0 0

Total inflow NGN/year 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000

Analysis Unit NGN/unit

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Annual cashflow balance NGN/year 582,250 1,432,250 1,432,250 1,432,250 1,432,250 1,432,250 1,432,250 1,432,250 1,432,250 1,432,250

Cumulative cash-flow balance NGN/year 582,250 2,014,500 3,446,750 4,879,000 6,311,250 7,743,500 9,175,750 10,608,000 12,040,250 13,472,500

Net present value over 10 years at 15%

NGN over 10 years 4,061,994

Internal rate of re-turn (10 years) % over 10 years n.a.


50

4.b Cash Flow with Loan Outflow

Fix cost Unit NGN/unit Quantity Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Repayment of prin-cipal NGN/unit 750,000 1

375,000 375,000

Cost of bank inter-est NGN/year 112,500 1 112,500 112,500 56,250 0 0 0 0 0 0 0

Repayment princi-pal shelter NGN 100,000 1 50,000 50,000

Cost of bank inter. rate (shelter) NGN/year 15,000 1 15,000 15,000 7,500 0 0 0 0 0 0 0

Total operating cost NGN/hectare 2,097 80 167,750 167,750 167,750 167,750 167,750 167,750 167,750 167,750 167,750 167,750

Total outflow NGN/year 295,250 720,250 656,500 167,750 167,750 167,750 167,750 167,750 167,750 167,750

Inflow Unit NGN/unit Quantity Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Cost of service to clients NGN/hectare 20,000 80 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000

Resale value ma-chine NGN/unit 150,000 1

75,000

Resale value shel-ter NGN 10,000 1 10,000

Total inflow NGN/year 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,685,000

Analysis Unit NGN/unit

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Annual cashflow balance NGN/year 1,304,750 879,750 943,500 1,432,250 1,432,250 1,432,250 1,432,250 1,432,250 1,432,250 1,517,250

Cumulative cash-flow balance NGN/year 1,304,750 2,184,500 3,128,000 4,560,250 5,992,500 7,424,750 8,857,000

10,289,250

11,721,500

13,238,750

Net present value over 5 years at 15%

NGN over 10 years 3,145,881

Internal rate of return (10 years)

% over 10 years n.a.


51

Author

Dr Tan Van Pham

Design and Layout

Dr. Annemarie Matthess, Dr. Kristina Spantig

Photo credits

© Cover page: GIZ | Map of Nigeria: Agnes Weegen | Report pictures: GIZ / Dr Tan Van Pham

As at

April, 2016

Green Innovation Centres for the Agriculture

and Food Sector – Nigeria

2, Dr. Clement Isong Street, Asokoro,

Abuja, Nigeria

PN 14.0967.1

Competitive African Rice Initiative (CARI)

11b, Mousa Traore Street, Asokoro

Abuja, Nigeria

www.cari-project.org

PN 13.2450.8

On behalf of

Federal Ministry for Economic Cooperation and Development (BMZ)

Addresses of the BMZ offices

BMZ Bonn

Dahlmannstraße 4

53113 Bonn

Germany

Tel. +49 (0) 228 99 0535 –0

Fax +49 (0) 228 99 535 – 3500

BMZ Berlin

Stresemannstraße

10963 Berlin

Germany

Tel. +49 (0) 30 18 535 –0

Fax +49 (0) 30 18 535 – 25

[email protected]

www.bmz.de

mailto:[email protected]

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