Technical Solutions and Business Models for the Mechanization of Small-holder Rice Production in Nigeria

Transcription

1 Special Initiative ONE WORLD No Hunger Technical Solutions and Business Models for the Mechanization of Small-holder Rice Production in Nigeria Abuja, 2016 Report by Dr Tan Van Pham to Green Innovation Centres for the Agriculture and Food Sector - Nigeria

2 Acknowledgements The author is extremely grateful for the valuable advice provided by the CARI project team leaders, particularly Dr. Stefan Kachelriess Matthess, and expresses special appreciation to Mr. Yusuf Dollah-Fuad and Mr. Musa Ebayaya for their assistance during his two weeks of field visits to various stakeholders of the rice value chain in Nigeria. The author also expresses his sincere thanks to the GIAE project for financial support and all persons who provided him with useful information or supports to complete the report. Lastly, the author gratefully thanks to all colleagues for reviewing the report and working closely with him during the consultancy. ii

3 Content Page Acknowledgements... i Executive Summary... v Acronyms...vi List of tables...vi List of figures...vii 1. Background of Nigeria rice production Current status of agricultural mechanisation in Nigeria Mechanisation level of rice production in Nigeria Availability of agricultural machinery in Nigeria Applied research on agricultural machinery by national institutes and centres Agricultural machinery manufactured by local fabricators Agricultural machinery supplied by international distributors Utilisation of agricultural machinery in rice production in Nigeria Utilisation of agricultural machinery in various stages of rice production Formation and activity of agricultural mechanisation service groups Mechanical services of local factories Extensional activities in agricultural mechanisation Policies of banks towards agricultural mechanisation Policies of agricultural insurance companies Solutions for mechanisation development of rice production in Nigeria Criteria for selection of agricultural machinery for small-scale rice production Selection of sets of agricultural machinery for service provision Model I: Investment in a single two-wheel power tiller of 14.5 horse power (HP) Model II: Investment in a single two-wheel tractor of 14.5 HP + a 2-body plow Model III: Investment in a single two-wheel tractor of 14.5 HP + a trailer of 1.5 tons Model IV: Investment in a single rice reaper of 1.2 meters Model V: Investment in a single axial rice thresher of 1.5 tons per hour Model VI: Investment in a complex model including a power tiller and a twobody plow Model VII: Investment in a complex model including a power tiller of 14.5 HP; a two-body plow and a self un-loading trailer Model VIII: Investment in a complex model including a power tiller; a self unloading trailer a rice reaper and an axial rice thresher...30 iii

4 3.2.9 Model IX: Investment in a complex model including a power tiller; a two-body plow; a self un-loading trailer; a rice reaper, and an axial rice thresher Other applications with two-wheel tractor in rural areas Setting up of mechanisation service groups Profit of farmers from application of mechanisation into rice farming Strengthening after-sale services Organising training courses Strengthening the agricultural extension system Financial resources for investment in agricultural machinery Government policies toward agricultural mechanisation Conclusions Recommendations Recommendations for the Competitive African Rice Initiative and the Green Innovation Centers Recommendations for the Nigerian Government...44 References...45 iv

5 Executive Summary This study aims to assess the current status of agricultural mechanisation for rice production in Nigeria and to suggest and prioritize suitable solutions to develop sustainable mechanisation services for small-holders. Field visits and interviews were carried out with different stakeholders of the rice supply chain in states of Kaduna, Niger, Kwara and Abuja City from 15th to 27th November Generally, mechanization in rice production of the states is just in the first stage of development. Although there are several machinery available in the markets, applications of the machinery to the rice production is very limited. Most of farming activities are carried out manually. Based on the findings, this study proposes a selection of machinery or groups thereof which could be used to mechanize various stages of small-holder rice production. Nine business models with different sets of the machinery are proposed for investment and provision of agricultural mechanization services. Each business model fits different conditions in terms of farming activities, financial and management capacities, ownerships and operational scopes of the investors or service providers. However, all business models result profitable not only to the service providers but also to the rice farmers using its services. Regardless of different inputs or crop yields, with the same amount of farming works, machinery and their business models give better work quality, lower farming costs and higher profit to the rice farmers. The higher the degree of mechanization, the higher is the profit for rice farmers. For a sustainable development of agricultural mechanisation, several measures are proposed to the Nigerian government and the projects Green Innovation Centers, financed by the Federal Ministry of Economic Development and Cooperation (BMZ), and Competitive Africa Rice Initiative, financed by BMZ and the Bill and Melinda Gates Foundation. The Nigerian government should have national strategies and action plans for development of agricultural mechanisation. The government should orchestrate the set-up of mechanisms for cooperations between government organisations, credit institutions, farm machinery service providers, farmer groups and farm machinery distributors. The government should also issue appropriate policies to support investments and applications of agricultural machinery into rice production. The and the GIAE projects can support this process by advising farmers and service providers on the identification of the right machinery for investment, right credit institutions to get loans and right business models for their business. Other supporting organisations such as agricultural research institutes, agricultural extension agencies, local machinery fabricators, locally mechanical factories, etc. should be strengthened to carry out machinery testing and demonstrations, to set up new business models of machinery for comparison with the manual farming models. This set of intervention has the potential to speed up the application of agricultural machinery to the rice production in Nigeria. v

6 Acronyms AGAN AMDA CARI CORAF/WECARD FAO FAOSTAT FRN GIAE GIZ MIENL NCAM JICA KAANL LUGS NAIC NBS NCAM NCRI NGN NSRIC PPP R&D TOR USAID Agricultural Graduate Association of Nigeria Agricultural & Mechanisation Development Authority Competitive African Rice Initiative West and Central African Council for Agricultural Research & Development Food and Agriculture Organisation of the United Nations Statistics Office of FAO Federal Republic of Nigeria Green Innovation Centres for the Agriculture and Food Sector Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH Mass International Equipment Nigeria Limited National Centre for Agricultural Mechanisation Japan International Cooperation Agency Kafarm Agro-Allied Nigeria Limited Let Us Grow Sustainably Nigerian Agricultural Insurance Corporation National Bureau of Statistics National Centre for Agricultural Mechanization National Cereals Research Institute of Nigeria Nigeria Naira Niger State Rice Investment Consortium Public Private Partnership Research & Development Term of Reference United States Agency for International Development List of tables Page Table1 Table 2 Table 3 Machinery/Equipment of models I to IX for mechanisation in small-scale rice production in Nigeria...26 Comparison of investment and financial efficiency between different models of agricultural mechanisation service...31 Comparison of farmer s profit between manual rice farming and mechanized farming...47 vi

7 List of figures Page Figure 1 Map of administration and rivers of Nigeria 1 Figure 2.1 Development stages of agricultural mechanisation in the world 3 Figure 2.2 Rice threshers of NCRI 4 Figure 2.3 Milling machinery of NCRI 4 Figure 2.4 Equipment made by Hanigha 5 Figure 2.5 Equipment samples 5 Figure 2.6 Three-disk plow & 7-disk harrower 6 Figure wheel tractors of 60HP 6 Figure 2.8 Machinery and equipment of Dae Sung Machinery & Construction 7 Co. Ltd Figure 2.9 Land preparation in Nigeria 8 Figure 2.10 Manual land leveling for rice transplanting in Wushishi, Niger State 8 Figure 2.11 Manual rice threshing and winnowing in Nigeria 8 Figure 2.12 A movable rice thresher in Nigeria 9 Figure 2.13 Sun-drying of paddy in Nigeria 9 Figure 2.14 Parboiled rice processing group at Doko area, Bida, Niger State 11 Figure 2.15 Small mechanical factory in Wushishi of Niger State 12 Figure 2.16 Mini power tiller with blade plow, rotary, water pump and trailer at 13 the AMDA Figure 2.17 Impact of mechanisation on farming capacity of farmers in Asia 15 and Africa Figure 2.18 Cultivated land beside unreclaimed areas at Washi village, Niger 16 State Figure 3.1 Power tiller working in both wet fields and dried fields 19 Figure 3.2 Ploughing machines 20, 21 Figure 3.3 Self un-loading trailer of 1.5 tons 22 Figure 3.4 Rice reaper with working width of 1.2 metres and cutting capacity 23 of 0.25 hectares/hour Figure 3.5 Rice thresher of 1.5 tons per hour 25 Figure 3.6 Model of a power tiller of 14.5 HP with a two-body plow 30 Figure 3.7 Model of a power tiller of 14.5 HP with a two-body plow and a self 35 un-loading trailer of 1.5 tons Figure 3.8 Model of a power tiller of 14.5 HP + a self un-loading trailer of tons + a rice reaper of 0.25 hectares/hour + a rice thresher of 1.5 tons/hour Figure 3.9 Model of a power tiller of 14.5 HP + a two-body plow + a self unloading 37 trailer of 1.5 tons + a rice reaper of 0.25 hectares/hour + a rice thresher of 1.5 tons/hour Figure 3.10 Two wheel tractor used for land leveling in Vietnam 38 Figure 3.11 Extirpator with two-wheel tractor for working in dried and wet soil in 39 Vietnam and Thailand Figure 3.12 Two-wheel tractor used for seeding on dried fields in Thailand 39 Figure 3.13 Diesel engine of 14.5 HP used with a flat-bed dryer of 6 tons of 40 paddy/batch in Vietnam, Cambodia and the Philippines Figure 3.14 Diesel engine of two-wheel tractor used for rice milling 40 Figure 3.15 Diesel engine of two-wheel tractor used for agricultural water 40 pumping in Vietnam Figure 3.16 Diesel engine of two-wheel tractor used for electricity generation in 41 rural areas Figure 3.17 Co-operation mechanisms between stakeholders for developments 42 of agricultural machinery service groups and agricultural mechanisation in Nigeria vii

