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

1. ETHIOPIAN DEVELOPMENT
RESEARCH INSTITUTE
The rapid - but from a low base - uptake of
agricultural mechanization in Ethiopia:
Patterns, implications and challenges
Guush Berhane (IFPRI/ESSP)
Mekdim Dereje (EDRI/ESSP)
Bart Minten (IFPRI/ESSP)
Seneshaw Tamru (EDRI/LICOS)
Hilton, Addis Ababa
October 31, 2017
1

2. 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. 3
2. Data and methodology
• Qualitative data: Interviews with key informants from
middle to end of 2016
• Quantitative data:
a. Import data
b. 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)

4. 4
3. Current machinery use
Use Unit All Farm size (by quintile)
Q1 Q2 Q3 Q4 Q5
FTF areas
Land preparation
Hoe only % of plots 20.5 33.2 19.5 15.6 16.5 16.7
Animals % of plots 78.8 66.4 79.8 83.9 82.9 81.9
Machine % of plots 0.7 0.4 0.6 0.6 0.6 1.5
Harvesting
Machine % of plots 1.2 1.1 1.0 0.8 1.1 2.0
Threshing
Manual % of plots 49.8 59.6 47 41.4 47.1 54.3
Sheller % of plots 1.5 1.6 1.2 0.7 1 3
Animals % of plots 47.9 38.2 51.1 57.4 51.4 41.2
Mechanical % of plots 0.8 0.7 0.7 0.5 0.5 1.5
National level (ES survey)
Plowing
Tractor % of plots 0.9 0.4 0.6 0.5 0.8 2.8

5. 5
4. Changes in rural factor markets
A. Wages
1020304050
2002m1 2004m1 2006m1 2008m1 2010m1 2012m1 2014m1 2016m1
real wage per day 95% CI
lpoly smooth: real wage per day
Trends in real daily wges for unskilled labor: 2003-2016

6. 6
4. Changes in rural factor markets
B. Livestock prices
2000400060008000
2004m1 2006m1 2008m1 2010m1 2012m1 2014m1 2016m1
real oxen price 95% CI
lpoly smooth: real oxen price
Trends in real Ox price: 2004-2016

7. 7
5. Changes in imports
0
10
20
30
40
50
60
70
80
90
MillionUSD
Imports of agricultural machines
Tractors
Combine-harvesters
Pedestrian tractors
Threshers

8. Increase in agricultural machinery imports – also by private dealers

9. 9
5. Changes in imports
Tractor sales by AAMI (METEC)
0
500
1000
1500
2000
2500
3000
2012/13 2013/14 2014/15 2015/16
Walking (HP 8 -15)
Small (HP 18-30)
Medium (HP 40-80)
High (HP 90-375)
However, demand for locally assembled tractors
declining; seemingly unsold stock…

10. 10
5. Changes in imports
0
1
2
3
4
5
6
7
8
9
10
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
MillionUSD
Import value of combine-
harvesters

11. 11
5. Changes in imports
Tractors/combine-harvesters especially taking off in
South-east of the country. Some reasons:
- Commercial farms and 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

12. 12
6. Current functioning
• 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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6. Current functioning
• 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

14. In Ethiopia, animal traction often combined with tractors

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6. Current functioning
• Typical costs of combine-harvester:
0
10
20
30
40
50
60
70
80
90
100
Jul.1sthalf
Jul.2ndhalf
Aug.1sthalf
Aug.1sthalf
Sep.1sthalf
Sep.1sthalf
Oct.1sthalf
Oct.2ndhalf
Nov.1sthalf
Nov.2ndhalf
Dec.1sthalf
Dec.2ndhalf
Jan.1sthalf
Jan.2ndhalf
Feb.1sthalf
Birr/quintal

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6. Current functioning
• Typical costs of combine-harvester depend on:
1. Type of soil (sandy soils higher)
2. Yields
3. Religion
4. Temperature
5. Location of farm
6. Slope of land

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

18. 18
6. Current functioning
• Seasonal movement combine-harvesters

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7. Implications for agricultural
transformation
• No strong association between use of modern inputs
and mechanization.
• Strong positive association between yield and use of
threshing/harvesting machines (mostly combine-
harvesters); No strong association between yield and
tractor use.
• Yield effects of combine-harvesters seemingly relate
to reductions in harvesting & post-harvesting losses.

20. Losses due to poor transportation, winnowing &
consumption by animals…

21. …and poor harvesting structures

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8. Take-away messages
• Animal traction still very important
• Mechanization is taking off, even among smallholders,
albeit from a low base (only 1% of plots)
• 1/4th of wheat area harvested by combine-harvesters
• Government (METEC) intervention but decreasing
demand
• Private sector rental service provision growing
• Strong association between combine-harvester use and
yield, not for tractor use

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8. Take-away messages
• Incentives for mechanization:
1/ Increasing wages and
2/ Costs keeping livestock
• Barriers for mechanization:
1/ farm structures (e.g. farm and plot size, fragmentation,
crop diversity)
2/ physical constraints (e.g. topography, soil types, stones)
3/ economic and financial constraints (e.g. access credit,
access foreign exchange, low wages less commercial zones)
• A lot remains unknown