Most Effective Project: Enhancing Access to Contract Mechanization via Reconditioned Used Tractors

FiatTractorIf, as mentioned elsewhere on this website, smallholder producers in many developing countries survive on only 2000 of the 4000 Kcal. they need to diligently work a full 8 hour agriculture day, and they continue to be expected to complete many of the “value chain enterprises” recommended for their benefit in a timely manner, perhaps the best assistance for them could be to concentrate on drudgery relief. The 2000 calories is really just barely enough for to sustain the proverbial couch potato. It provides no calories for heavy manual labor. It thus limits the work day to as little as three or at most four hours. This then impacts on the total time needed to accomplish critical tasks. Basic land preparation that requires some 300 person hour could easily extend from the ideal maximum of three weeks to eight weeks or more from the onset of the growing season. The delay would then render all subsequent field activities equally delayed, reduce the quality of most crop husbandry activities, substantially reduces the area that can be devoted to, the yield, and returns to any “value chain cash enterprise”. The adverse impact on the value chain enterprise would be even greater if, as is the usual case, subsistence crops take priority over cash crops.

Even if 4000 cal/day were available, a person can still only develop a continuous 1/10 hp of energy output. Perhaps the only means to effectively overcome this 60% caloric deficit is to provide access to contract mechanization within smallholder communities. For upland areas the most appropriate mechanization is individually owner-operated four wheel 65 hp tractors that can pull a three bottom disk plow or similar tillage equipment. Such tractors with a trailer can double up to provide transportation services, including basic commuter service between villages and surrounding but distant fields. This would all be similar to the Fiat tractor shown in the photo from Ghana, although the Massy-Ferguson 165 and 265 tractors are also very popular. Facilitating access to private contract mechanization maybe the only way for “value chain enterprises” to represent an increase in the area cultivated, instead of a substitute for crops already well established. Private mechanization enterprises can also become an integral part of the Symbiotic Community Support Services into which most smallholder communities are divided. Those involved in contract mechanization really should not be producers as that would become a conflict of interest with providing the mechanization service. It would be expected that the servicing the community would become a full time occupation.

It is unlikely shifting to contract mechanization for basic land preparation will reduce the demand for labor. Rather it may simple shift the limited labor supply to other activities that will increase the yield or quality and value of the enterprise. Something that is major problem for High Value, Quality Sensitive Crops often considered for value chain promotions. There is also a need to appreciate the basic oversights of agronomy. Agronomy does an excellent job of determining the potential yield of a give environment, but it fails to determine the Operational Resources Needed to expand from the small research/demonstration plot to the full farm. It just assumes those resources are available. Unfortunately, the evaluation of resources needed to expand to a full field are an administrative void in the development process, as is the drag the limited available resources has on the agronomic potential of an area.

Contracted land preparation through individually owned and operated private tractors is responsible for the vast majority of the basic land preparation throughout most of the Middle East including Egypt, Pakistan, Iraq, and Afghanistan. This is mostly done through individuals who have given up smallholder farming to concentrate on contracted support services. In the fully irrigated Middle East with its subtropical climate defining two mutually exclusive annual growing season, winter and summer, tractor owner/operators can expect a 220 plus work year just on tillage operations. This is more than most professionals have in developed countries when weekends, holidays, and vacation time is factored in. This also does not include double duty for stationary threshing at night, or hauling road construction material when needed. The shift to contract tillage in the Middle East took place at least 30 years ago, and was mostly spontaneous and self financed by the individuals involved without and assistance from the development community.

Private contract mechanization is slowly becoming available through much of sub-Saharan Africa. However, it is all self-financed and represents a lost opportunity for the development community. It is possible to get quotes for contract mechanization service in Zambia, Uganda, Kenya, Tanzania, Malawi, Nigeria and Ghana. Such quotes would are available only when there is a demand for the service, and someone is trying to satisfy that demand. In Tanzania the costs of contract tillage could be part of Informal Loans.

However, new tractors are expensive. Often tractor owners will has taken a guest worker position for a couple years in the Persian Gulf or similar country and very prudently managed their money. Otherwise most members of a smallholder community can afford. But are new tractors necessary? How about a reconditioned used tractor? Most likely the tractors being obtained in smallholder communities are used tractors either purchased at discount from defunct public sector mechanization units or purchased from estate operations that are replacing old tractors approaching the end of their 10,000 hour designed service life.