8 1. Background of Nigeria rice production Agricultural land area of Nigeria is about 718,500 square kilometers, occupying about 79% of the country land area. Not less than 70% of Nigerians earn their living on agriculture (Odoemenem & Inakwu, 2011). In spite of this, agricultural production in Nigeria occupies only about 19.65% GDP of the country (National Bureau of Statistics, the Federal Republic of Nigeria, 2014). Although Nigeria is the largest rice producing country in the West African region; average rice yield is still lower than the standard of Africa; and it is still one of the biggest rice importers in the world. It imports annually from 2.2 to 2.6 million tons of milled rice to meet consumption demand of 6.8 million tons yearly. There is a large variation in annual rainfall in Nigeria. It is very high, from 1,800mm to 2,400 mm in Southern states along Atlantic Ocean. It becomes less and less in middle states. Annual rainfall of states of Kaduna, Niger and Kwara is about 1,100 1,200 mm. Three main rivers cross the states are Niger, Kaduna and Mariga rivers (Fig. 1). Rice is becoming a major staple food of Nigerians. It is a unique crop grown virtually all over 5 ecological regions of the country. Despite this, the gap between potential and practical productions of rice is still very wide, mil. hectares and 1.7 mil. hectares (about 35% of the potential), respectively. Main rice producing states of Nigeria are Kaduna (occupying 22%), Niger (16%), Benue (10%) and Taraba (7%). There are 3 main prevalent rice farming systems in Nigeria, being rainfed upland, rainfed lowland and irrigated lowland (Singh et al., 1997). Due to lack of irrigation systems, rainfed rice production is the main rice system in Nigeria. It occupies up to 77% of the total land area for rice production in which 47% is lowland and 30% is upland (FAO, 2013). There is mostly one rice crop/year with average yield of tons of paddy rice/hectare. Most of rice farms in Nigeria are small with farm size ranging from 0.2 to 3 hectares. However, small-holder farmers produce up to 80% of food for Nigeria. Figure 1 Map of administration and rivers of Nigeria 1

9 2. Current status of agricultural mechanisation in Nigeria 2.1 Mechanisation level of rice production in Nigeria Generally, there are main stages in rice farming as follows: Soil preparation (including land leveling, soil ploughing and soil harrowing), rice establishment (seeding or planting), rice management (watering, weeding, fertilizing and spraying), harvesting (including cutting, collecting and threshing/winnowing), drying and storage of the paddy rice. Mechanization plays a very important role as it increases labour productivity, crop yield, efficiency of agricultural production and reduction in crop losses, especially in intensive, labour-consuming stages such as soil preparation, planting and harvesting. Because of small household and field size with uneven terrain, together with poverty in rural areas, development of mechanization in rice production in Nigeria is facing many difficulties. Mechanization level for rice production in Nigeria is quite low. It is just 0.27HP/hectare compared with Vietnam (2.2HP/hectare), Thailand (4 HP/hectare), China (8HP/hectare) and South Korea (10HP/hectare). Only 7% of the farming activities are mechanized; 15% by draft animal and the other 78% carried out manually. As other Africa countries, Nigeria is also in the dawn stage of development in agricultural mechanization (Fig. 2.1). Figure 2.1 Development stages of agricultural mechanisation in the world. The black star marks the status quo of the Nigerian stage Source: Adapted from Japan International Cooperation Agency JICA 1

10 2.2 Availability of agricultural machinery in Nigeria Applied research on agricultural machinery by national institutes and centres There are some research institutes studying on agricultural machinery such as National Centre for Agricultural Mechanization (NCAM) in Ilorin of Kwara State or Mechanisation Department of the National Cereal Research Institute in Bida of Niger State. The institutes have researched and fabricated various machinery and equipment for rice farming and processing such as drum seeders, rice threshers (Fig. 2.2), rice sorters and cleaners, rice parboiling equipment, rice milling machinery, etc. Although most of them are still prototypes, some equipment also meet market requirement at acceptable selling prices like rice threshers and rice milling machinery (Fig. 2.3). Selling prices of rice thresher of 2 tons/hour and rice milling machine of 900-1,200kg/hour using electrical motor of 11 kw are 300,000 NGN and 750,000 NGN, respectively. Annually, the institutes usually organize training courses on use of farm machinery for machinery users and rice farmers. Figure 2.2 Rice threshers of NCRI Figure 2.3 Milling machinery of NCRI Agricultural machinery manufactured by local fabricators Some locally mechanical factories fabricate and supply agricultural machinery and equipment. For examples, Hanigha Nigeria Limited in Kaduna State. It has enough facilities, equipment and skilled workers to make simple machinery. Equipment for mechanical manufacturing consists of welders, cutters, drillers, lathes, grinders, bending equipment, etc. It supplies a wide range of products to the local markets such as pedal rice trippers, rice/corn threshers, flat bed dryers, small column dryers, bucket elevators, crew conveyors, animal feed grinders and mix- 2

11 ers, pelleting machines, etc. (Fig.2.4). However, most of the locally mechanical factories could not fabricate machinery or equipment with complicated structures and technologies or needing high manufacture accuracy such as disk plough, rice transplanting machine, rice reaper, rice combine harvester, grinder, etc. Selling prices of the machinery or equipment are quite acceptable for high income farmers. For instances, 1.5 ton- and 2.5 ton-rice threshers are at prices of US$1,500 and US$ 2,500, respectively. Besides, the factory also has cooperation programs with national projects to make equipment samples for testing and demonstrations like weeding tools or seeding tools (Fig. 2.5). Most of customers of the factory are from private sectors, rarely from public sectors. Although the factory usually organizes short-training courses of 2-3 days for users right after sales; due to limitation of capacity, it could not provide any guarantees to its purchaser. Besides, to avoid possible risks of no payment, it often requires a single payment to buyers, right after taking the machinery. These caused limitation for investments in agricultural machinery. The company complained that it hardly get supports from the government. Figure 2.4 Equipment made by Hanigh Figure 2.5 Equipment samples Agricultural machinery supplied by international distributors Some international companies also participate in the market of agricultural machinery in Nigeria. These are Mass International Equipment Nigeria Ltd (MIENL) and Kafarm Agro-Allied Nigeria Limited (KAANL) from Turkey, located in Kaduna State; Metagro Nigeria Limited from Ukraine, located in Minna Town of Niger State; and Dae Sung Machinery & Construction Co. Ltd. (Agricultural Machin-ery) from South Korea, based in Abuja. Exception of Dae Sung Machinery & Construction Co. Ltd., the other distributors 3

12 supply mainly big machinery such as 4- wheel tractors of 60HP, 3-disk plow, 7- disk harrowers (Fig. 2.6), 3-ton trailers, seeding machines, mowing machines, 1.2 m rice reapers, etc. Machinery having good markets in Nigeria are 4-wheel tractors of 60HP (Fig. 2.7), 3-disk plow, 7-disk harrowers, 3-ton trailers. These are used mostly for crops grown in up-land such as sugarcane, cassava, bean or sorghum, but not much for rice in lowland. Prices of the machinery are quite high. For instances, 4.3 million NGN for a 60HP 4-wheel tractor, 450,000 NGN for a 3-disk plow, 700,000 NGN for a 3-ton trailer, 1.2 million NGN for a self un-loading 5-ton trailer or 750,000 NGN for a 1.2m rice reaper etc. Because of higher investment cost, almost supplying contracts are with government projects. According to the Chairman/CEO of KAANL, the company can sell about 8 Four-wheel tractors, 5 Three-disk plows, 4 Seven-disk harrowers and many 5-ton trailers per year. The companies also supply spare-parts to customers after sales. Figure wheel tractors of 60HP On the other hand, Dae Sung Machinery & Construction Co. Ltd. supplies smaller machinery and equipment, mostly for rice farming and postharvest handling such as power tillers, rice transplanters, rice reapers, rice threshers, rice mills, rice destoners, etc. (Fig. 2.8). Selling prices of Korea machinery are quite high compared with those from other country companies. For examples, Korea power tiller is US$ 7,500; Korea 4-row rice transplanter with row spacing of 35cm is US$ 10,000; Korea rice reaper with working width of 1.2 m is US$ 9,000; Korea dial rice thresher with capacity of 300kg/hour is US$ 8,000; Korea rice milling machine with capacity of 220kg/hour is US$ 8,000; Korea rice milling machine with capacity of 300kg/hour is US$ 10,000; Korea rice de-stoner with capacity of 300kg/hour is US$ 3,500. However, the company offers customers up to one year warranty, one year free spareparts and free maintenance, free installation and 3-week training. Figure 2.6 Three-disk plow & 7-disk harrower 4

13 Figure 2.8 Machinery and equipment of Dae Sung Machinery & Construction Co. Ltd Figure 2.9 Land preparation in Nigeria 2.3 Utilisation of agricultural machinery in rice production in Nigeria Utilisation of agricultural machinery in various stages of rice production Due to small field size, small land holding, uneven terrain and low investment capacity, small machinery and equipment are more suitable to rice farming, post-harvest handling and processing in Nigeria. For soil preparation like ploughing and harrowing, power tillers are used quite popularly in somewhere of Nigeria (Fig. 2.9). According to Niger State Rice Investment Consortium (NSRIC project, Bida, Niger state; mechanization in soil preparation for rice farming in Washi village is about 60-70%. In spite of this, the activity particularly land leveling is mostly performed by human power with simple tools. It is hard work with low capacity (Fig. 2.10). Figure 2.10 Manual land leveling for rice transplanting in Wushishi, Niger State Rice transplanting is mostly by human power. Snap-sack sprayers are used popularly for diseases and weed controls in rice farming. Rice cutting and threshing in Nigeria are still mainly manual. After being cut, paddy grains are separated from rice straw by beating the rice stems onto wood sections or on an empty drum (Fig. 2.11). Then, winnowing of the paddy rice is done manually by women. These activities need large amount of labours. Besides, these also cause higher physical and quality losses for the rice. 5

14 Figure 2.11 Manual rice threshing and winnowing in Nigeria In recent years, some rice threshers with threshing capacity ranging from 1,000kg/hour to 1,500kg/hour were tested and demonstrated in Nigeria. After being separated from their rice stems by the threshing drum, paddy grains are cleaned by a radial fan and a screen underneath. After being separated out of the cut stem, chaff, dust, etc. cleaned paddy grains are collected into a bag or a basket through a chute on a side of the thresher. The rice threshers are quite light and could be movable manually from farms to farms for provision of the threshing service (Fig.2.12). Figure 2.12 Movable rice thresher in Nigeria Although there are some prototypes of flat-bed dryer at research institutes or mechanical factories, sun-drying is still the most popular drying method for paddy rice in Nigeria (Fig.2.13). This traditional drying method also causes higher losses and contamination with foreign materials such as soil, sand, gravels, or other foreign materials for the rice. Figure 2.13 Sun-drying of paddy in Nigeria Formation and activity of agricultural mechanisation service groups In recent years, due to requirement of agricultural mechanisation, some service groups have been formed to provide mechanisation services in soil preparation, 6

