Smallholder farmers' willingness to pay for two‐wheel tractor‐based mechanisation services in Zambia and Zimbabwe

Abstract

Mechanisation is back among top development policy priorities for transforming African smallholder agriculture. Yet previous and ongoing efforts ubiquitously suffer from lack of scientific information on end‐user effective demand for different types of mechanical innovations to inform public investment or business development programmes. We assess smallholder farmers' willingness to pay (WTP) for two‐wheel tractor (2WT)‐based ripping, direct seeding and transportation using a random sample of 2800 smallholder households in Zambia and Zimbabwe. Applying the Becker–DeGroot–Marschak Mechanism (BDM) experimental auctions, we find that at least 50% of sample households in Zambia and Zimbabwe were willing to pay more than the prevailing market prices for ripping. In nominal terms, sample households in Zimbabwe were willing to pay more than those in Zambia for the different services. Empirical results suggest that wealth is the strongest driver of WTP for tillage and seeding 2WT services while labour availability and using animal draft power reduce it. These findings imply a need to (i) raise awareness and create demand for 2WT‐based services in an inclusive business manner that does not create perverse incentives and (ii) better target mechanisation to operations with comparative advantage, using approaches that bundle 2WT‐based and other mechanisation services with asset‐agnostic credit schemes or other interventions meant to overcome asset‐mediated barriers.

Willingness to pay for agricultural mechanization services by smallholder farmers in Malawi

“…The overall average WTP for land preparation services is 22,211 MWK per acre, which is 11% higher than the prevailing market rate (20,000 MWK per acre) for land preparation services using a tractor hire where a tractor is available (Table 4, second row). This result is in line with the result of the study conducted on demand for tractor‐hire services among farm households in Burkina Faso (Hodjo et al, 2021), and Zambia and Zimbabwe (Ngoma et al, 2023). The authors found that the WTP for custom‐hire tractor plowing was higher by 36% than the rental cost.…”

Made in Africa – How to make local agricultural machinery manufacturing thrive

“…2 Diao et al (2020) argue that African mechanization is no longer held back by lacking demand but, now, rather by supply-side constraints. This is in line with recent empirical studies from countries such as Benin (Hinnou et al, 2021) and Zambia and Zimbabwe (Adu-Baffour et al, 2019;Ngoma et al, 2023), showing that there is indeed an effective demand for mechanization. Mechanizing Africa's 85 million farms (Lowder et al, 2021) will create a large demand for the products of agricultural machinery manufacturers such as tractors, power tillers, plows, rippers, planters, shellers, threshers and mills, among others.…”

“…2 Diao et al (2020) argue that African mechanization is no longer held back by lacking demand but, now, rather by supply‐side constraints. This is in line with recent empirical studies from countries such as Benin (Hinnou et al, 2021) and Zambia and Zimbabwe (Adu‐Baffour et al, 2019; Ngoma et al, 2023), showing that there is indeed an effective demand for mechanization.…”

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“…2), hurdles to its adoption include inadequate equipment and machinery to mechanize operations, low supply/ availability of crop residues for mulching, and competing needs for residue use as animal feed. Yet, 50% of the farmers are willing to pay for mechanized minimum tillage (Ngoma et al, 2023). Thus, with adequate equipment and machinery there is potential for widespread adoption of CA and participatory CA technology testing can support information diffusion as farmers become agents of change.…”