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This study was conducted to understand the evolution of agricultural mechanization in Nepal, specifically its determinants on both the demand and supply sides, as well as impacts on agricultural production and associations with broader economic transformation processes, in order to draw lessons that can be conveyed to other less mechanized countries. Mechanization levels in Nepal, a largely agricultural country, were relatively low until a few decades ago. However, significant mechanization growth, including the adoption of tractors, has occurred since the 1990s, against a backdrop of rising rural wages, particularly for plowing, combined with growing emigration and growth in key staple crop yields and overall broad agricultural production growth, as well as improved market access and participation. This growth in mechanization has taken place despite the general absence of direct government support or promotion. The growth of tractor use in the plains of the Terai zone has transformed agricultural production rather than inducing labor movement out of agriculture, raising overall returns to scale in intensification and enabling the cultivation of greater areas by medium smallholders than by resource-poor smallholders. Tractors have also facilitated the intensification of crop production per unit of land among very small farmers, enabling mechanization growth despite the continued decline in farm size, although these farmers may not have benefited as much as medium smallholders. Potential future research areas with policy relevance include mitigating accessibility constraints to tractor custom hiring services, identifying appropriate regulatory policies for mechanization, and providing complementary support to some smallholders who may not fully benefit from tractor adoption alone. ; Non-PR ; IFPRI1; CRP2; D Transforming Agriculture ; DSGD; PIM ; CGIAR Research Program on Policies, Institutions, and Markets (PIM)

The objective of this chapter is to examine empirically some of the key economic factors affecting the profitability of paddy rice production at the farm level and, given these current conditions, estimate whether price incentives are able to induce an aggregate supply response at the national level. The types of public-sector interventions needed to promote output growth are also explored, drawing on lessons and experiences from other major rice-producing regions in the developing world. The chapter specifically focuses on irrigated and lowland production systems because, as shown in Chapter 3, these systems have the greatest potential for rice-production growth in Nigeria. Understanding the microeconomics of these systems can provide important insights into the constraints affecting rice-production growth, despite recent government efforts to introduce price incentives through higher import tariffs. ; PR ; IFPRI2; C Improving markets and trade ; DSGD

In Nigeria, despite the scarcity of tractors, average horsepower and prices of tractors appear high. These patterns are different from the experiences in other parts of the world where initially tractor horsepower was often smaller, such as Asia, or farmers were better endowed with land and wealth, such as Latin America. In Nigeria, joint ownership of tractors is rare, and formal loans are often unavailable due to high transactions costs. IFPRI's survey in Kaduna and Nasarawa states in 2013 suggested that the spatial mobility of tractors is generally low and the use of tractors is highly seasonal. There do not seem to be plausible explanations for the seeming dominance of large tractor use based on available information on prices and soils. Nevertheless, these patterns seem driven by the own initiative of the private sector rather than by government policies. Indivisibility of large tractors and limited mobility of supplies may cause imperfections in the custom tractor hiring market. In order to distinguish the impacts of technology adoption at the extensive margin from those at the intensive margin, in the empirical analyses for the research presented here we tested these hypotheses focusing on the differences among marginal adopters of tractor hiring services and non-adopters with similar characteristics. The results are three-fold: (1) adoptions patterns of tractor services are partly explained by basic factor endowments, suggesting that the market for custom hiring is in some way functioning efficiently in response to economic conditions; (2) adoptions are, however, affected by supply-side factors, including the presence of large farm households (and thus potential tractor owners) within the district, and (3) per capita household expenditure level differs significantly between the marginal adopters and non-adopters with similar characteristics. This difference seems to arise from adoption per se, rather than the intensity of adoption, which is consistent with the hypothesis of imperfection in the custom tractor hiring market. ; Non-PR ; IFPRI1; CRP2; NSSP ; DSGD; PIM ; CGIAR Research Program on Policies, Institutions, and Markets (PIM)

Returns to scale in agriculture have profound implications on how effectively governments' various efforts in developing countries lead to agricultural intensification and transformation. Historically, agricultural transformation has often accompanied increasing returns to scale. Little direct evidence exists, however, on what actually causes such an increase, despite knowledge about many factors that are associated with the increase. We fill the knowledge gap by testing whether the hiring in of tractor services has increased returns to scale in agriculture at the household level in the Terai of Nepal, an area that has undergone a rapid increase in tractor use through custom hiring services. Using the Roy–Rubin framework of identifying causal mechanisms, combined with endogenous switching regression methods and IPW-GMM, we address two sources of endogeneity involved with the estimation of returns to scale: (a) farmers' self-selection on whether to hire in tractor services; and (b) use of inputs in the production function. Based on the assumptions of the Cobb–Douglas production function specification and perfect efficiency of farm households, we find that the hiring in of tractor services significantly increased the returns to scale in agricultural production for a certain segment of tractor-hiring farm households not owning tractors, for which suitable control groups are found. Findings are robust under various alternative specifications. ; Non-PR ; IFPRI1; A.3 Science, Technology, and innovation Policy; D.2 Public Investment priorities and Impacts; CRP2 ; DSGD; PIM ; CGIAR Research Program on Policies, Institutions, and Markets (PIM)

IFPRI3; ISI; CRP2 ; EPTD; DSGD; PIM ; PR ; CGIAR Research Program on Policies, Institutions, and Markets (PIM)

IFPRI3; ISI; CRP2 ; DSGD; PIM ; PR ; CGIAR Research Program on Policies, Institutions, and Markets (PIM)