15 water pumping, pesticide spraying, etc. in some regions of Nigeria. According to the Agricultural Graduates Association of Nigeria (AGAN) in Bida, the AGAN in cooperation with Bishorps Limited under new initiative called the Let Us Grow Sustainably (LUGS) Initiative through an integrated rice project set up 167 centres in which each centre was financed to invest 2 tillers, 10 weeding tools, 1 rice reaper (known as mini harvesters) and 1 rice thresher. Each centre formed a group of 30 farmers in which 4 farmers were selected to participate in training courses on use of the agricultural machinery. The group of 4 farmers worked as an agricultural mechanization service group. It provides mechanization services to the 30 farmers and other outsiders of the group at different fees. For example, service of land preparation using power tiller for farmers in the group are only NGN 15,000/hectare, but for outsiders are up to NGN 20,000/hectare. NGN 15,000 is divided as follows: NGN 8,000 is paid to the centre for repayment of the investment cost, maintenance and repair costs; NGN 4,000 is paid to the equipment operator (the 4 selected farmers), other NGN 3,000 is for purchasing petrol for operation of the power tiller. Besides, the farmers are also supplied inputs by the LUGS and have to pay back to the LUGS by their income/output from the rice production. Another example of a successful service provider, a service provider in Wushishi of Niger State reported that he was supplied a combine including one 4-wheel MF tractor of 60HP linked with a 3-disk plow by a local government in cooperation with the AGRO Corporation. To provide service of land preparation to farmers, the service provider has to buy diesel for operation of the combine. The service provider has to also pay NGN 20,000 per day to the local government as a renting cost of the combine. The local government is responsible to pay for costs of maintenance and repair of the combine. Service cost of land preparation paid by farmers is about NGN 40,000-50,000 per day (land preparation capacity of the combine is about hectares per day, and service cost of land preparation is about NGN15,000/ hectare). Cost of diesel for operation of the combine paid by the service provider is NGN10,000 per day. As a result, income of the service provider is about NGN10,000-NGN20,000 per day. The tractor operator was very pleased with the profit sharing. Mechanisation services were also expanded to post-harvest handling activities such as parboiled rice processing, rice milling or grinding of farm crops for animal feed. It was reported that a group of people at the Mechanization Department of the National Cereal Research Institute in Bida, Niger State used their own equip- 7

16 ment consisting of paddy cleaners, boilers, soaking tanks, steaming pots, flatbed dryer/or sun-drying and rice mills for parboiled rice processing service. There are two main service seasons. The group serves almost every day in high season of dry season from November to May of the following year. For low seasons lasting from June to October annually, the group has 2 to 3 services a week. Service cost for parboiling with drying of paddy rice and milling of the rice is about NGN15/kg of paddy rice. Thanking to the project on Improving Post-harvest Quality & Packaging of Rice and Rice Products to Enhance Marketability in West Africa donated by SONGHAI, CORAF/ WECARD and USAID; Awomana Women Cooperative of parboiled rice processing was established in Doko area, Bida of Niger State. It has 6 groups of women. Each group was donated with a paddy cleaning machine, 4 boiling pots of 75kg paddy, a cement yard for sundrying of the parboiled paddy (Fig 2.14), a milling machine, a rice de-stoner of 300kg/hour and a sewing machine. Maximum service capacity of each group is about 600kg of parboiled rice per day including parboiling, milling, de-stoning and packaging. The women cooperative is providing the parboiled rice processing service successfully to the community. Figure 2.14 Sun-drying of parboiled paddy rice and product of the group: parboiled milled rice Mechanical services of local factories In comparison with Asian countries, mechanical services of local factories in Nigeria are very poor. There are very few locally mechanical factories existing in Nigeria. Beside lack of skilled workers, facilities and equipment of the locally mechanical factories are not good enough for fabrication, maintenance or repair of agricultural machinery (Fig.2.15). These cause low quality for machinery made by the factories. Figure Small mechanical factory in Wushishi of Niger State 8

17 2.3.4 Extensional activities in agricultural mechanisation For development in agricultural mechanisation, Niger State established an Agricultural & Mechanization Development Authority (NAMDA) several years ago. It is a public institution based in Mina City of Niger State. Its main function is to disseminate modern technologies and machinery to the agriculture of the state. However, it seems that its activities were not very efficient. The organization has only about 10 extension workers for agricultural mechanization, but they are not professionally trained. Sometimes, it organizes training courses for farmers or demonstrations of farm machinery. While the farmers have no machinery for their farming, there are still a lot agricultural machinery abundantly at the headquarter (Fig 2.16). Figure 2.16 Mini power tiller with blade plow, rotary, water pump and trailer at NAMDA Although sometimes, agricultural institutes such as National Centre for Agricultural Mechanisation (NCAM), international distributors of agricultural machinery like Mass International Equipment (Nigeria) Ltd., Kafarm Agro-Allied Nigeria Limited or Dae Sung Machinery & Construction Co. Ltd also organized technical training courses for their customers; in general, these were usually very short and not enough for machinery operators and farmers. Besides, access of information and services of agricultural mechanisation is quite difficult for farmers. As a result, these caused misusing of machinery for farmers, leading to reduction in serving time of the machinery, increases in repairing cost and production cost in the agriculture Policies of banks towards agricultural mechanisation A meeting with director of the Bejin-Doko Microfinance Bank (Nig) Limited was carried out at the bank office, in Bida, Niger State, Nigeria. This is known as a bank for farmers. Because of limitation of fund for lending and avoiding risks of no repayment of loans, the regulation of the bank is providing only small amount loans with short term loans. Normally, loans are provided on 6 month basis, from June-July of the first year to February-March of the following year. The later corresponds to the harvesting seasons of rice crops. The bank could lend up to a maximum amount 1% of the investment cost for individual farmers; or up to maximum amount 5% of the total investment cost for group of farmers. However, bank interest rate is very high, up to 25%/year. The bank also 9

18 provided short term loans to women groups of Awomana Women Cooperative in Doko area, Bida, Niger state, Nigeria for parboiled rice processing. Bank of Agriculture Ltd. located in Minna town, Niger State, Nigeria was visited and interviewed. According to a manager of the bank, the bank provided loans to different stakeholders of the rice supply chain such as private companies, individual farmers, groups of farmers and rice cooperatives. Conditions of loans are (1) the customers have to open a bank account at the bank and deposit at least 25% of the total loan into the account; (2) repayment to the bank progressively. Bank interest rate of loans is about 5%/year. For commercial program, bank interest rate is 9%/year. The bank provided loans to 5 groups of service providers to buy 50 tractors. The bank of agriculture has two schemes of lending: (1) Micro loans: It are 6 or 12- month term loans and not for owning tractors or machinery but for hiring the machines. Amount of loans are calculated based on hiring cost per hectare. Maximum amount of loans are not higher than NGN 250,000 (US$ 1,250). Despite of this, according to advice of the manager, to buy power tillers or agricultural machinery, one can apply for the micro loans; and a loan amount could be up to NGN million (US$6,000-7,500). However, the borrowers must be legally registered in a group of 5-10 persons. (2) Macro loans: Borrowers must be also legally registered in a group of 5-10 persons. The group has to deposit at least 10% of the total loan by house of used land. Depending on project feasibility, loan term could last up to 3 years. Processing time of loans is dependent on seasonal time in which the loans are necessary to be provided. According to a State officer of Bank of Industry in Minna, Niger State, Nigeria, the mandate of the bank is to provide loans to agricultural processing sectors but not to the agricultural production sectors. There are two models of lending: (1) For borrowing, bank, farmers and an agricultural processor must sign a common agreement in which the processor has to guarantee to repay the loan amount together with its bank interest to the bank. Mechanization service providers can get loans to buy farm machinery such as power tillers, rice threshers, etc. Similar to that condition; the bank, the farmers and the service provider must have a common agreement in which the mechanization service provider has to guarantee to repay to the bank. (2) Besides, a group of farmers who like to buy 1 or 2 machines like power tiller, rice thresher, etc. for service provision can also borrow money from the Bank of Industry. Conditions for lending are that (a) the group must be legally registered or certified by the farmer association; (b) the group must deposit a certain amount of money at the bank to ensure their repay- 10

19 Hectares Technical Solutions and Business Models for the Mechanization of Small-holder Rice Production in Nigeria ment. Maximum amount of loans is up to NGN1-5 million (US$5,000-25,000). Because it is a commercial bank, bank interest rate of the Industry bank is quite high, 9%/year. However, the period of repayment can last longer, at least 3-5 years and only begins to repay from the second year Policies of agricultural insurance companies Policies on agricultural insurance are discussed with a manager of the Nigerian Agricultural Insurance Corporation (NAIC). NAIC provides insurance to Plant all risks (PAR) due to accidents like fire, damages caused by uncertain climate, etc. (1) Insurance fee is 1% of the total capital value for no limitation of insurance; (2) Insurance fee is 0.5% of the total capital value for not covering breakdowns of machinery; (3) Insurance fee is 0.5% of the total capital value for only breakdowns of the machinery breakdown (MBD). Because of constraints above, exploitation of land for crop farming is still limited. There is a big gap between harvested land area and arable land area in Africa countries, compared with that of Asian countries (Fig.2.17) Predominantly hand power Hand power / DAP Tractors Significant Tractors Dominant Asia - Harvested area cultivated / person Asia -Arable area cultivated / person Africa - Harvested area cultivated / person Africa - Arable cultivated / person Figure 2.17 Impact of mechanization on farming capacity of farmers in Asia and Africa (Source: FAO Agriculture towards & FAOSTAT) 11

20 Similarly, due to lack of agricultural machinery, Nigeria has more than 12 million hectares of land potential for rice production, but only less than 5 million hectares are under rice farming (Fig.2.18). Figure 2.18 Cultivated land beside unreclaimed areas at Washi village, Niger State 12

