the rapid - but from a low base - uptake of agricultural mechanization in ethiopia: patterns,...

ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE

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

Preliminary resultsGuush Berhane (IFPRI)Mekdim Dereje (EDRI)

Bart Minten (IFPRI) Seneshaw Tamru (Licos)

EDRI February 14, 2017 1

2

1. Introduction

• Ethiopia’s economy quickly transforming; double-digit average growth rates in last decade

• Agricultural sector also shows large changes:- Modernization and increasing yields- But also increasing wages and increasing costs of animal traction• As relative factor costs change, typical pattern

towards higher use of machinery• Little recent empirical evidence on mechanization and

its uptake in Ethiopia

3

1. Introduction

• At policy side, two reasons for interest:1. Climate change2. Further modernization of the sector (mechanization

important; raise farm power 10-fold by 2025)• In this analysis:1. Mechanization patterns2. Changing trends in demand conditions3. Mechanization provision and policies4. Mechanization and productivity5. Implications and challenges

4

2. Data and methodology • Qualitative data: Interviews with key informants from

middle to end of 2016• Quantitative data: a. Import datab. Household data (2015) of the FtF program (7,000 hhs,

representative of 9 million hhs)c. Ethiopia Socio-economic Survey (ESS) 2013/14 (5,262

hhs representative of 6 regional strata/nation)• HIMI (High and Intermediate Mechanization

Implements): tractors, combine-harvesters, threshers• LMI (Low Mechanization Implements): plows, sickles,

etc.

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3. Agricultural growth and structural transformation

• Large growth in agricultural sector: 7.6% per year

• Increasing modernization, but from low base (fertilizer, improved seeds, agro-chemicals)

• Some changes are important for mechanization and machine use

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A. Wages 10

2030

4050

Birr

/labo

r/day

2002m1 2004m1 2006m1 2008m1 2010m1 2012m1 2014m1 2016m1

real wage per day 95% CIlpoly smooth: real wage per day

Trends in real daily wges for unskilled labor: 2003-2016

7


A. Wages

Nepal (2010)

Sri Lanka (2012)

Myanmar (2004)

Malaysia (2012)

Bangladesh (2010)

Kenya (2015)

Tanzania (2015)

Ethiopia (2012)

0 2 4 6 8 10 12

USD/day

8


B. Livestock prices 20

0040

0060

0080

00

Birr

per

Ox

2004m1 2006m1 2008m1 2010m1 2012m1 2014m1 2016m1

real oxen price 95% CIlpoly smooth: real oxen price

Trends in real Ox price: 2004-2016

9


C. Connectivity and market improvement

D. Farm size (areas large farms increasing, from 0.5 million has in 2007 to 1 million has in 2014)

2004 2011 20150

0.2

0.4

0.6

0.8

1

1.2

mean median

ha/f

arm

10

4. Demand side analysis4.1. Current machinery use and ownership

Unit All Farm size (by quintile)Ownership Q1 Q2 Q3 Q4 Q5FTF areasAverage size of farm Mean hectares 1.6 0.3 0.7 1.2 1.8 4.2High and Intermediate Mechanization Implements (HIMI)Motorized water pump (diesel) % of households 0.1 0.0 0.0 0.0 0.0 0.3Small tractor % of households 0.3 0.0 0.3 0.1 0.7 0.5Hand-held motorized tiller % of households 0.1 0.0 0.0 0.0 0.1 0.2Total value HIMI Mean Birr 144 0 10 6 19 685

Median Birr 0 0 0 0 0 0Low Mechanization Implements (LMI)Plow yoke % of households 64.3 30.6 56.4 69.6 79.3 86.0Maresha (metal) % of households 65.1 31.4 57.4 71.0 79.8 86.0Total value LMI Mean Birr 521 229 416 516 619 829 Median Birr 425 130 347 465 535 660

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Use Unit All Farm size (by quintile) Q1 Q2 Q3 Q4 Q5FTF areasLand preparationHoe only % of plots 20.5 33.2 19.5 15.6 16.5 16.7Animals % of plots 78.8 66.4 79.8 83.9 82.9 81.9Machine % of plots 0.7 0.4 0.6 0.6 0.6 1.5HarvestingMachine % of plots 1.20 1.10 1.00 0.80 1.10 2.00ThreshingManual % of plots 49.8 59.6 47 41.4 47.1 54.3Sheller % of plots 1.5 1.6 1.2 0.7 1 3Animals % of plots 47.9 38.2 51.1 57.4 51.4 41.2Mechanical % of plots 0.8 0.7 0.7 0.5 0.5 1.5National level (ES survey)PlowingTractor % of plots 0.9 0.4 0.6 0.5 0.8 2.8

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Unit All Cereals

cereals Teff Barley Wheat Maize Sorghum Other FTF areasLand preparationMachine % of plots 1.1 0.2 0.4 1.1 1.4 3.7 0.4HarvestingMachine % of plots 1.6 0.8 1.1 6.5 0.4 0.5 1.6ThreshingSheller % of plots 1 0.6 0.3 0.7 1.9 0.5 0.5Mechanical % of plots 1.2 0.6 0.3 5.9 0.2 0.2 0.2National level (ES survey)PlowingTractor % of plots 0.9 0.8 0.5 0.7 1.7 5.5 0.3

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How does Ethiopia compare to the rest of Africa?

