Cost And Policy Determinants Of Features Of Tractor Markets In Nigeria Case Studies Of Tractor Sellers In Kaduna State And Tractor Owners In Benue State

In this study, we contribute to such efforts to enhance the use of tractors in Africa by describing the key characteristics of markets for tractors in Nigeria. Nigeria is among a set of countries in Africa that has both low agricultural productivity and low agricultural mechanization growth (Malabo Montpellier Panel 2018). Current understanding of the tractor market in Nigeria mainly highlights only specific aspects of mechanization issues or only delves into the application of specific emergent mechanization technologies. Consequently, many stakeholders do not have sufficient understanding of how tractor markets in Nigeria are organized both in vertical and in geographic terms.

In Nigeria, despite the scarcity of tractors, average horsepower and prices of tractors appear high. These patterns are different from the experiences in other parts of the world where initially tractor horsepower was often smaller, such as Asia, or farmers were better endowed with land and wealth, such as Latin America. In Nigeria, joint ownership of tractors is rare, and formal loans are often unavailable due to high transactions costs. IFPRI’s survey in Kaduna and Nasarawa states in 2013 suggested that the spatial mobility of tractors is generally low and the use of tractors is highly seasonal. There do not seem to be plausible explanations for the seeming dominance of large tractor use based on available information on prices and soils. Nevertheless, these patterns seem driven by the own initiative of the private sector rather than by government policies. Indivisibility of large tractors and limited mobility of supplies may cause imperfections in the custom tractor hiring market. In order to distinguish the impacts of technology adoption at the extensive margin from those at the intensive margin, in the empirical analyses for the research presented here we tested these hypotheses focusing on the differences among marginal adopters of tractor hiring services and non-adopters with similar characteristics. The results are three-fold: (1) adoptions patterns of tractor services are partly explained by basic factor endowments, suggesting that the market for custom hiring is in some way functioning efficiently in response to economic conditions; (2) adoptions are, however, affected by supply-side factors, including the presence of large farm households (and thus potential tractor owners) within the district, and (3) per capita household expenditure level differs significantly between the marginal adopters and non-adopters with similar characteristics. This difference seems to arise from adoption per se, rather than the intensity of adoption, which is consistent with the hypothesis of imperfection in the custom tractor hiring market.

This paper presents results of a small survey of tractor owner-operators conducted in Kaduna and Nasarawa states in Nigeria. Following are the key findings from simple descriptive statistics: (1) owner-operators who buy tractors from the private market or from private individuals are more efficient than those who receive tractors through government programs, providing services to a greater area at lower costs, including during the off-peak season; (2) providing access to a wider range of tractor horsepowers may improve efficiency over diverse soil types; (3) similar to some Asian countries in the 1980s, tractor operations are mostly concentrated in interviewees’ local home districts, though a fraction form groups and serve in distant locations to earn greater revenues.

Demand for mechanization in Nigeria is growing in a fairly consistent way predicted by economic theories. The farming system has intensified and the use of animal traction has grown at a substantial rate. Demand side factors considerably explain the low adoptions of tractors in Nigeria. Where demand is sufficient for tractors, the private sector has emerged over time as a more efficient provider of hiring services (particularly farmer-tofarmer services) than the public sector. Conditions are consistent with the hypotheses that, because of generally low support for the agricultural sector in Nigeria in the past few decades, agricultural mechanization (tractor use in particular) has remained low despite the declining share of the workforce engaged in the agricultural sector. Agricultural transformation in the form of a declining agricultural labor force has happened partly through the growth in the oil industry since the 1970s. Instead of inducing further exit from farming, tractor adoptions in Nigeria might have helped those who have remained in farming to start expanding their production scale. A knowledge gap, however, still remains regarding the dominance of large tractors and the potential effects of tractor adoptions on smallholders who have yet to adopt them.

This study reviews the evolution of tractor use in India in the past few decades, and supplements this with a panel model analysis using factors associated with state-level tractor density growth. Growth in tractor use in India, unlike that in the United States and Japan, has occurred at relatively low wage rates and with a substantial majority of the workforce remaining in the agricultural sector. Considerable growth in domestic manufacturing has contributed to growth in tractor densities. Tractor density across the 14 major states in India between 1982 and 2012 was positively affected by income per capita, cropping intensity, and the average size of farmland holdings. Tractor intensity grew at a fast pace even in low-wage regions of India, indicating that relatively lower labor wages might not have been a binding factor for diffusion of farm machinery and tractors among smallholding farmers in India.