21 3. Solutions for mechanisation development of rice production in Nigeria Based on the information collected from the field visits, it can be seen that to develop mechanisation for rice production in Nigeria, it is necessary to carried out a set of various measures including technical aspects, management in production and business, and government policy. 3.1 Criteria for selection of agricultural machinery for small-scale rice production Selection of machinery plays a very important role in agricultural mechanisation. Right selection could increase efficiency and profit of the investment. By contrast, wrong selection could cause huge losses for the investors and fails for mechanisation programs. For Nigeria, based on information collected during the field visits, criteria for selection of agricultural machinery for small holder rice producers could be prioritized in the order as follows: Because rice farms in Nigeria are mostly small with fragmented land and uneven terrain, machinery for mechanisation of the rice farming must be small in size and light in weight to be more convenient and efficient in their operations; Rice in Nigeria could be grown throughout five different ecological regions of the country. Therefore, machinery for each ecological region must be suitable to specific conditions of climate, weather, topography, soil types and other conditions of the ecological region in which the machinery will be used; Each machine or a group of machinery invested must bring in higher profit and benefit to the farmers in compared with the traditionally manual and existing farming methods. To shorten payback period and to increase efficiency of investments, agricultural machinery for the rice mechanisation should be applicable as much as possible for multi-purposes in the farming activities. Besides services for their own farm, the machinery should be also used to provide services for neighbor farms in the region or regions nearby. Experience in agricultural mechanisation for small-scale rice production of developing countries in South-Eastern Asia showed that a power tiller including a two-wheel tractor should be the first selection for investment. It has been recognised as a core machine in groups of machinery. The two-wheel tractor facilitates efficiently using of the other machinery/equipment in the groups. A twowheel tractor can provide power source to run various types of equip- 13

22 ment linked with it for performance of different farming activities. Therefore, the two-wheel tractor is the most important machine to increase efficiency of investment in different equipment in the group. Various groups of machinery or equipment in which a two-wheel tractor plays a role as a core power source are often very successfully. Therefore, setting up models of agricultural machinery should follow this approach. The machinery should be convenient and easy in use, maintenance and repair for users, service providers or farmers; Each machine or a group of machinery invested should be based on specific needs and practical farming conditions, operational scope of the machinery as well as financial and management capacities of the investors/service providers, but not on subjective wills of political leaders. 3.2 Selection of sets of agricultural machinery for service provision Based on the criteria specified, different models were established for mechanisation of small farms of rice production in Nigeria. Models from I to V are single models which have only one function in rice farming such as harrowing (Model I), ploughing (Model II), transporting (Model III), rice cutting (Model IV) and rice threshing (Model V). Models VI to VIII are integrated models which are a combination of 2 or more equipment to carry out two or more activities Model I: Investment in a single two-wheel power tiller of 14.5 horse power (HP) The purpose of harrowing is to make soil softer and smaller in size before seeding or planting of crops. Harrowing could be carried out after plowing or directly to the soil without plowing (minimum soil preparation method) in wet or dried land. Model I is a single model of a power tiller including a two-wheel tractor of 14.5 HP and a harrower linked behind it (Fig.3.1). Its single function is land harrowing. Manufacturing of two-wheel tractors is very complicated; besides fabricating of the soil cutting blades of the harrower requires metal annealing. Therefore, the power tiller could not be manufactured in Nigeria. It needs to be imported from Japan, Vietnam, Thailand or China. Technical specifications, original countries and selling prices of the power tillers are shown in Table 1. Initial investment cost of the model is estimated at 750,000NGN (US$3,750). Average working capacity of the power tiller is 0.25 hectares/hour. The investment is very efficient because the power tiller can work very well both in wet and dried fields. Therefore, beside land preparation for rice farming, it can expand the service to other crops in dried land 14

23 such as cassava, sorghum, beans, etc. Depending on served regions, seasons and soil conditions, service price of land preparation could vary from NGN (US$90) to 25,000NGN/hectare (US$125/ hectare). In average, it is 20,000NGN/ hectare (US$100). It means that the farmers have to pay 20,000NGN (US$ 100) per hectare for the mechanized service of land preparation using of the power tiller. Figure 3.1 Power tiller working in both wet fields and dried fields Result of the calculations for investment in Model I revealed a Net Present Value (NPV) > 0 in case financing the machine with own capital as well as financing it with a loan (100%). A positive NPV means that the investment is acceptable. The sensitivity analysis shows that the investment is relatively insensitive to price and effective use of service changes. The break-even point is reached after 5 respectively 12 hectare depending on the financing option. The detailed calculations for Model I are displayed in the Annex Model II: Investment in a single two-wheel tractor of 14.5 HP + a 2-body plow Purposes of ploughing are to create a deeper soil layer with good texture, to improve soil aeration for better activities of micro-organisms and plant roots, to destroy weeds, grasses; and to prevent soil erosion. These enable the rice plants to absorb fertilizer more effectively and to grow more evenly leading higher quality for the rice grains and higher yield for the rice crop. Model II is also a single model which is a combination of a two-wheel tractor of 14.5 HP and a two-body plow (Fig. 3.2a &b). It has only one function of land ploughing. Making of two-body plows needs metal molding and annealing technologies; therefore, the plows could not be fabricated in Nigeria. The two-body plows (moldboard or disk plows) should be imported from Thailand or China. Technical specifications, original countries and selling prices of the plows are described in Table 1. Initial investment cost of the model is 750,000NGN (US$3,750). Average ploughing capacity of the combination 1 The calculations of the other models will be made available on the CARI website 15

24 is about 0.15 hectares/hour. The machine can plow both in dried fields (using twomoldboard plow or two-disk plow) (Fig. 3.2 a, b & c) or wet fields (using twomoldboard plow) (Fig. 3.2 a &d) for not only rice farming but also for other crops such as cassava, sorghum, beans, etc. Service price of land ploughing is ranging from 10,000NGN to 15,000NGN/hectare (US$50 to75/hectare) depending on regions, seasons and land conditions. In average, farmers have to pay about 12,000NGN/ hectare (US$60/hectare) to get the mechanized land ploughing service. c) Ploughing in dried field d) Ploughing in wet field Figure 3.2 Ploughing machines a) Two-moldboard plough Calculations for investment in Model II revealed that the investment in Model II is acceptable, NPV > 0 as it could bring in profit to the investor. In summary, model II satisfied all criteria for selection of the machinery above. b) Two-disk plough Model III: Investment in a single two-wheel tractor of 14.5 HP + a trailer of 1.5 tons Most of transportations of input materials like fertilizer, seeds, pesticides and agricultural commodities in Nigeria are not mechanized but manual. These are heavy works and intensive time consumption. It also increases production cost of crops. 16

25 Therefore, mechanisation in rural transportation is very necessary. A single model of transportation consists of a twowheel tractor of 14.5 HP and a self unloading trailer of 1.5 tons linked behind it (Fig. 3.3). Function of the model is only rural transportations. Although simple twowheel trailers could be made in Nigeria, self-unloading two-wheel trailers should be imported from China or Thailand. Selfunloading trailers require a hydraulic pump from the tractor, a hydraulic cylinder underneath the carriage and hydraulic lines connecting from the hydraulic pump and the hydraulic cylinder. These components must be imported to Nigeria. Technical specifications, original countries and selling prices of the trailers are shown in Table 1. Figure 3.3 Self un-loading trailer of 1.5 tons Investment cost of the model is 800,000NGN (US$4,000). The model could be used for transportation of agricultural input materials and commodities all the years. Depending on type and amount of commodities, requirements and distance of transportation, road conditions, seasons, etc. service price of transportation could range from 1,500 NGN to 3,500NGN/hour (US$ 7.50 to 17.50/hour). For investment calculation, in average; service price of transportation could be 2,000NGN/hour (US$10/hour). However, depending on capacity and creation in marketing of service providers, it can be used for rural transportation up to 280 days per year. Compared with the criteria specified above, model III satisfied all the criteria Model IV: Investment in a single rice reaper of 1.2 meters Harvesting cost often occupies a high percentage of the total production cost of rice. Experience from Asia countries showed that mechanisation in rice cutting using rice reaper contributed significantly to reductions in harvest loss, labor intensity and production cost. A business model consisting of the rice reaper has only one function, that of rice cutting. The cutting knives of the rice reaper need metal annealing technologies, reciprocating motion speed of cutting bar of the rice reaper is quite high and clearance between the cutting knives and the cutting blades is very narrow. These require accurately mechanical manufacturing. Therefore, rice reapers could not be made in Nigeria, but imported from other countries such as Vietnam, Thailand, China, etc. Technical specifica- 17

26 tions, original countries and selling prices of the rice reaper are shown in Table 1. It often has working width of 1.2 metres with cutting capacity of 0.25 hectare per hour (Fig.3.4). It requires a gasoline engine of 5.5 horse powers with fuel consumption of 0.7 to 1.0 litres/hour. Initial investment cost of the rice reaper is about 400,000NGN (US$2,000). The rice reaper can replace up to labors in rice cutting. Besides, it can reduce cutting loss to only 1% compared with hand cutting of 2-3%. Cutting height of the machine can be adjusted from 7cm to 35cm to cut rice plants with height ranging from 50cm to 90cm. It can work in both dried and wet fields. However, it works easier and faster in dried fields. Therefore, for more convenience in harvesting, farmers should drain up field water from 7 to 10 days before cutting. Figure 3.4 Rice reaper with working width of 1.2 metres and cutting capacity of 0.25 hectares/hour Depending on number of rice crops per year and marketing capacity of the service provider; operating time of the rice reaper can vary widely from 20 days to 200 days per year. An average value of 100 days was taken for investment analysis. On the other hand, depending on regions, seasons and rice conditions, service price of rice cutting could be also vary from 14,000NGN/hectare (US$70/hectare) to 17,000NGN/hectare (US$85/hectare). On average, a cutting service price of 15,000NGN/hectare (US$75/hectare) was taken for investment analysis. The result of economic analysis shows that the investment in the rice reaper for service of rice cutting is acceptable because it is very efficient (NPVs > 0). Model IV also satisfied all the criteria for selection of agricultural machinery mentioned previously. It can bring in profit to the investor and pay back to the investment within 0.33 years. 18

