Unleashing the Power of Mechanization

Abstract

After reviewing recent developments in the uptake of agricultural mechanization in Ghana, and the factors that are driving the growth in farmers’ demand, this chapter discusses supply-side constraints to greater mechanization, and evaluates the government’s program of subsidized tractors through Agricultural Mechanization Services Centers (AMSECs). The chapter concludes that such interventions often lead to market distortions in machinery prices, encouraging rent-seeking behavior, and discouraging the development of private sector supply system. The program is also unnecessarily costly to the public sector. Instead, the government would be more effective in achieving its goals if it were to withdraw from the AMSEC program and instead play a more complementary and supporting role to the private sector. This might include funding appropriate mechanization research, technical training of young mechanics, and ensuring that financial institutions can provide the longer-term lending needed by private agents and farmers in the mechanization supply chain.