Government tractor hire service scheme as a tractorization policy in Africa: The Nigerian experience

Government tractor hire service scheme as a tractorization policy in Africa: The Nigerian experience

Agric. Admin. & Extension 25 (1987) 63-71 Government Tractor Hire Service Schemeas a Tractorization Policy in Africa: The Nigerian Experience* Amos A...

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Agric. Admin. & Extension 25 (1987) 63-71

Government Tractor Hire Service Schemeas a Tractorization Policy in Africa: The Nigerian Experience* Amos A. Akinola Commonwealth Secretariat, Marlborough House, Pall Mall, London SWlY SHX, Great Britain (Received 10 April 1986; accepted 13 May 1986)

SUMMARY Government tractor hire service schemes initiated by some African governments to persuade small-scale farmers to mechanize their farms have been the subject of recent debate. A review of the evidence, drawing largely on the Nigerian experience, indicates that farmers as well as government hire units face various types of problems in tractorization. Farmers face a problem of untimeliness of services which may be due to a shortage of tractor operators, irregular supply of diesel oil in the rural areas, the frequent breakdown of tractors and equipment coupled with a shortage of spare parts. Management of government hire units is also defective as decision-making processes are cumbersome and policies not eflectively pursued. Nevertheless, private hire operators are found to be more economically efficient in running their units than are government oficials since the former operate at a lower cost, handle more work per year than government units, make eficient use of tractor operators and make prompt management decisions. To improve the performance of government tractor hire units in Africa, may require the governments to reorganize their schemes with a view to bringing their management closer to farmers. It is also suggested that an ‘economic rent’be chargedfor services rendered by hire units but a graduated type of rebate, and not an ail-embracing subsidy approach currently used, should be introduced to reduce farmers’ production costs. Furthermore, eforts should be made to reduce the cost of running schemes and to increase * This paper was written when the author was a lecturer at the Federal University of Technology, Bauchi, Nigeria. Views expressed in it are those of the author and are not necessarilyheld by the Commonwealth Secretariat. 63 Agric. Admin. & Extension

0269-7475/87/$0350

England, 1987. Printed in Great Britain

0 ElsevierApplied SciencePublishers Ltd,

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Amos A. Akinola tractor output by encouraging tractor operators to be more ejficient as well as investing in machines neededfor operations which are currently not being mechanized.

INTRODUCTION The problems of subsistence farmers in Africa have been a subject of discussions and controversies over the past decade or two. Constituting, as they do, a major proportion of the agricultural sector, particularly in terms of numbers if not land area, serious consideration of their problems is essential to achieving long-lasting development in the continent. One of their main problems has been a shortage of farm labour, especially during the peak period of farm operations. This may be due to rural-urban migration, drudgery in the traditional method of using hoes and cutlassesin African agriculture and the associateddemand for labour in non-farm enterprisessuch as craft work, petty trading, etc., in the rural areas.3.4Whatever its cause,the labour shortageresults in under-utilization of rural lands, inadequate maintenance of farms and inefficient and late harvesting of farm produce. The consequenceis the continuous decline in agricultural production in Africa. One solution is tractorization of the agricultural sector which may be used to increase agricultural production through increased farm size and timeliness of farm operation by reducing farmers’ complete reliance on human labour for all their farm operations. In addition, it may help to improve farmers’ managerial skills to the extent that the use of tractors allows them more time for planning and supervising their farm operations. Consequently, one of the main concerns of development planners in the continent has beento provide tractor facilities to their farmers so that they could make maximum use of their land, capital and skills. Generous farm credit, subsidy and import tax rebate policies on agricultural machinery have been implemented by almost all the African governments to reduce the cost of farm machines and therefore to stimulate farmers to use them. Nevertheless, the majority of African farmers, especially the small-scale ones, are unable to mechanize their farming operation becausethey still cannot afford to purchase their own tractors and other necessary implements. Since the late 1950s therefore, many African countries such as Nigeria, Sierra Leone, Ghana, Kenya, Zambia, Tanzania and Uganda, have sought to promote tractorization of their subsistencefarmers in general with the establishment of government Tractor Hire Service (THS) schemes.The main objective of such schemeshas been to provide subsistencefarmers