27 3.2.5 Model V: Investment in a single axial rice thresher of 1.5 tons per hour. Rice threshing with winnowing is the hardest work in rice harvesting. It consumes a lot of labours and occupies a highest percentage of the harvesting cost. Mechanisation in rice threshing can reduce not only harvesting cost but also harvesting loss of rice. A single model of axial rice thresher has two functions being threshing and winnowing (cleaning) of the rice grains. Owing to training courses on fabrication of agricultural machinery carried out by the previous projects, rice thresher could be manufactured at some mechanical factories in Nigeria. However, it could be also ordered and imported from other South-East countries such as Vietnam, Thailand, etc. Technical specifications, original countries and selling prices of the rice threshers are described in Table 1. It often requires a diesel engine of at least 7.5 horse powers (Fig. 3.5). Investment cost of the rice thresher is about NGN 350,000 (US$1,750). Its capacity is 1.5 tons of paddy rice per hour including threshing and cleaning of the paddy, replacing up to 30 labours. It consumes about 2 liters of diesel per hour. Depending on number of rice crops per year and marketing capacity of the service provider, operating time of the model could be taken from 20 days to 200 days per year. Moreover, dependent on yield of rice crop, field conditions and seasons; service price of rice threshing could be also varied from 1,500 NGN to 6,400NGN/hectare (US$7.5-32/hectare). For investment analysis, average values of the two data taken were 100 days and 4,000NGN/hectare (US$20/hectare), respectively. Figure 3.5 Rice thresher of 1.5 tons per hour made at Hanigha workshop, Nigeria Result of investment analysis showed that it is acceptable to invest the rice axial thresher of 1.5 tons of paddy rice per hour for service of rice threshing & winnowing as NPV > 0. The investment is quite efficient. Similar to the other models, model V also satisfied all the criteria. It can bring in profit to the investor. Based on individual service prices of soil ploughing, harrowing, transportation, rice cutting and rice threshing in the Model I, II, III, IV and V, the total cost of mechanized farming activities per hectare could be determined. This corresponds to the service price that the rice farmers have to pay to service providers to get their mechanized farming activities (Table. 3). 19

28 Table 1. Machinery/Equipment of models I to IX for mechanisation in small-scale rice production in Nigeria No. Agricultural machinery/equipment Technical specifications Original country & selling prices I. PLOUGH 1 + Type: Two-disk plough + Model: 1LS Number of disks: 2 + Net weight of plow (kg): 40 + Ploughing width (cm): 40 + Ploughing depth (cm): Required power: 2-wheel tractor of 12-18HP. + Product of Yuching Heng-Shing Machinery Co. Ltd-YCHS (China) + Selling price in China: US$70-80 (NGN14,000-16,000) II. POWER TILLER 2 + Type: Power tiller + Overall dimensions (LxWxH) (cm): 275x90x125 + Weight without engine (kg): Tilling width (cm): (600) + Required power: Diesel engine of 7.72 kw; type: 4 cycle, 1 cylinder, horizontal position. + Product of Thailand + Selling price in Nigeria: NGN 750,000 (US$3,750) 3 + Type: Power tiller + Model: MK 120 (MK 120S) + Overall dimensions (LxWxH) (cm): 229x71x120 + Weight without engine (kg): 257 (271) + Tilling width (cm): (600) + Speeds: - Forward: 6 speeds - Reverse: 2 speeds - Tilling: 4 speeds + Wheel tread (cm): Required power: Diesel engine RV125-2 (LX), type: 4 cycle, 1 cylinder, horizontal position - Weight of engine (kg): Rated output: 10.5 HP/2,200 rpm - Max output: 12.5HP/2,400 rpm - Cooling system: Radiator + Product of Sveam (Vietnam); + Selling price at Saigon sea port in Vietnam (FOB price): US$1,500 (NGN300,000) 20

29 No. Agricultural machinery/equipment Technical specifications Original country & selling prices 4 + Type: Diesel engine + Model: RV145-2LX + Overall dimensions (LxWxH) (cm): 77.2 x 37.8 x Weight of engine (kg): Bore x Stroke (mm): 100 x 94 + Rated output: 12.5 HP/2,200 rpm + Max output: 14.5HP/2,400 rpm + Cooling system: Radiator; + Diesel consumption (g/hp.hr): Product of Sveam (Vietnam) + Selling price at Saigon sea port in Vietnam (FOB price): US$ 1,200 (NGN240,000) 5 + Type: Power tiller + Model: MX Overall dimensions (LxWxH) (cm): - With cage wheels: 325 x 225 x With rubber wheels: 325 x 170 x Weight with engine (kg): 1,100 + Speeds (Gear box made in China): - Forward: 6 speeds, 3-5 km/hr - Reverse: 2 speeds - Tilling: 4 speeds + Tilling width (cm): 120 (+20) + Tilling capacity: - In wet field (hectares/hr): In dried field (hectares/hr): Required power: Diesel engine of 28-30HP, VIKYNO (Sveam) Vietnam, type: 4 cycle, 1 cylinder, horizontal position III. TWO-WHEEL FARM TRAILER 6 + Type: Hydraulic self-unloading + Kind: Rear unloading + Number of rubber wheels: 02 + Overall dimensions (LxWxH) (cm): 280 x 160 x Size of carriage (cm):200 x 100 x 45 + Weight of trailer (kg): Transporting capacity (tons): Max. transporting speed (km/hr): 25 + Scopes of application: Plains, mountain areas, wet lands, rural areas, etc. + Required power: Two-wheel tractor of HP. 7 + Type: Hydraulic self-unloading + Kind: Rear unloading + Model: 7C-1.5T (7CX-1.5T) + Number of rubber wheels: 02 + Tire/number: wheels + Overall dimensions (LxWxH) (cm): 315 x 155 x Size of carriage (cm):210 x 150 x 45 + Weight of trailer (kg): 390 (470) + Loading capacity (tons): Unload form: No tipping (back tip- + Product of Tu Sang Mechanical Enterprise (Vietnam); + Selling price at Saigon sea port in Vietnam (FOB price) in Vietnam: - With engine: US$ 5,000 (NGN1,000,000) - Without engine: US$3,500 (NGN700,000) + Product of Shandong Tiansheng Machinery Co.Ltd (China) + Selling price in China (FOB): US$ 800-1,000 (NGN 160, ,000) + Product of Tianchang Machinery Co. Ltd -TICH (China); + Selling price in China (FOB): US$1,000-1,500 (NGN 200, ,000) 21

30 No. Agricultural machinery/equipment Technical specifications Original country & selling prices IV. RICE REAPER ping) + Required power: Tractor of 12-25HP. 8 + Type: Rice reaper + Model: VPR Overall dimensions (LxWxH) (cm): 220 x 148 x 70 + Weight of rice reaper (kg): Cutting width (cm): Cutting height (cm): Cutting capacity (m 2 /hr): 2,500 3,000 + Required power: 4 Cycle air cooled gasoline engine of 4kW/3,600rpm + Travelling speed: - Forward (km/hr): Reverse (km/hr): Product of Sveam (Vietnam); + Selling price at Saigon sea port in Vietnam (FOB price): US$ 2,000 (NGN 400,000) 9 + Type: Rice reaper + Overall dimensions (LxWxH) (cm): 199 x 190 x Weight of rice reaper without engine (kg): Cutting width (cm): Cutting height (cm): Cutting capacity (m 2 /hr): 3,000 4,000 + Required power: 4 Cycle air cooled gasoline engine of 6.5-7HP/3,600rpm; + Fuel consumption (litre/hr): Product of An Giang Mechanical Company (Vietnam); + Selling price at Saigon sea port in Vietnam (FOB price): US$ 2,000 (NGN 400,000) 22

31 V. RICE THRESHER 10 + Type: Axial rice thresher + Overall dimensions (LxWxH) (cm): 250 x 130 x Weight of thresher (kg): Threshing capacity (kg/hr): 2,000 + Required power: 4 cycle water cooled diesel engine of 10HP. + Product of The National Cereal Research Institute (Nigeria); + Selling prices in Nigeria: NGN350,000 (US$ 1,750) 11 + Type: Axial rice thresher + Overall dimensions (LxWxH) (cm): 165 x 160 x Weight of thresher (kg): Threshing capacity: a) 1,500 kg/hr; required power of 4 Cycle water cooled diesel engine of 7 HP. b) 2,500 kg/hr required power of 4 cycle water cooled diesel engine of 15 HP. + Product of Hanigha (Nigeria); + Selling prices in Nigeria: a) US$ 1,750 (NGN 350,000); b) US$ 2,200-2,700 (NGN 440, ,000) 12 + Type: Axial rice thresher + Overall dimensions (LxWxH) (cm): 320 x 130 x Weight with engine (kg): Threshing capacity (tons/hr): 1 2 (including threshing & winnowing) + Required power: Sveam Diesel engine of HP made in Vietnam + Product of Tu Sang Mechanical Enterprise (Vietnam); + Selling price at Saigon sea port in Vietnam (FOB price) in Vietnam: - With engine: US$ 2,300 (NGN 460,000) - Without engine: US$2,000 (NGN 400,000) Note: Exchange rate between Nigerian Naira (NGN) and US Dollar is 200NGN/US$ 23

32 3.2.6 Model VI: Investment in a complex model including a power tiller and a two-body plow For models of VI, VII, VIII and IX; these are complex models which integrated two or more equipment into a complex model. Advantages of the complex models compared with single corresponding models are that these have the same functions (for example ploughing activity) and capacity (hectare/hour) of services but these have lower investment cost, higher profit (NGN/year) and shorter payback period (year). Model VI is a complex model which is an additional investment of the twobody plow to model I (Fig.3.6). the total investment cost of model I with model II (Table 2). Lower investment cost is due to a combination of different equipment. For example, if we compare model VI with model II, we can see that the investment of ploughing equipment (only 2- body plow) of model VI was only 150,000 NGN (US$750) while the investment of two-wheel tractor of 14.5 HP with a twobody plow were: 600,000 NGN + 150,000 NGN = 750,000 NGN (US$3,750). However, profit, breakeven point and payback period of model VI were 1,070,400 NGN/year (US$5,352/ year) 6.25 hectares and 0.05 years, respectively; while these of model II were only 196,750 NGN/year (US$983.75/ year), up to hectares and up to 0.52 years, respectively. It is clear that model VI is better than model II. Figure 3.6 Model of a power tiller of 14.5 HP with a two-body plow Although model VI has the same functions and capacity as model I with model II; it has lower investment cost compared with 24