Burkina FasoGhanaKenya

MozambiqueNigeria

RwandaSouth-Africa

TanzaniaTunisiaZambia

ZimbabweEthiopia

-10 10 30 50 70 90 110 130 150

Tractors per 100 sq km of arable land (World Bank, 2014)

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4. Demand side analysis4.2. Changes over time

20012002

20032004

20052006

20072008

20092010

20112012

20132014

0102030405060708090

Imports of agricultural machines (3-year MA)

TractorsCombine-harvestersPedestrian tractorsThreshers

Mill

ion

USD

15

4.2. Changes over time

2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

500

1000

1500

2000

2500

3000

Imports of four-wheel tractors (3-year MA)

16


Tractor sales by AAMI (METEC)

2012/13 2013/14 2014/15 2015/160

500

1000

1500

2000

2500

3000

Walking (HP 8 -15) Small (HP 18-30)

Medium (HP 40-80) High (HP 90-375)

17


20012002

20032004

20052006

20072008

20092010

20112012

20132014

0123456789

10

Import value of combine-harvesters (3-year MA)

Mill

ion

USD

18

Strong spatial patterns in mechanization. High intensity in:- Western Tigray- Parts of Somali region- Arsi/Bale- Tractors also in West Gojjam/South Gondar/East

Shewa

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Tractors/combine-harvesters especially taking off in South-east of the country. Some reasons:- Commercial farms; Relatively bigger smallholder

farms- History of interventions (ARDU/CADU)- Rural wages on the high side- Two harvests (belg/meher): time pressure- Terrain is contiguous, flat, and stone-free

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Average Plot size (in ha) Slope of the plot (%)Zone Mean Median Plain Hilly ValleyMechanization-intensive zonesArsi 0.39 0.25 76% 23% 1%Bale 0.51 0.41 79% 21% 0%West Arsi 0.38 0.25 79% 19% 1%Jijiga 0.57 0.33 97% 3% 0%W/Tigray 0.75 0.38 90% 9% 1%Other zonesAll other FTF zones 0.25 0.15 71% 28% 2%

Total 0.28 0.19 72% 27% 2%

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5. Supply side analysis • No manufacturers of combine-harvesters or tractors

in the country• Taxation similar to other investment goods• Access to foreign exchange has been important hurdle• Might be alleviated a bit recently: 1/ priority sector;

2/ AAMI• Most important private dealers: GEDEP, ADEP, AMNIO,

Caleb, and Ries Engineering• Local assembly of tractors (only done by AAMI)• Tractors of private dealers more expensive but

perceived to be of higher quality as well (John Deere 120 HP: 1.8 million Birr; AAMI: 1.2 million Birr)

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5. Supply side analysis

• Ownership tractors: 60% commercial farmers/state farms; 40% service providers

• Ownership combine-harvesters: 10% commercial farmers/state farms; 90% service providers (about 200 of them; typically 3 per owner)

• Service providers:- Mostly live in towns where mechanization used- Other businesses (cereal trade; consumer shops; flour

factories); however, no integration of these activities

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Unit All Farm size (by quintile) Q1 Q2 Q3 Q4 Q5FTF areasLand preparationOf those that used machine (=100%)Rented % of hhs 71.9 88.1 50.2 68.8 73.6 79.1HarvestingOf those that used machine (=100%)Rented % of hhs 58.7 52.5 54.8 66.5 47.9 63.1ThreshingOf those that used machine (=100%)Rented % of hhs 95.9 100 96.2 100 90.6 94.8National level (ES survey)PlowingOf those that used machine (=100%)Rented % plots 68.6 31.0 45.9 55.2 60.0 83.9

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• Typical costs of tractor (Arsi/Bale) in 2016:1. 1,200 Birr/ha first plowing (2 to 2.5 hours)2. 650 Birr/ha harrowing (30 minutes)3. 500 Birr/ha covering up soil (30 minutes)• Sometimes second plowing (in vertisols): 900 Birr/ha• Some areas more expensive if soil harder (Ginir)• Plowing costs higher if after fallow• Also distance to town might matter

• Less seasonal movement of tractors than for combine-harvesters – more activities in one place

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Burkina Fa

soGhana

Kenya

Mozambique

Nigeria

Rwanda

Tanzania

Zambia

Ethiopia0

20406080

100120140160180

Cost of plowing (USD/ha)

26


• Typical costs of combine-harvester:

Jul. 1st

half

Jul. 2nd half

Aug.1st half

Aug. 1st

half

Sep. 1

st half

Sep. 1

st half

Oct. 1st

half

Oct. 2nd half

Nov. 1st

half

Nov. 2nd half

Dec. 1st

half

Dec. 2nd half

Jan. 1st

half

Jan. 2nd half

Feb. 1

st half

0102030405060708090

100

Birr

/qui

ntal

27


• Typical costs of combine-harvester depend on:1. Type of soil (sandy soils higher)2. Yields3. Religion4. Temperature5. Location of farm6. Slope of land

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• Cost comparisons (quarter ha; close to Assela):1. Combine-harvesters: 50 Birr/q.*15=750 Birr2. Traditional:- Harvesting: a. labor: 5 person-days*80Birr=400 Birr; b.