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with the opportunities of using tractor serviceswhich hitherto they could not afford because of the high cost of purchasing tractors and the appropriate implements. Participating governments regard the schemesas one of their most important directly productive services to their peasant farmers. Consequently, they earmark some amount of money to purchase tractors and implements every year. Nevertheless, the economics and the overall performance of these schemeshave beenthe subject of some debate.It is, therefore, the objective of this paper to review the schemes, drawing heavily on the Nigerian experience, with a view to highlighting their constraints and suggesting feasible solutions necessaryto improve their performance in Africa. TRACTOR HIRE SERVICE SYSTEM IN NIGERIA A government tractor hire service was initiated by the Nigerian government to persuadesmall-scale farmers to mechanizetheir farms with a view to increasing their production, income and standard of living. In 1983it was estimated that over 3000four-wheel and 300single-axletractors were in operation in over 250 Tractor Hire Units (THUS) distributed all over the country. However, the hire units are more concentrated in areas that are predominantly savanna with moderate annual rainfall suitable for arable crops production. The useof tractor servicesis also concentratedin certain operations with land ploughing and produce transportation accounting for about 85 per cent of the total use of tractor hire units: seed planting, harrowing, and ridging accounted for the remaining 15 per cent in 1983.6This suggeststhat the demand for tractor services according to different operations is limited in scopein Nigeria. Nevertheless,the number of farmers applying for tractor serviceshas been increasing although the percentageof those actually served has been fluctuating. For instance, 87 per cent of farmers who applied for tractor servicesin 1975 were served while the corresponding figures in 1980and 1983were 91 per cent, and 84 per cent, respectively.6This may be due to a shortage of tractors and also to inadequate funds to maintain the available tractors and implements. The State Ministry of Agriculture and Natural Resources(MANR) and the government agro-service centre are the two principal agencies managing government hire units for farmers. For instance,when the THUS were first establishedin the former western region (now Oyo, Ondo, Ogun and Bendel States) in 1958, they were under the jurisdiction of the engineering division of the regional MANR but later moved to the Agricultural Input Service Unit in 1977 when the agro-servicecentre was established.’ The THU sub-division was charged with the responsibility of

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acquiring and allocating tractors and implements to the various units; employing and training manpower in the running and maintenance of the machines; and determining the prices to be charged for services rendered for eachfarm operation.6 The hire units, which were establishedto function as a public serviceunit, are managed by the supervising ministry located in the capital. The actual administration of the units at the farm level, however, depends mainly on the extension officer deployed from the extensiondepartment of the principal agency,but he is endowedwith limited authority. His main functions have beento compile the list of applicants for tractor servicesto be sent to the head office for approval, allocate tractors to farmers whose applications have beenapproved, collect and forward to the head office appropriate dues and forward monthly progress reports about staff, the hire unit and farmers’ problems: all theseare in addition to his main responsibility as an extension officer. He is allowed to effectminor repairs and servicesat the unit workshop without formal approval from the supervising division, but major repairs and purchases of spare parts and fuel remain the sole responsibility of the principal agency. As a consequence,tractor serviceshave tended to be untimely, leading to the frustration of many farmers. The waiting time before farmers obtain tractor serviceshas ranged from one to three months with the result that crops are often planted late.’ As well as the extension officer’s inability to take decisionsindependently, the untimeliness of tractor servicesis also due to a shortage of tractor operators, irregular fuel supplies and the high frequency of tractor and equipment breakdown coupled with delays in repairs due to difficulties in getting spare parts. Furthermore, tractor serviceshave been delayed becausethe extension division of the ministry which receivesthe notice from the officer-in-charge is sometimes slow in communicating it to the engineeringdivision on time. Becauseof the delay, many farmers travel distances of about 60 km or more about ten to fifteen times to visit the hire stations before being served. Another weaknessof the tractor hire schemeis that the number of hire units is too small to cope with the geographical spreadof farmers, with the result that some hire units are very far from their customers. Furthermore, with an estimated land area of about 34 million hectaresunder cultivation in Nigeria, there is only one hire unit tractor for every 10300 hectares of cultivated land? this may not be an appropriate tractor/land ratio. It means that some tractor operators travel several kilometres to plough an area as small as two or three hectares. Since tractor operators usually return to basedaily, most of their time and energy,as well as fuel, are used for travelling and not for effective work on the farm. Furthermore, the quality of their work is often not thorough because of a shortage of supervisors.