33 Table 2. Comparison of investment and financial efficiency between different models of agricultural mechanisation service MODEL MODEL I MODEL II MODEL III MODEL IV MODEL V MODEL VI MODEL VII MODEL VIII MODEL IX Core machinery A power tiller of 14.5 HP (including a twowheel tractor + a harrower linked behind it) with working capacity of 0.25 hectares/hour A two-wheel tractor of 14.5 HP A two-wheel tractor of 14.5 HP A power tiller of 14.5 HP (including a twowheel tractor + a harrower linked behind it) with working capacity of 0.25 hectares/hour A power tiller of 14.5 HP (including a twowheel tractor + a harrower linked behind it) with working capacity of 0.25 hectares/hour A power tiller of 14.5 HP (including a two-wheel tractor + a harrower linked behind it) with working capacity of 0.25 hectares/hour A power tiller of 14.5 HP (including a two-wheel tractor + a harrower linked behind it) with working capacity of 0.25 hectares/hour Additional equipment A two-body plow with ploughing capacity of 0.15 hectares/hour A self unloading trailer with transporting capacity of 1.5-tons A single rice reaper with cutting width of 1.2 metres and cutting capcacity of 0.25 hectares/hour A single axial rice thresher with capacity of 1.5-tons of paddy/hour including threshing and cleaning of the paddy A two-body plow with ploughing capacity of 0.15 hectares/hour A two-body plow with ploughing capacity of 0.15 hectares/hour A two-body plow with ploughing capacity of 0.15 hectares/hour A self unloading trailer with transporting capacity of 1.5-tons A self un-loading trailer with transporting capacity of 1.5- tons A rice reaper with cutting width of 1.2 metres and cutting capcacity of 0.25 hectares/hour A self un-loading trailer with transporting capacity of 1.5- tons A rice reaper with cutting width of 1.2 metres and cutting capcacity of 0.25 hectares/hour An axial rice thresher with capacity of 1.5- An axial rice thresher with capacity of

34 MODEL MODEL I MODEL II MODEL III MODEL IV MODEL V MODEL VI MODEL VII MODEL VIII MODEL IX tons of paddy/hour including threshing and cleaning of the paddy tons of paddy/hour including threshing and cleaning of the paddy Pictures Picture of model 1 & Picture model 2 Pictures of models 1,2 & 3 Pictures of models 1,3,4 & 5 Pictures of models 1,2,3,4 & 5 Initial investment cost 600, ,000 = 750,000 NGN (US$ 3,750) 600, ,000 = 750,000 NGN (US$ 3,750) 600, ,000 = 800,000 NGN (US$ 4,000) 400,000 NGN (US$ 2,000) 350,000 NGN (US$ 1,750) 750, ,000 = 900,000 NGN (US$4,500) 750, , = 1,100,000 NGN (US$5,500) 750, , ,000 = 1,640,000 NGN (US$8,200) 750, , , ,000 = 1,790,000 NGN (US$8,950) Total profit (NGN/year) 1,348,250 NGN (US$6,741) (pre-financed) 1,220,750 NGN (US$6,104) (post financed) 924,000 NGN (US$4,620) 594,800 NGN (US$4,774) 2,616,800 NGN (US$13,084) 1,119,100 NGN (US$5,596) 3,764, ,070,400 = 4,834,400 NGN (US$24,172) 3,764, ,070, ,200 = 5,575,600 NGN (US$27,878) 3,764, , ,616, ,135,540 = 8,257,500 NGN (US$41,288) 3,764, ,070, , ,616, ,135,540 = 9,327,940 NGN (US$46,640) Breakeven point (hectare) & ; 6.25 & ; 34.88; & ; 6.25; 34.88; & NPV 4,061,994 NGN (pre-financed) 3,951,124 NGN (post financed) 4,842, ,202, ,916, ,742, ,096, ,427, ,096, ,427, ,787, ,096, ,787, ,853, ,798, ,096, ,427, ,787, ,853,

35 MODEL MODEL I MODEL II MODEL III MODEL IV MODEL V MODEL VI MODEL VII MODEL VIII MODEL IX 3,798, Proper programs & banks to apply for loans to invest agricultural machinery Applying for Micro loans at the Bank of Agriculture which can lend up to NGN mil. (US$6,000-7,500) with interest rate of only 5%/year within up to 12 months Applying for Micro loans at the Bank of Agriculture which can lend up to NGN mil. (US$6,000-7,500) with interest rate of only 5%/year within up to 12 months Applying for Micro loans at the Bank of Agriculture which can lend up to NGN mil. (US$6,000-7,500) with interest rate of only 5%/year within up to 12 months Applying for Micro loans at the Bank of Agriculture which can lend up to NGN mil. (US$6,000-7,500) with interest rate of only 5%/year within up to 12 months Applying for Micro loans at the Bank of Agriculture which can lend up to NGN mil. (US$6,000-7,500) with interest rate of only 5%/year within up to 12 months Applying for Micro loans at the Bank of Agriculture which can lend up to NGN mil. (US$6,000-7,500) with interest rate of only 5%/year within up to 12 months Applying for Micro loans at the Bank of Agriculture which can lend up to NGN mil. (US$6,000-7,500) with interest rate of only 5%/year within up to 12 months - Legally registered groups of 5-10 farmers can use their houses or used land for deposit of at least 10% of the total loan to apply for Macro loans at the Bank of Agriculture which can lend more than NGN1.5 mil. (US$7,500) at interest rate of 5%/year within up to 3 years. - Legally registered groups of 5-10 farmers can use their houses or used land for deposit of at least 10% of the total loan to apply for Macro loans at the Bank of Agriculture which can lend more than NGN1.5 mil. (US$7,500) at interest rate of 5%/year within up to 3 years. - Legally registered groups of farmers have to sign an agreement with Bank of Industry and have a certain deposit for ensuring their repayment in order to apply for long term loans of NGN1-5 mil (US$5,000-25,000) at interest rate of 9%/year within 3-5 years. Re- - Legally registered groups of farmers have to sign an agreement with Bank of Industry and have a certain deposit for ensuring their repayment in order to apply for long term loans of NGN1-5 mil (US$5,000-25,000) at interest rate of 9%/year within 3-5 years. Re- 27

36 MODEL MODEL I MODEL II MODEL III MODEL IV MODEL V MODEL VI MODEL VII MODEL VIII MODEL IX payment can begin in the second year. payment can begin in the second year. Scale of service Proper owners Within a farm or with neighbor farms Big farmers or individual service provider Within a farm or with neighbor farms Big farmers or individual service provider Within a farm or with neighbor farms Big farmers or individual service provider Within a farm or with neighbor farms Big farmers or individual service provider Within a farm or with neighbor farms Big farmers or individual service provider Operational scopes of the machinery - For soil preparation before sowing or transplanting; - For soil preparation in both dried and wet fields for rice, vegetables or other crops. - For soil preparation before harrowing; - For soil preparation in moist land. - For rural transportation of agricultural inputs like fertilizer, seeds, etc. and agricultural commodities like rice, animal feed, other crop products or farming machinery/ Equipment. - For rice cutting, - For rice threshing & winnowing Note: Exchange rate between Nigeria Naira (NGN) and US Dollar is 200NGN/US$ Within a farm or with neighbor farms Big farmers or individual service provider - For land preparation of rice or other crops in low land or up-land Within a cooperative or Intervillages Cooperative or a group of service providers - For farming and transportation within and outside of farms. Within a big cooperative or inter-regions or inter-states of Nigeria Big group of farmers, cooperatives or service providers - For farming and service on agricultural mechanisation inter-villages or inter-regions. Within a big cooperative or inter-regions or inter-states of Nigeria Big group of farmers, cooperatives or service providers - For farming and service on agricultural mechanisation inter-villages or inter-regions. 28

37 In addition, if we compare total investment of model VI with the total investment of model I + model II, we can see that model VI has the same functions of harrowing and ploughing as model I + model II. However, the former requires a lower investment than the latter; 750,000NGN (US$3,750) + 150,000 NGN (US$750) = 900,000 NGN (US$4,500) compared with 750,000NGN (US$3,750) + 750,000NGN (US$3,750) = 1,500,000 NGN (US$7,500) (Table 2). However, total profit of model VI (3,764,000 NGN/year (US$18,820/year) + 1,070,400 NGN/year (US$5,352/year) = 4,834,400 NGN/year (US$24,172/year)) is higher than that of Model I with model II (3,764,000 NGN/year (US$18,820/year) + 924,000NGN/year (US$4,620/year) = 4,688,000NGN/year (US$23,440/year). Comparison of the other criteria such as breakeven point, payback period and NPV between the two models gives the same results (Table 2). So, it is clear that model VI is more beneficial and profitable than model II or model I + model II. Similarly, with the same functions and capacity; model VII has less investment cost but higher profit than a set of model I + model II + model III; model VIII has less investment cost but higher profit than a set of model I + model III + model IV + model V; model IX has also less investment cost but higher profit than a set of models I + II + III + IV+ V (Table 2). Comparison of investment cost, total profit, breakeven point, payback period and NPV between the 9 models give the same results Model VII: Investment in a complex model including a power tiller of 14.5 HP; a two-body plow and a self un-loading trailer This model is a combination of models I, II & III. It requires a bigger investment capital compared with single investments of each model I, II & III. In comparison with model III (a single investment in a twowheel tractor of 14.5 HP with a self unloading trailer of 1.5 tons), the additional investment of the self un-loading trailer of 1.5 tons becomes more efficient. Result of calculations from Table 2 reveal that profit of model VII increased NGN292,800/year (US$1,464/ year) compared with the total profit from 3 models of I, II & III (NGN5,282,800/year (US$26,414/year)) in the same conditions of production. 29

38 profit for the investors compared with single investments of the machinery. Figure 3.7 Model of a power tiller of 14.5 HP with a two-body plow and a self un-loading trailer of 1.5 tons Model VIII: Investment in a complex model including a power tiller; a self un-loading trailer a rice reaper and an axial rice thresher This model has high investment cost. Due to the 1.5 tons trailer, it can help expand services of the land harrower, the rice reaper and the rice thresher wider. The three machineries could be put onto the trailer for transporting to service sites easily. Therefore, annual service time of the machinery increases. It leads to increases in financial efficiency of investment and Figure 3.8 Model of a power tiller of 14.5 HP + a self un-loading trailer of 1.5 tons + a rice reaper of 0.25 hectares/hour + a rice thresher of 1.5 tons/hour 30