Costs and foods = 220 Birr- Threshing: a. oxen: 300 Birr; b. labor: 4 person-

days*50 Birr=200 Birr; c. Food and drinks: 150 Birr- Total: 1270 Birr

Profitability can quickly change depending on costs combine-harvester and wage levels

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• Seasonal use of combine-harvesters:

Jul. 1st

half

Jul. 2nd half

Aug.1st half

Aug. 1st

half

Sep. 1

st half

Sep. 1

st half

Oct. 1st

half

Oct. 2nd half

Nov. 1st

half

Nov. 2nd half

Dec. 1st

half

Dec. 2nd half

Jan. 1st

half

Jan. 2nd half

Feb. 1

st half

0

100

200

300

400

500

600

700

Num

ber o

f com

bine

-har

vest

ers

30


• Seasonal movement combine-harvesters

31


• Seasonal movement combine-harvesters

32


• Coordination travel plans done by brokers (2 Birr/quintal)

• Maintenance/servicing crucial:- AAMI and private dealers provide warranty for up to

1,000 hours- They have mobile workshops- Commonly switch to independent private mechanics

after 1,000 hours

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6. Mechanization and agricultural transformation

0.1

.2.3

-2 0 2 4 6 8Log of total labor use per Hectare

Users Non-users

Difference in labor use by use of Combine Harvestors

0.1

.2.3

.4

0 2 4 6 8log (total labor per Hectare)

Users Non-users

34


UnitAdoption

tractor T-test yes no t-value sign.Land productivity By cropBarley Quintals/hectare 11.7 15.4 1.86 *Wheat Quintals/hectare 14.0 19.3 3.29 ***Maize Quintals/hectare 6.1 16.2 8.38 ***Sorghum Quintals/hectare 8.4 7.3 -1.44Sesame Quintals/hectare 2.2 2.7 1.37Modern input use no positive influence of tractor useLand rentalShare rented-in % 1.2 2.8 1.85 *Sharecropped-in % 1.0 2.1 1.43

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UnitAdoption combine-

harvester T-test yes no t-value sign.Land productivity (wheat)Mean Quintals/hectare 20.1 18.5 -1.61Median Quintals/hectare 20.0 16.0Modern input useDap kgs/ha 99.1 97.3 -0.22UREA kgs/ha 20.6 29.4 1.60Herbicide l/ha 1.5 1.1 -1.61Improved seeds % of plots 41% 47% 1.32Land rentalShare rented-in % 3.9 2.9 -0.64Sharecropped-in % 1.5 4.7 2.20 **

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• Yield effects of combine-harvesters seemingly due to reduction in post-harvest losses:

- Losses because of untimely rain- Theft- Transport from field to threshing floor- Losses during threshing- Consumption animals during threshing- Losses during winnowing

7. Conclusions

• Major findings:- Use mechanization is low but important recent

dynamics- Rapid uptake in the wheat sector; quarter of the wheat

area harvested by combine-harvesters- Commercial service providers for plowing, harrowing,

and harvesting rapidly emerging- Large effect on labor productivity- No effect of tractors on yields- Some (weak) evidence of combine-harvesters on yields

7. Conclusions

• Rapid uptake in south-east/wheat:1. Commercial farmers very active2. Large clusters of wheat growers3. Flat-contiguous areas4. Bi-modal rainfall5. Appropriate soils for mechanized plowing• Challenges:1. Physical constraints (sandy, stones, slope)2. Farm structure (small farms, small plots, crop diversity)3. Economic constraints (foreign exchange, credit, low wages)

7. Conclusions

• Messages for further upscaling:1. Prices matter- Improve access to credit- Improve access to foreign exchange- Those with investment license only allowed to import

duty free; others face higher prices- Potential of cheap two-wheel tractors (2-wheel

tractor: 25,000 Birr; 40 HP tractor: 400,000 Birr)? Need further piloting: Where? Which tasks? Etc.

7. Conclusions

2. Maintenance and after-sale service matters- Only selling machines is not enough- After-sale service matters; Access to spare parts

often an issue- Changes in models makes spare parts a big issue- Might become easier when mechanization markets

grow- Make sure that private mechanics are there and can

function well

7. Conclusions

3. The role of the public sector- Success story in upscaling has arguably been the take-up by

the private sector - Role of public sector:a. Capacity building and improve knowledge/awareness in

potential areas (training; study tours)b. Create enabling environment for private supply chains to

take off (help in access to credit)c. Help in the development of appropriate technology

(encouraging innovation in multi-functional tractor use; R&D)

d. Monitoring and evaluation

the rapid - but from a low base - uptake of agricultural mechanization in ethiopia: patterns,...

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