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As tractor operators are civil servants directly responsible to the engineeringdivision and not the extension division, from which the officerin-charge of the hire unit has been deployed, there are procedural difficulties in disciplining them. Many farmers have complained that the operators are late in getting to the farm for work, are unfriendly (or not sympathetic enough with farmers) and frequently stop work at 3.30p.m. when their colleagues do so in government offices.’ It is also not uncommon for the operators to get annoyed and leave a farm if the farmer dares to complain of a poor job. Tractor operators, however, usually complain that their wagesand overtime (if they do any) allowances are low and are seldom paid on time: in most casesovertime claims are drastically reduced by the supervising officer. It has been argued that the government is not the appropriate institution to manage a tractor hiring business,as the economics of government hire units in Nigeria and other African countries is questionable especially in the short run. This is becausein government-operated schemes nobody feels seriously worried or hurt by low output while farmers also feel that becausethey pay taxes and enjoy little or no modern amenities they should not be charged for any government services.Research indicates that the averageoutput in the privately managed tractor hire units in Oyo State of Nigeria, for example, is higher than that of the government hire units.l.’ For instance, the averageannual output of 711-Ohours at two private hire units-although this is low when compared with tractor output of 1000 hours per year in developed countries-is much higher than the highest annual output of 344-Ohours recorded at any government hire unit. The low tractor output in Nigeria as well as in other African countries may be due to seasonality of agricultural production, itself causedby seasonality of rainfall and lack of irrigation facilities in most parts, seasonalityof demand for tractor services (as high demand is only made during ploughing and produce transportation), a shortage of tractor operators, a shortage and irregular supply of diesel fuel in the rural area,and frequent breakdowns in tractors and equipment, coupled with a shortage of spare parts. It has also beenshown that private hire operators are more economically efficient in running their units than government officials, since the former operate at a cost of about W 600 per tractor hour while the latter operate at, about N 15.00per tractor hour.’ Overhead costs in the form of salaries and allowances of tractor operators and mechanics, tractor and building depreciation and cost of spareparts are higher in the government hire units than those in the private units. The relative economic efficiency of the private units may be attributed to differences in hours of duty of their operators: while those at the private units work an averageof about 9 hours per day, six days a week, those at the government units work about 7 hours

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per day but only five days a week, since civil servants do not work on Saturdays in Nigeria. In fact, during busy periods private hire units do not adhere strictly to official working hours as do the government units. Tractor operators in private units are paid an overtime allowance and are financially motivated to cover three or more farms per day. Furthermore, they operate strictly within their location so that time, fuel and operator energy are not wasted in travelling betweenstation and farms. In contrast, government hire units are by definition responsible to all farmers in the state and are supposed to serve all farmers, irrespective of distance. The procedure for payment for services rendered by the hire units is another factor responsiblefor the relative economic efficiency of the private hire units. While a farmer applying for tractor services from government units is expectedto pay the full, although highly subsidized,cost of services required before being servedthe private unit usually serve their customers first and obtain payment when the farmer has sold his produce. As a result, poor farmers seem to prefer the private hire units to those of the government despite the fact that their services are relatively more expensive.The private units therefore handle more work per year than the government units. Another point worth considering is the fact that, while officers-in-charge of government hire units are not allowed to take any managerial decision on their own, the onus of decision-making restson the private ownersin the private hire units. In the former, a series of consultations on matters affecting either tractors, implements or operators has to be made between the unit at farm level and the principal agency headquarters before decisions are taken. While government hire units purchase tractors, implements and even spare parts through the cumbersome government tender procedure, a private unit may go directly to the dealer and collect whatever he wants within days. Another important feature of the tractor hire scheme in Nigeria is the Subsidy Schemeadopted by the government to encouragefarmers to useits services.The aim of the subsidy programme is to reducethe actual price of tractor servicesto farmers with a view to reducing their production costs. Besides, subsidies are intended to induce farmers to expand their use of tractor servicessince farmers in their profit maximizing behaviour tend to employ fewer inputs (suchas tractor services)than may be socially optimal. As a consequence,the charges to farmers for using tractor services at government hire units incorporate a 30 per cent to 60 per cent subsidy, depending on the operation and the state. In general, farmers are charged well below even the operation cost of theseservices.The subsidy is effected in such a way that all farmers benefit equally, irrespective of their economic and financial power. Becauseof the limited number of available serviceable

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tractors the allocation of tractor serviceshas tended to be biased in favour of farmers with political and financial power. Poor, small-scale farmers are either prevented from using tractor services or forced to hire tractor servicesfrom the private units at a relatively higher cost. SUMMARY