39 3.2.9 Model IX: Investment in a complex model including a power tiller; a two-body plow; a self unloading trailer; a rice reaper, and an axial rice thresher This is a complex model. It needs the biggest investment, and therefore needs better business management. It can provide mechanisation services to not only rice farmers in low land but also to farmers of other crops in up-land such as cassava, sorghum, beans, sugarcane, etc. in intervillages or inter-regions. In comparison with model V (a single axial rice thresher with capacity of 1.5 tons of paddy rice including threshing and winnowing), the additional investment in the axial rice thresher of 1.5 tons per hour without including a diesel engine of 7.5 HP becomes more efficient and profitable. Table 2 showed that in the same conditions of rice production, model IX brought in the biggest profit compared with the other models. Figure 3.9 Model of a power tiller of 14.5 HP + a two-body plow + a self un-loading trailer of 1.5 tons + a rice reaper of 0.25 hectares/hour + a rice thresher of 1.5 tons/hour 31

40 3.3 Other applications with two-wheel tractor in rural areas Beside models mentioned above, the twowheel tractor and its diesel engine could be also used for various purposes in rural areas in Nigeria such as land leveling, field cleaning, seeding, water pumping, paddy rice drying, rice milling, electrical generation, etc. A simply wood board attached behind a two-wheel tractor could be used for land leveling in wet fields before rice seeding or transplanting (Fig. 3.10). equipment is very simple, it could be also made easily at locally mechanical factories in Nigeria. An extirpator linked behind the two-wheel tractor could be used for making the soil finer, more even or for collecting rice straw, grass or other foreign materials remained in the fields in order to make it cleaner before seeding or transplanting. The equipment could work easily both in wet or dried fields (Figure 3.11). It is about only US$50 (NGN 10,000) and could be fabricated easily in locally mechanical factories in Nigeria. Figure 3.10 Two wheel tractor used for land leveling in Vietnam Purposes of land leveling are to make the rice field even; leading to saving of water supply and energy, better weed control using water level, higher efficiency in use of fertilizer, reduction in chemical uses, even growth of the rice field, increases in quality and yield of the rice. The equipment is only about US$100 (NGN 20,000) and used popularly in South-East Asia countries such as Vietnam, Thailand, Indonesia, the Philippines, etc. Because the Figure 3.11 Extirpator with two-wheel tractor for working in dried (a) and wet (b) soil in Vietnam and Thailand 32

41 Depending on specific conditions of soil, seed and crop requirements, various grain seeders could be designed and fabricated to connect behind two-wheel tractors for seeding of cereal grain seeds such as paddy, maize, peanut, soybean or other grain seeds on dried soil (Fig. 3.12). Depending on size of the seeder, working principle and structure of the seeding component and number of seeding rows; selling prices of seeding machines could vary from US$ 500 (NGN 10,000) to US$3,750 (NGN 750,000). Simple grain seeders could be also designed and fabricated in Nigeria for local use. Figure 3.13 Diesel engine of 14.5 HP used with a flat-bed dryer of 6 tons of paddy/batch in Vietnam, Cambodia and the Philippines Nigeria is very rich with oil. Diesel and gasoline are very cheap. However, the national electricity network does not cover throughout the country and being not stable, especially rural areas. To solve the problems, a diesel engine of HP from the two-wheel tractor could be used very efficiently for powering an axial fan in paddy rice drying (Fig. 3.13), rice milling (Fig. 3.14), animal feed processing, agricultural water pumping (Fig. 3.15) or electricity generation for various purposes in rural areas (Fig. 3.16). Figure 3.12 Two-wheel tractor used for seeding of cereal grains in South-East Asia Figure 3.14 Diesel engine of a two-wheel tractor used for rice milling 33

42 Figure 3.15 Diesel engine of a two-wheel tractor used for agricultural water pumping in Vietnam, Thailand, Indonesia Figure 3.16 Diesel engine of a two-wheel tractor used for electricity generation in rural areas of developing countries such as Cambodia and Laos All the equipment for combinations with two-wheel tractors above could be imported from Japan, Vietnam, Thailand or China. 3.4 Setting up of mechanisation service groups Lessons drawn from the development of agricultural mechanisation in developing countries point out that small farmers with low income cannot afford to buy machinery for all their own farming activities. It is not efficient if machines are used only several days a year within a farm. Therefore, besides serving their own farm, the machinery have to expand their services to neighbour farms within the village or outside the village in order to increase number of service days per year, reduce the service cost and repayment time. On the other hand, individuals or private groups perform better and more efficiently in the provision of agricultural mechanisation services than public organisations. To develop agricultural mechanisation, first beneficiaries of the machinery service have to be the farmers, then service providers themselves. Service provider could be individual persons or groups of people. Because they are professional units, the scope of their service could be expanded widely; and the mechanisation service could be provided very efficiently and timely to each of small rice farmers. For setting up agricultural mechanisation service groups in the early stage when the groups have no capital for investment in agricultural machinery; the government could allocate some funds to credit institutions which on behalf of service groups will pay investment cost of the machinery to farm machinery distributors or suppliers. The government could also subsidize some percentage of the investment or bank interest rate to the service groups. After taking the machinery from the distributors or suppliers, the service groups will provide mechanisation services to the 34

43 rice farmers to get service fees in order to repay gradually the investment cost and bank interest to the credit institutions. The service groups also have to pay after sale services such as maintenance and repair to the farm machinery distributors or suppliers. During getting the machinery services, the rice farmers will have requirements and feedbacks to the machinery distributors or suppliers for improvement of the machinery. The rice farmers can also take part into the service groups via an investment as shareholders in order to share profit from the services. Farm machinery distributors can also suggest the government to issue better policies to speed up and scale out the agricultural mechanisation of the country. Cooperation mechanisms between the stake-holders for the developments of agricultural machinery service groups and agricultural mechanisation are shown in Fig Depending on technical specifications of machinery, size of the investment, number of the machinery and management capacity of service groups; corresponding operational scopes of the machinery, service owners and scales of the service provision are described in Table 2. Figure 3.17 Co-operation mechanisms between stakeholders for developments of agricultural machinery service groups and agricultural mechanisation in Nigeria 35

44 To support for setting up service groups, local farmer association should provide guarantee to banks so that the service groups can get bigger loans with longer terms and softer interest rates for their investment in machinery. Besides, the government should also subsidize some percentage of the investment for the groups. In return, the group has to pay credit to the local farmer associations for the guarantee. The groups have to prioritize their mechanisation service to members of their co-operatives other than outsiders of the co-operatives. Members of the service groups should be given training on technical and management knowledge. For sustainable development, service groups have to do the business efficiently, provide good service to the rice farmers, bring in and share profit properly to members of the group. For Nigeria, agricultural mechanisation service groups should be formed from people who have good knowledge in agricultural production and machinery as well as skills in business management. Members of the group should be shareholders or workers of the service business. Main contractor should be one of the biggest shareholders or appointed by all members of the group. He is known as a chief of the group, who has highest responsibilities and the most powerful right in issuing decisions during doing the business. 3.5 Profit of farmers from application of mechanisation into rice farming Application of machinery into rice farming in Nigeria can bring in profit not only to the service providers (Table 2) but also to the rice farmers (Table3). Profit for the rice farmers is calculated based on normal conditions of rice production in Nigeria assuming the following: Working capacity of the machinery remains the same in all situations; operating time of the machinery is a medium figure, 100 days/year; bank interest rate is 25%/year; inflation rate is 11%/year; selling price of diesel and gasoline are 140NGN/litre and 87NGN/litre, respectively; depending on type of the machinery, period of ownership is 10 years or 5 years. Profit of the rice farmer from application of machinery in each stage of rice farming is a subtraction between the manual farming cost and mechanized farming cost of the farming stages. Manual farming cost of each farming stage is a multiplication of number of man-day (MD) for the farming stages and daily labour cost (See Column no.9 of Table3). Mechanised farming costs are a sum of fixed costs and running cost of the machinery which are computed based on the assumptions. Table 3 revealed clearly that no need to consider effects of other inputting costs and yield of the rice; with the same 36

45 amount of work, machinery in all stages of the rice farming can give the rice farmers better quality of work and higher profit compared with manual farming method. The more the farming machinery were applied into rice production, the more the profit is for the farmers. On the other hand, compared with single investments in machinery such as models I, II, III, IV & V; complex investments in sets of the machinery like models VI, VII, VIII & IX bring in more profit not only to the investors/service providers (See Table2) but also to users of the services (farmers). Besides, Table 3 also indicates that machinery needs less labour than the traditionally manual method in rice farming. The more the machinery is applied into rice farming, the more the labour is liberated out of the farming. Because of much higher working capacity compared with human power, the machinery can help farmers reclaim more land areas for cultivation to improve their income and living standard. People liberated from the rice fields, especially young people can participate to develop rural agro-industries or get in cities for jobs with higher income. 37

46 Table 3. Comparison of farmers' profit between the manual rice farming and mechanized farming Mechanized models Model I Labour cost: 800 Farmers' profit from mechanized services NGN/MD Farming structure and structure of labour requirement (%) Farming cost (NGN/ha) and cost structure (%) Manual farming Mechanized farming Operation Labour Manual Mechanized Reduction in Reduction in Labour Structure Capacity time Labour Structure cost farming Structure farming Structure labour requirement farming cost Rice farming stages MD/ha % ha/hr days/yr MD/ha % NGN/day NGN/ha % NGN/ha % MD/ha % NGN/ha % Land preparation (harrowing) Model II Land ploughing Model III Transportation Model IV Rice cutting Rice threshing and Model V winnowing Total Model VI Land preparation Land ploughing Transportation Rice cutting Rice threshing and winnowing Total Model VII Land preparation Land ploughing Transportation Rice cutting Rice threshing and winnowing Total Model VIII Land preparation Land ploughing Transportation Rice cutting Rice threshing and winnowing Total Model IX Land preparation Transportation Rice cutting Rice threshing and winnowing Total

