Smallholder farmers' willingness to pay for scale-appropriate farm mechanization: Evidence from the mid-hills of Nepal

Abstract

This paper analyzes smallholder farmers' willingness to pay (WTP) for the purchase of scale-appropriate farm mechanization in the hill ecologies of Nepal using the case of mini-tiller technology: a small, 5–7 horsepower two-wheel tractor primarily used for agricultural land preparation. Using primary survey data from 628 randomly-selected households, we find that farm size, local wage rates, out-migration, access to credit services, and associations with agricultural cooperatives positively influence the WTP for mini-tillers while the number of draft animals owned negatively influence the WTP for mini-tillers. On average, farmers were willing to pay 31% less than the actual price of a mini-tiller. Results also exhibited a heterogeneous demand in which the lowest quartile farm size households, typically the poorest farm households, were willing to pay 26% less for the mini-tiller than the top quartile of farms. In the context of labor scarcity and rising rural wages, agricultural policy on farm mechanization in Nepal should aim to prioritize small farms through robust service provision models in order to increase the level of farm mechanization in the country.

Responsible Agricultural Mechanization Innovation for the Sustainable Development of Nepal’s Hillside Farming System

“…Female-headed households in Nepal doubled from 13% in 1995 to 26% in 2010 [66]. These circumstances have created an unprecedented workload and therefore, the need for reducing drudgery through agricultural mechanization in rural areas [67].…”

“…In Nepal, male out-migration has created acute labor shortages during the peak farm seasons of planting and harvesting [1,62,65], which favor a high wage rate [67]. Major real wages in Nepalese agriculture increased by 22% in the last seven years compared to only 6% in the non-agricultural sector [66].…”

“…Small machines could pass through a canopy of agroforestry trees and between intercropped rows without replacing much of the employment opportunities of family labor. In addition, small-scale mechanization can address the chronic labor shortages in hills and mountains, reduce drudgery to women, reduce the cost of agricultural production, and facilitate on-site processing of high-value crops [1,14,38,67]. Farm mechanization could be implemented with two purposes in mind-increasing farm power and decreasing power demand through increased efficiency, including the use of solar-powered machines, biogas plants, household communication gadgets, and handheld tools.…”

“…Smaller-scale shallow tube wells have spread more rapidly where diesel/petrol pump sets for pumping from deep tube wells were available and promoted. Nepal's underdeveloped hydroelectricity potential has also directly affected the choice of technique in relation to electric or diesel engines for pump sets and other farm machines [1,67]. Although there is a recent increase in hydroelectricity production, it is too early to predict its effect on promoting farm machinery use in the hills of Nepal because hydropower can run only stationary machines unless battery-operated machines are adopted for hillside farming [78].…”

Evaluation of Different Wheat Establishment Methods at Agricultural Machinery Testing and Research Centre, Nawalpur, Sarlahi, Nepal

“…Rahaman et al (2011) reported that the less number of labors per hectare is required to complete the production process by mechanized farm compared to traditional farms. Paudel et al (2019) showed that farm size, on-farm wage rates, access to credit serviceswere positively associated with willingness to pay for mini-tillers in mid-hills. Din and Khattak (2018) found the per acre productivity of mechanized farmers a little bit greater than the nonmechanized farmers.…”