ince 2007, the Government of Ghana (GoG) embarked on a bid to transform agriculture under its Med... more ince 2007, the Government of Ghana (GoG) embarked on a bid to transform agriculture under its Medium Term Ag‐ ricultural Investment Plan (METASIP) and Accelerated Agricultural Modernization Policy. This policy has been translated into the provision of subsidized agricultural machinery to individual farm‐ ers and private enterprises established as Agricultural Mechaniza‐ tion Services Enterprise Centers (AMSECs) (Diao et al. 2012). These interventions have contributed to increasing farmers’ ac‐ cess to agricultural mechanization services and reducing drudgery in farming across the country, but more work needs to be done. Unlike in the 1980s, when the lack of demand was seen as a constraint to agricultural mechanization in many developing coun‐ tries (Pingali 2007), economy‐wide labor constraints such as non‐ agricultural sector growth and rural‐urban migration have fuelled the demand for agricultural mechanization services in the coun‐ try. However, the current demand pattern is primarily focused on power‐intensive operations, especially plowing services. The de‐ mand for control‐intensive operations, such as weeding, sowing, fertilization, and harvesting, is marginal. As a result, most of the tractors are usually placed in storage after the plowing seasons, which last 45 days in the north and 60 days in the south of the country. This pattern of demand (and therefore supply) raises ques‐ tions as to what should be a practical service provision model to promote, and whether a specialized agricultural mechanization service provision model presently pursued by GoG can be a viable business model attractive to private investors. This brief examines the profitability of agricultural mechani‐ zation service provision at the current stage of mechanization in the country based on a recent research by Houssou et al. (2012). Many stakeholders believe strongly that the state should subsi‐ dize agricultural machinery. This is understandable, since import‐ ed tractors are unaffordable by individual firms. However, subsi‐ dies should not be a barrier to developing a sustainable supply chain in which the private sector can play a leading role in the transformation of agriculture in the country. This brief is organized as follows. Section 2 briefly describes the theoretical framework and methodology applied, whereas section 3 presents the main results. Section 4 offers our concluding re‐ marks.
ince 2007, the Government of Ghana (GoG) embarked on a bid to transform agriculture under its Med... more ince 2007, the Government of Ghana (GoG) embarked on a bid to transform agriculture under its Medium Term Ag‐ ricultural Investment Plan (METASIP) and Accelerated Agricultural Modernization Policy. This policy has been translated into the provision of subsidized agricultural machinery to individual farm‐ ers and private enterprises established as Agricultural Mechaniza‐ tion Services Enterprise Centers (AMSECs) (Diao et al. 2012). These interventions have contributed to increasing farmers’ ac‐ cess to agricultural mechanization services and reducing drudgery in farming across the country, but more work needs to be done. Unlike in the 1980s, when the lack of demand was seen as a constraint to agricultural mechanization in many developing coun‐ tries (Pingali 2007), economy‐wide labor constraints such as non‐ agricultural sector growth and rural‐urban migration have fuelled the demand for agricultural mechanization services in the coun‐ try. However, the current demand pattern is primarily focused on power‐intensive operations, especially plowing services. The de‐ mand for control‐intensive operations, such as weeding, sowing, fertilization, and harvesting, is marginal. As a result, most of the tractors are usually placed in storage after the plowing seasons, which last 45 days in the north and 60 days in the south of the country. This pattern of demand (and therefore supply) raises ques‐ tions as to what should be a practical service provision model to promote, and whether a specialized agricultural mechanization service provision model presently pursued by GoG can be a viable business model attractive to private investors. This brief examines the profitability of agricultural mechani‐ zation service provision at the current stage of mechanization in the country based on a recent research by Houssou et al. (2012). Many stakeholders believe strongly that the state should subsi‐ dize agricultural machinery. This is understandable, since import‐ ed tractors are unaffordable by individual firms. However, subsi‐ dies should not be a barrier to developing a sustainable supply chain in which the private sector can play a leading role in the transformation of agriculture in the country. This brief is organized as follows. Section 2 briefly describes the theoretical framework and methodology applied, whereas section 3 presents the main results. Section 4 offers our concluding re‐ marks.
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