AND CONCLUSIONS

This review indicates that farmers as well as government hire units face various types of problems in tractorization. Farmers using tractor services face a problem of untimeliness of serviceswhich may be due to a shortage of tractor operators, irregular supply of diesel oil in the rural areas, the frequent breakdown of tractors and equipment coupled with a shortage of spare parts. They are also confronted with unsympathetic and uncooperative tractor operators. The government hire units themselves are managed as a government business which, in the African context, is ‘everybody’sbusiness’with nobody seriously worried about its profitability. Management decisions are cumbersome and policies not effectively pursued. Despite its unlimited problems the demand for government tractor hire serviceshas been increasing up to the present stagewhen the government cannot provide enough tractors to meet farmers’ demands. This, therefore, tends to suggestthat the schememay be regardedas successfulespecially in creating the necessaryawarenessregarding farm tractorization. Moreover, in view of the tremendous potential of tractorization in Africa and becausesmall peasant farms can be mechanized, the challenging but surmountable problems of managing government hire units should be given appropriate political and financial considerations. The fact that government hire units are meant to provide welfare servicesto farmers does not mean they cannot and should not be efficiently managed. To improve the performance of government tractor hire units in Africa will therefore require taking some profit-oriented, but welfare-like, management policies. In the first place,the state agro-servicecentre, which is the principal agency of the government hire units, should be brought under the jurisdiction of the local government so that the day-to-day and long-term management of the hire units are brought closer to the farmers. The centre,which should be profit oriented, could be managed by a Board comprising the local government administrator, the local council agricultural officer representing the state government interest, representativesof farmers’ unions or cooperative societies and representatives of local council politicians. It should, however, be grant-aided by the state government. Decisions about input purchasesfor eachsection of the centre,such as tractors, implements,

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spareparts and fuel purchasesfor the tractor hire unit, should be handled by the agro-service management Board. However, the day-to-day management of the hire unit should be vested in the unit manager who should be responsible to the General Manager of the Centre. Services rendered to farmers should be priced in such a way as to break even. Consequently, farmers should be charged an ‘economic rent’ but, to provide the necessarywelfare-like services,a graduated type of rebate to be determined by the state government and not an all-embracing subsidy approach should be introduced. The hire unit should determine and give each farmer an appropriate rebate, taking into consideration his estimated annual net income. The state government should then reimburse the agroservicecentre with the total amount of rebate granted in each year using the allocation meant for tractor hire subsidy. In order to run the unit profitably efforts should be made to reduce operational costs,as well as the waiting time before farmers are served,and to improve the decision-making process. Furthermore, tractor output should be increased by encouraging tractor operators to work overtime especially during busy periods, promptly repairing tractors and implements, employing and training efficient tractor operators and mechanics and investing in machines needed for operations, such as weeding and harvesting, which are currently not being mechanized. To increasethe number of farmers using tractor servicesin Africa it may be reasonableto suggestthat government should encourageprivate group ownership of tractors, in the form of co-operatives, by intensifying the existing machinery loan scheme: long-term and low interest rate policy might be adequate. Since privately owned tractor hire units are relatively more efficient, the machinery loan schemecould also be used to encourage private ownership of hire servicesto augment government units. Charges for servicesrenderedshould, however, be the sameat both government and private units. Rebates,which are to be offset by the government, could be used in both casesto reduce the actual cost of using tractor services. REFERENCES 1. Ajekigbe, J. M., A comparative study of the performance of government tractor hiring units and private tractor owners in Oyo South Division of Western State, Nigeria. Unpublished BSc dissertation, University of Ibadan, Nigeria, 1975. 2. Akinwamide 0. P., Organizational structure of tractor hiring unit in Oyo State of Nigeria. Unpublished Higher Diploma dissertation, IAR & T, University of Ife,

Ibadan Campus, Nigeria, 1980. 3. Ekong, E. E., Partial farm mechanization and labour requirements: A dilemma in Nigerian agricultural development. Journal of rural economics and development, 11 (1977), 81-92.

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4. Essang, S. M. & Mabawonku, A. F., Determinants and implications of ruralurban migration: A case study of selected communities in Western Nigeria, African rural development paper, No. 10, University of Ibadan, Nigeria, 1974. 5. Federal Ministry of Agriculture, Proceedings of National Seminar on Agricultural

Mechanization and Land Use in Nigeria, Feb. 28th-March

3rd, 1978.

6. Federal Ministry of Information, National Development Plan (various issues), Lagos, Nigeria. 7. Kolawole, M. I., Mechanization of the small farm: Possibilities and problems, West African Journal of Agricultural Economics, 1 (1972), 166-85.