"Patterns of Ownership and Use of Agricultural Machines in Ghana: Implications for agricultural mechanization policy", presented by Nazaire Houssou at NSD/IFPRI workshop on "Mechanization and Agricultural Transformation in Asia and Africa", June 18-19, 2014, Beijing, China

1. Patterns of Ownership and Use of Agricultural
Machines in Ghana: Implications for agricultural
mechanization policy
Nazaire Houssou
Xinshen Diao
Frances Cossar
June 18, 2014
National School of Development,
Peking University, China

2. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 2
• Recent Trends in Ghanaian Economy
• Mechanization in Ghana: Historical Perspective
• Current Agricultural Mechanization Policy
• Specialized Mechanization Service Provision
• Private Sector-Led Mechanization
• Prospects for Scaling up Agricultural
Mechanization in Ghana
Outline

3. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Source: www.wpmap.org397

4. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 4
Recent Trends in Ghanaian Agriculture
• Middle-income country with 24 million people
• Transformed economy
 Increasing share of service sector : 50.6% of GDP (2013)
 Decreasing agriculture share : 21.3% of GDP (2013)
• But low agric. productivity and growing food needs
• Increasing rural-urban migration and land/labor ratio
• Rising demand for mechanization (Diao et al., 2014)
• Focus on land preparation similar as earlier in South
Asia (Binswanger, 1978)

5. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 5
Mechanization in Ghana:
Historical Perspective
• Large state involvement in mechanization after
independence (1957)
• Mechanization as means for increasing power
supply and freeing labor
• Failures in Ghana and elsewhere in SSA
• Lack of demand - low farming systems intensification
(Pingali et al., 2007)
• SAP/1990s led to withdrawal from direct service
provision

6. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 6
Current Agricultural Mechanization Policy
• Since 2007 GoG. renewed support for mechanization
• Attempts to partner with private sector
• GoG. seeks low interest loans to import tractors and
other agricultural machines
• Sells tractors to individual farmers & AMSECs at
subsidized prices with lenient repayment schedules
• Loan origin dictates tractor importing country

7. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 7
Current Agricultural Mechanization Policy
0
200
400
600
800
1000
1200
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Figure 1: Agricultural Machinery Imports
Government
Private market
Source: Diao et al. (2012). NB: Data for 2012 is up to July 2012

8. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 8
State-sponsored specialized service
provision not viable
Figure 2. Net profit of tractor investment — actual (South)
Source: Houssou et al. (2013)

9. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 9
State-sponsored specialized service
provision not viable
Specialized service provision: AMSEC Weaknesses
• Provide only plowing services
• Low operational scale: 60 ha per tractor, 1:40 farmers
(Benin et al., 2012, Houssou et al., 2013)
• No regional migration across rainfall zones
• Frequent machine breakdowns
• Lack of spare parts
• Poor maintenance and lack of skilled operators

10. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Straight line plowing saves time and fuel (Upper
East, Ghana)
Source: Courtesy from the University of Hohenheim (Germany), 2014
Irregular plowing
Straight line plowing

11. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Medium-Large Scale
Farmers and Mechanization
Survey (2013)
Conducted in collaboration with Savanna
Agricultural Research Institute (SARI)
Category Sample
size
Tractor
owners
Small 768 29
Medium 850 213
Large 225 160
Total 1,843 402
What Are Farmers Doing about Mechanization?
11
Source: IFPRI/SARI Survey (2013).

12. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Tractor and Animal Traction are Both Relevant
12Source: IFPRI/SARI Survey (2013).
Use tractor plowing Use animal plowing
Do not plow
District
Non-tractor
owners
Tractor
owners
Non-bullock
owners
Bullock
owners
Ejura 108 119 0 0 26
Techiman 14 1 0 0 202
Kintampo North 58 9 0 0 154
Yendi 135 112 1 0 21
Gushiegu 172 91 5 1 31
Kasena Nankana East 99 10 31 11 9
Bawku Municipal 36 5 79 54 21
Sissala East 131 45 17 19 16
Total 753 392 133 85 480
Table 1: Distribution of mechanized plowing in the sample

13. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Emerging Private Sector-Led Mechanization
13
Gov.
11%
Private
89%
Source of Tractor
Acquisition
Number of tractors: 487.
New
21%
Used
79%
New or Used
Tractor?
M. Ferguson
59%
Farmtrac
13%
J. Deere
9%
Ford
7%
Others
12%
Dominant Brands
Increase private ownership of used tractors, mostly M. Ferguson
Source: IFPRI/SARI Survey (2013). J. Deere = John Deere, M. Ferguson=Massey Ferguson
Figure 3: Sources, state, and tractor brands in the survey districts

14. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Refurbished Massey Ferguson
Tractor (Ejura, Ghana)

15. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Tillage on rice field (Asutsuare, Ghana)

16. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Emerging Private Sector-Led Mechanization
16
Tractor owners started small
Small
85%
Medium
11%
Large
4%
Initial
Figure 4: Farm size dynamics among tractor owners
Source: IFPRI/SARI Survey (2013). Small (< 5 ha), Medium (5- 20 ha), Large (>20 ha)
Small
4%
Medium
25%
Large
71%
Current
Number of tractor owners: 402.

17. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Emerging Private Sector-Led Mechanization
17
Table 4: From tractor user to tractor ownership
Overall
Terciles of cultivated land
Lowest Middle Highest
How many years hired-in tractor services
before owning? (n=339)
9.7 8.8 10.3 10.2
Less than five years (%) 18.3 38.9 23.0 15.8
Five to ten years (%) 30.7 33.3 31.1 30.4
More than ten years (%) 51.0 27.8 45.9 53.8
How many years since owning a tractor?
(n=397)
3.6 3.1 3.4 4.2
Less than five years (%) 77.8 78.8 82.1 72.5
Five to ten years (%) 15.4 16.7 11.2 18.3
More than ten years (%) 6.8 4.5 6.7 9.2
Mean tractors owned per farmer
(n=402)
1.2 1.1 1.1 1.4
Source: IFPRI/SARI Survey (2013).

18. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Emerging Private Sector-Led Mechanization
18
Figure 5: Motivation and tractor financing
Farm expansion
51%
Timeliness
22%
Service provision
22%
Others
5%
Why do owners acquire
tractors?
Source: IFPRI/SARI Survey (2013).
Own savings (only)
87%
Loans
2%
Remittances
4%
Others
7%
Financing with own savings
Number of tractor owners: 402.

19. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Emerging Private Sector-Led Mechanization
19
Overall
Terciles of cultivated land
Lowest Middle Highest
Percentage of farmers who hire-out services
First plowing (%) 83.2 82.0 81.7 85.8
Maize shelling (%) 19.5 17.2 18.3 22.8
Carting farm products and inputs (%) 35.5 38.5 38.1 29.9
Ratio of tractor owner to farmers served
(median)
1:60 1:60 1:51 1:67
Number of hectares plowed per tractor
(2012)
182.4 171.4 162.0 211.4
Years providing plowing services (n=302) 5.0 4.1 4.8 6.1
Table 5: Hiring-out mechanization services
Source: IFPRI/SARI Survey (2013).

20. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
Emerging Private Sector-Led Mechanization
20
Table 6: Hiring-in tractor services
Small Medium Large
Number of non-tractor owners (n=1,441) 739 637 65
Percentage of farmers who hired services
Plowing (n=750) 45.3 58.9 61.5
Shelling (n=338) 17.3 30.5 24.6
Carting (n=375) 20.0 32.3 32.3
Experience with service rental (years)
Plowing 7.7 9.5 12.5
Shelling 5.6 6.3 6.6
Carting 6.3 7.0 11.8
Source: IFPRI/SARI Survey (2013).
Developing tractor service rental market

21. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 21
Prospects for Scaling up Agricultural
Mechanization in Ghana
• Mechanization unlikely to scale up without
development of private channels
• Support ownership among farmers who are providers
• Transfer ownership decision and choice to farmers
• Policies to overcome credit market failures
• Seek flexible machinery loan sources
• Develop appropriate machines import channels for
an easy exit in the medium and long terms

22. INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
THANK YOU !