47 3.6 Strengthening aftersale services Existing maintenance culture of machinery users in Nigeria is not good enough. This causes higher operating cost, lower efficiency and service time of the machinery. Therefore, to minimize the costs, Figure 3.17 showed that suppliers or distributors of agricultural machinery should provide good after-sale service to buyers such as periodic maintenance and repair or supplying spare parts of the machinery immediately right after a telephone calling. For a sustainable development in agricultural mechanisation, it is necessary to build up a system of locally mechanical factories in each production region to provide services of maintenance and repair of the agricultural machinery to the users. 3.7 Organising training courses Knowledge of agricultural production and machinery is very important to increase operational efficiency of machinery, yield and quality of agricultural crops. Therefore, farmers should participate in training courses on rice quality, rice crop establishment and management; and agricultural mechanisation. Machinery operators and mechanisation service providers should also join training courses on mechanical techniques, operation skills; maintenance and repair of agricultural machinery; and business management. 3.8 Strengthening the agricultural extension system For agricultural extension agencies, the government should strengthen their organization and activities. Mechanisation section of the NAMDA should disseminate widely information of agricultural machinery and mechanisation to farmers and other stakeholders in the rice value chain. It should also conduct training courses for farmers, machinery operators and service providers and organize demonstrations on agricultural machinery more frequently. 3.9 Financial resources for investment in agricultural machinery Although Bejin-Doko Microfinance Bank (Nig) Limited has been known as bank of farmers, it has very tough conditions and very high interest rate (25%/year) for lending. It often provides farmers with very small loans within only 6 months. Its maximum loans are smaller than 1% of the total investment cost for individual farmers; or smaller than 5% of the total investment cost for groups of farmers. 39

48 Because of very small amount of loans at very high interest rate within very short time of repayment, the loans are not suitable for investments in agricultural machinery. Although Bank of Industry is specialized in lending money to the agricultural processing sector, it can also provide loans for investments in agricultural machinery. If legally registered groups of farmers sign an agreement with the bank and have a certain deposit at the bank to ensure their repayment of the loans together with the bank interest, they can apply for loans up to NGN1-5 mil. (US$5,000-25,000) with interest rate of 9%/year. Repayment can last up to 3-5 years and can begin from the second year. In comparison with lending conditions of Bejin-Doko Microfinance Bank (Nig) Limited in terms of loan amount, interest rate and repayment time period; those of the Bank of Industry are softer and more convenient to borrowers for investments in agricultural machinery. Based on initial investment costs of the machinery, groups of farmers running models of VIII & IX can apply for larger amount of loans to invest their agricultural machinery (Table 2). Compared with Bejin Doko Microfinance Bank (Nig) Limited and the Bank of Industry, Bank of Agriculture requires lowest interest rate for loans. It is only 5%/year. Based on initial investment costs, models I, II, III, IV, V, VI & VII owned by legally registered groups of 5-10 farmers can apply for Micro loans ranging from NGN mil (US$6,000-7,500) to invest the machinery. The groups of farmers can ask their farmers association to deposit at least 25% of the total loan at the bank for guarantee of their gradual repayment within 6 to 12 months. For complex models such as models VIII & IX, these need bigger amount of loans for initial investment costs. The groups of farmers can use their houses or used land for deposit at least 10% of the total loan to apply for Macro loans in order to invest the agricultural machinery of the models. Interest rate is also 5%/year, the same as the Micro loans. However, time of repayment can last longer, up to 3 years. The Bank of Agriculture could be the most suitable bank for the rice farmers because it has provided loans to 5 groups of service providers to buy 50 tractors previously Government policies toward agricultural mechanisation Although there are also some certain promotions, the government has no separately national policies on devel- 40

49 opment in agricultural mechanisation. A system of locally mechanical factories is weak. It could not meet requirements of maintenance and repair of agricultural machinery in the future. Systems of agricultural extension, research and application of machinery are also weak. It is quite difficult for farmers and other rice stakeholders to access information of agricultural machinery. Lessons from Asia countries like Japan, South Korea and India showed that to have a modern agriculture, in initial stages, the governments need to have national strategies for development in agricultural mechanisation. It plays very important role to reduce production cost, increase yield and productivity of the crops and minimize postharvest losses. Agricultural mechanisation also helps liberate a large amount of agricultural labours for development of agro-industries in rural areas, improve income and living standard of the rural people. 41

50 4. Conclusions There are many challenges and constraints for development in agricultural mechanisation in Nigeria such as a low level of mechanisation, lack of skilled mechanics and machinery operators, a weak service system for maintenance and repair of the machinery after sale, in-efficient information and agricultural extension systems of agricultural machinery, low capacity of investment in machinery of small rice farmers, lacks of national strategies and appropriate policies for agricultural mechanisation, etc. However, there is also a high potential for development in agricultural production in Nigeria. Conditions of climate, weather, land and soil are quite favorable for application of agricultural machinery into small-scale rice production in the country. 9 groups of farm machinery together with 9 business models of agricultural mechanisation service have been identified as suitable to the existing conditions of small-scale rice production in Nigeria. Some groups of farm machinery and business models like Model I, II, III, VI, VII and IX can provide mechanisation services not only for rice production but also for other crop productions in upland like cassava, beans, sorghum, sugarcane, etc. The business models are suitable to the currently technical and management capacities of the people. All the business models can create profit not only for the service providers but also for the rice farmers who use the services. Regardless of different inputs and crop yields, with the same amount of farming works, all machinery and the models gave higher quality of work, lower production cost and higher profit to the rice farmers compared with the currently manual farming methods. For sustainable developments in agricultural mechanisation and rice production in Nigeria; mechanisms for co-operations between government organisations, credit institutions, farm machinery service providers, farmer groups and farm machinery distributors; national policies and management measures were also proposed for implementation. These can help speed up application of farm machinery into the agricultural production, exploit more unreclaimed land for the agricultural production, bring in more profit to the investors and the service providers; and improve income of the farmers, especially small rice farmers. 42

51 5. Recommendations 5.1 Recommendations for the Competitive African Rice Initiative and the Green Innovation Centers Depending on needs and requirements of the practical production, capacities of investment and business management of service providers, the projects can advise service providers to select one of the nine business models for investment and service provision. Application of agricultural machinery is successfully only when the farmers recognise clearly their actual benefit such as increase in the rice yield and improvement in their income and living standard; and only when machinery investors or service providers can get profit from their mechanisation services. Therefore, the CARI project should advise farmer groups to get loans from Banks of Agriculture or Banks of Industry which have softer conditions for lending. Based on specific conditions of rice farming in the project areas, technical specifications and selling prices of the proposed machinery, the CARI project should provide appropriate assistance to farmers to select right machinery for their uses. After buying the machinery, the CARI project should organise demonstrations of the machinery to rice farmers in the project areas. Manually practical production models and the new mechanized production models should be set up for comparisons. Technical and economic criteria should be analysed and compared between manual farming methods and the mechanized farming method. For efficient management of mechanisation service groups, the groups should be organized as a shareholding company in which all members of the group must be responsible for their own capital investment and activities. Chief of the group should be a member having highest capital investment in the machinery or one of the biggest investors appointed by all members of the group. Profit from the service must be shared properly among members of the group. The CARI project should send some of the CARI project staff and other agricultural machinery fabricators to Vietnam or Thailand for sharing experience on manufacture, maintenance and repair of farm machinery at locally mechanical factories, and sharing lessons on development of agricultural mechanisation for small-scale rice production. 43

52 5.2 Recommendations for the Nigerian Government The Nigerian government should have national strategies and action plans to develop agricultural mechanisation not only for rice but also for other crop productions. The government should play a role as a chief of an orchestra to establish mechanisms for co-operations between government organisations, credit institutions, farm machinery service providers, farmer groups and farm machinery distributors (See Fig. 3.17) to speed up application of machinery into agricultural production. The government should have appropriate policies to provide financial supports to the farmers or mechanisation service providers for investments in agricultural machinery; for examples subsidizing 30% of the total investment cost of machinery or 100% of bank interest rates for the first two years of the investment and 50% of the bank interest rates from the third year onward of the investment. The government should encourage establishment and strengthen locally mechanical factories for services on maintenance and repair of the agricultural machinery. The government should also provide more financial supports for R&D projects to research and apply machinery into agricultural production. It is also necessary to provide training courses on design, modification and manufacture of agricultural machinery to the technical workers of locally mechanical factories. The NAMDA should be enforced. The NAMDA should have more efficient co-operation with the other agricultural research institutes or national centres in research and transfer new machinery into agricultural production. Testing, demonstrations and training on agricultural machinery should be organized more frequently for the farmers and local fabricators. Information of agricultural machinery and mechanisation services should be accessed easier for farmers. In order to increase the rice yield and number of rice crops per year, the government should provide budget to maintain better the existing irrigation systems or investments in new irrigation systems for the rice production. 44

53 References FAO, Analysis of incentives and disincentives for rice in Nigeria. Monitoring African Food & Agricultural Policies SPAAA. 42 pages. Odoemenem, I.u. & Inakwu, J.A Economic analysis of rice production in cross river state, Nigeria. Journal of Development & Agricultural Economics. 3 (9), Nigerian Gross Domestic Product Report National Bureau of Statistics, the Federal Republic of Nigeria. Quarter One, issue 01, Singh, M.O. & Mowa, Y.A Rice growing environments and biophysical constraints in different agro-ecological zones of Nigeria. Met, I. 2(1):

54 Annex 2 : Business Model 1 SINGLE TWO-WHEEL POWER TILLER of 14.5 HP General information Unit Quantity Capacity hectare/hour 0.25 No. hour/day 8 Quantity of units 1 Operating time days/year 40 Annual working capacity hectare/year 80 Estimated life time (service time) years Calculation of Service Cost Financing with own capital Financing with loan 1.1. Fixed costs (ownership costs) Unit Quantity Quantity Purchase price NGN/unit 750, ,000 Resale value machine NGN/unit 150, ,000 Period of ownership Years Average annual depreciation 0 Average annual depreciation of machine NGN/year 60,000 60,000 Depreciation cost (fix cost per hectare) NGN/hectare Cost of financing Bank interest rate (nominal) p.a Inflation rate p.a Bank interest rate (real) p.a Cost of bank interest NGN/year 112,500 NGN/hectare 1, Purchasing tax % of the price NGN/year 75,000 75,000 NGN/hectare More business models to be provided online under 46