Smallholder farmers’ willingness to pay for two-wheel tractor-based mechanization services in Zambia and Zimbabwe

Hambulo Ngoma, Paswel Marenya, Adane Tufa, Arega Alene, Lovemore Chipindu, Md Abdul Matin, Christian Thierfelder and David Chikoye

No 365869, 2023 Seventh AAAE/60th AEASA Conference, September 18-21, 2023, Durban, South Africa from African Association of Agricultural Economists (AAAE)

Abstract: Mechanization is back among top development policy priorities for transforming African smallholder agriculture. Yet previous and ongoing efforts ubiquitously suffer from lack of scientific information on end-user effective demand for different types of mechanical innovations to inform public investment or business development programs. We assess smallholder farmers’ willingness to pay (WTP) for two-wheel tractor (2WT) - based ripping, direct seeding, and transportation using a random sample of 2,800 smallholder households in Zambia and Zimbabwe. Applying the Becker-DeGroot-Marschak Mechanism (BDM) experimental auctions, we find that at least 50% of sample households in Zambia and 20 Zimbabwe were willing to pay more than the prevailing market prices for ripping. In nominal terms, sample households in Zimbabwe were willing to pay more than those in Zambia for the different services. Empirical results suggest that wealth is the strongest driver of WTP for tillage and seeding 2WT services while labor availability and using animal draft power reduce it. These findings imply a need to (i) raise awareness and create demand for 2WT-based services in an inclusive business manner that does not create perverse incentives and (ii) better target mechanization to operations with comparative advantage, using approaches that bundle 2WT-based and other mechanization services with asset-agnostic credit schemes or other interventions meant to overcome asset-mediated barriers.

Keywords: Consumer/Household; Economics (search for similar items in EconPapers)
Pages: 32
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaae23:365869

DOI: 10.22004/ag.econ.365869

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