Thus the real need could be for used tractors that could be reconditioned and brought up to specification enough for another 10,000 service hours. Thus the question is how many used 65 hp tractors are sitting around tractor dealers, or farm yards scattered through the developed world? How much would it cost to round them up, purchase a reconditioning kit, disassemble them, containerize them, ship them to a developing country, recondition them in a host country hopefully as part of a diesel training program, and sell them to members of smallholder communities that are interested in going into the contract tillage business? How many tractors could be obtained as charity contribution, with accompanying tax credit, etc.? Can all of this be done on a revolving fund basis at no cost to a donor government or individual?

A quick and cost estimate would be:

  • a used 65 hp tractor with 7000 to 10,000 service hours would be US$5000
  • reconditioning kit US$1000
  • disassemble and containerizing US$1000
  • shipping 40 foot container with three disassembled tractors US$8000 or US$2700 per tractor
  • reconditioning training effort in destination country US$1000
  • Total cost US$10,700

Sale value US$12,000 to US$15,000 per unit providing an overhead cost or profit margin of from US$ 1300 to US$4300. This sale cost is what an agriculture enterprise individual operating a 1200 ac rice farm leased to tenants in Uganda claimed was reasonable. What kind of credit be arranged to assist with the purchase using the tractors as collateral?

Would this make a reasonable project?

The problem is the development community for some reason appears solidly against promoting mechanization. Perhaps they are concerned with the problems associated with the public sector mechanization units a couple decades ago. They were and continue today to be a major disaster, with the equipment being surveyed out of service with an average of only 3000 or the 10,000 designed service life operating hours. An example would be the tractors attached to the ADPs in Nigeria are in poor condition with less than 500 hours. The number of units per ADP would barely accommodate the political influential or private cultivation of ADP staff. It would be highly unlikely they would ever reach a smallholder producer, proclaimed as the primary beneficiary for the tractors. If they do become available to smallholder most likely the operator and perhaps the officer supervising the operator will be seeking some Informal Income opportunity from providing the services. That is kind of the norm for public sector services and was specifically mentioned in Ethiopia as an access fee.

More likely, if the development community become interested in providing access to mechanization for smallholder community it will be through some form of communal ownership through a farmer cooperative or credit club etc. that development projects like to encourage and often Misrepresent. With communal ownership maintenance can be a concern as noted by the FAO women’s income generation cooperative Shown on an Accompanying Webpage. The cooperative is locked up and has been for months, because they could not sort out some simple maintenance problems with some of the processing equipment.

Because of the maintenance and repair requirements, any mechanical equipment can only be managed by individual ownership. The question is: are the donor concerns about maintenance justified for privately held machinery? Certainly, it is something that has to be considered, but under private management what mechanical maintenance is being done in most host countries? Someone has to be maintaining all those diesel trucks that are plying up and down the highways, and even off the highway to serve remote communities. They often contain the same basic engine as the tractors, just different chassis, drive chains and wheels. Someone is also maintaining all those smaller stationary diesel engines powering the grain mills distributed throughout the remote areas of Africa, that have virtually completely replaced women pounding maize or other grains. Perhaps this is mostly deferred maintenance concentrating on repairing breakdowns instead of scheduled preventative maintenance, but with the overall Financially Suppressed Economy, that severely restricts profit margins, it might represent the economic optimal management.

Note on Paddy Cultivation

As mentioned at the beginning the use of four wheel tractor would be mostly for upland smallholder communities, since for paddy areas the problem has largely been solved with small 12 hp, diesel power tillers. These are all individually owned and operated and usually not contracted out. They have completely taken over the paddy lands of Asia starting nearly 30 years ago. They reduced the time required for land preparation by 50% and even allowed operational holding to expand to around six hectares. Most likely they played a major but unrecognized role in success of the Green Revolution in Asia.

They are moving into the irrigated paddy schemes of Africa. Virtually all of this has been self financed by the farmers independent of the development community’s assistance. It again represents a lost opportunity to provide some clearly needed assistance. The larger four wheel tractors can also have problems when working in paddy fields due to grit getting into the front bearing requiring they be replaced on an annual basis instead of every three years. This can cost about US$400 per replacement and add a couple dollars per hour to the costs of operating the tractor.

Last Revised: 16 March 2010

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