The Neglected Governance Challenges of Agricultural Mechanisation in Ghana

Trends like urbanization and change in agricultural systems have generated important labor bottlenecks, especially during land preparation, which has led to a mechanization push from both large and smallholder farmers in Ghana. The bulk of Ghana’s small farmers relies on hired help. There is also the impact of social and cultural norms. Mechanization services are in high demand among young farmers since manual labor in agriculture has a reputation for being boring and inefficient.

Several new endeavors have emerged as a result of the recent push toward mechanization. The distribution of subsidized tractors and agricultural machinery, an example of a state-led scheme, is still commonplace today. On the other hand, the private sector is given a lot of attention, for instance via government funding of commercial service providers. The private sector is also making strides, with some examples being the rise of used tractor importers and the plans of big multinational tractor manufacturers such as Massey Ferguson tractors and New Holland tractors to create business models aimed at Ghana’s smallholder farmers.

Invisibility

Even while tractors are not public commodities like seeds or fertilizer, they nonetheless benefit from economies of scale because of their indivisible nature. Recent mechanization initiatives in Ghana have proven that it might be challenging for small, dispersed farms to operate tractors economically. Agricultural machinery and Tractor service marketplaces and cooperatives are two examples of institutional solutions that have helped small farmers in industrialized nations deal with these issues.

Inadequately established financial markets make it harder to establish these institutional solutions. Further, they are not easy to set up for time-sensitive tasks like ploughing. When there are fewer companies offering tractor services, consumers may have less choice and less negotiating power. Hit-and-run operators that prey on smallholder farmers may gain an edge via a combination of a power imbalance and the information asymmetry present in on-demand service marketplaces.

Since private goods allow for more precise targeting of big, politically prominent farmers that participate in rent-seeking, governments may be incentivized to supply them in favor of mechanization rather than public goods. Examples include the subsidization of private goods like agricultural machinery and tractors importation. Previous state-led mechanization, as a consequence, had a strong emphasis on agricultural machinery and tractor imports and paid less attention to building up the skills of operators and technicians. Due to the high cost of agricultural machinery and tractors, even when heavily subsidized, smallholder farmers are unlikely to gain from tractor import initiatives. This leaves the elites in control. Lack of openness in the government’s distribution of imported agricultural machinery and tractors in Ghana fueled rent-seeking. Due to the agricultural machinery and tractors’ short-term impacts and media attention, which is especially useful in the run-up to elections, importing agricultural machinery and tractors is more politically appealing than investing in skill development.

Informational difficulties may also lead to governmental failures. Because there is no correlation between agricultural machinery and tractor demand and availability, the government may buy the wrong tractors. As an example, the environmental damage caused by the use of imported agricultural machinery and tractors during earlier mechanization programs is now mostly reversible. Problems with demand and supply have been highlighted for Ghana. A distribution that leaves out the best candidates is another possible outcome of demand and supply being disconnected.

Private Service Providers

Most farmers that use mechanization do so via private service providers, who may themselves be small- to medium-scale farmers, or who may be tractor-owners in addition to their primary vocations (such as teachers, store owners, or retired extension officials). Used tractors and agricultural machinery dealerships such as Massey Ferguson Ghana are the most common source of agricultural machinery and tractors, and most tractor owners have made their purchases from them. Almost all of the sales made by private dealers of new tractors like Massey Ferguson tractors and New Holland tractors are made to big (commercial) farms. Associations of tractor owners often set standard rates for plowing. They also impose costs on seasonal service providers that travel from regions with varying precipitation. The existence of these transient service providers increases competition and prevents local tractor-owners from specializing in serving just big, readily accessible farms, resulting in reduced costs despite the fees that local tractor-owners demand.

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Conclusion

There is a lot of information that shows how ignoring governance problems has led to the failure of previous mechanization attempts in Ghana, yet despite this, many of the country’s governance problems have been ignored. If mechanization is to have a positive impact on Ghana’s economy, society, and environment, the country’s government will need to prioritize the whole Agricultural Innovation System.

Government efforts would be better spent fostering a supportive institutional framework for the developing agricultural machinery and used-tractor and service markets rather than only relying on the provision of subsidized agricultural machinery. Some examples of this kind of help include putting money into applied research on environmentally friendly forms of mechanization and bolstering the capacity of the education and training domain within the innovation system.