Draft Investment Potential for Agricultural Mechanisation

1. BACKGROUND
.Tanzania has an area of 945.239 sq.km (94 million ha), 44 million
ha are classified as suitable for agriculture and about 10.1 million
ha or 23% is under cultivation. Agriculture is the leading sector of
the economy. It accounts for about 26% of GDP. Over 80% of its
40 million people are living in the rural areas with agriculture as
the mainstay of the living and smallholder farmers cultivate
between 0.2 and 2.0 ha the level of mechanization is low with the
hand hoe dominating in farming systems. The use of animal
traction is estimate at 24% and the mechanical power is estimate
at 13%.. Examples of agricultural mechanization equipment are
tractors, power tillers, weeders, maize shellers, sugar cane forklift
and mechanical harvesters. Some tractor models have experienced
(frequent) breakdowns and some more feedback is expected from
services agents & suppliers.
The Role of Agricultural Mechanisation
Mechanization is a necessary condition for farmers to improve
productivity of labour and land.
Mechanization of agriculture has the potential to turn idle land
into productive land for national economic growth and
increase of land.

harvesting. Hilly areas can also be ploughed by tractors, but

requires ridging along the contour lines (horizontal ploughing).
This to avoid the run-off of rain water and soil erosion from
the hill downwards in freshly ploughed vertical ridges.
Mechanisation is more than tractorization. With additional /
auxiliary equipment the tractor can be used for planting,
weeding; shelling; harvesting and water pumping. It could even
be used to distribute fertilizers and spray agro-chemicals). This
will assist the efficient use of equipment and facilitate loan
repayment.
The government will support farm mechanisation through
policies on mechanization of crop production and increased
productivity.
The private sector is allowed and encouraged to acquire
machinery and provide hire services to farmers for primary and
secondary agricultural operation importation trends show a
steady increase in number of imported mechanical power
machines
Demand for two axle tractors and implements are 1500 1800
p.a. and increasing
Demand for single axle tractors is 1500 2000 p.a. and
increasing

2. PRESENT SITUATION OF AGRICULTURE

MECHANISATION
Most farm land is still ploughed with hand hoe and ox plough. The
number of tractors is on the increase (see table below). Most farm
mechanisation is limited to tractor and plough. There are few
machine harvesters and very few mechanised dryers and maize
shellers; Many tractor operators/owners have also trailers to
transport farm produce from the farm to the house or to the market.
In the tea sector, there are now mechanised tea picking machines
(Mufindi); In the sugar, there are now forklift trucks and sugar
cane cutters (Kilombero). Also water pumps are widely used in
the county. Some are connected to tractor engines, others are 4. CHALLENGES IN AGRICULTURAL
driven by electric power supply or (mobile) diesel engines.
MECHANISATION
Low purchasing power and management skills in operation
Trends and Statistics on Farm Mechanisation
and maintenance of most small scale farmers.
There has been a 300% increase in number of tractor in use. (see Mechanisation can attack low productivity / low farm income
table below). Therefore the amount of arable land per tractor has
as farmers in the past used mainly hoe / ox plough for land
reduced from 1196 ha (1995) to 442 ha per tractor (2007) . Also
cultivation.
there has been an increase in number of tractors per 100 sq.km
Low producer prices due to lack of bargaining power and
from 8 (1995) to 24 (2007). The following indicators show the
market information.
degree of agricultural mechanization in Tanzania:
High cost of agricultural machinery despite the low or no
import charges on agricultural machinery.
3. POTENTIAL FOR INVESTMENT IN AGRICULTURAL
Limited access to agricultural credit.
MECHANISATION
Lack of well trained operators and mechanics for farm
Large areas of farm land are still available for mechanisation.
machinery.
Most suitable land for mechanised ploughing has (medium-)
Lack of suitable machinery packages for main agricultural
deep soils without roots or where roots of trees have been
operations.
removed. Flat perimeters in irrigation areas are also very
Importation of tools, equipment and machinery of poor quality
suitable for mechanised, ploughing, planting, weeding and
is costly.
General poor technical know how among tractor
Trends of Mechanisation with Tractors in Tanzania
owners/operators.
Year
1995
1997
1999
2001
2003
2005
2007
Number of Tractors in use
Number ha arable land in million

7525
9

10435
8.95

14345
8.85

18255
8.9

21300
9.47

21500
9.5

21500
9

Number of ha arable land per tractor

1196

858

617

488

445

442

442

12

16

21

22

23

24

No. of tractors /100 sq. km arable land

S: W B I - - A , 2012-04-19

Copyright 2013, PASS Trust

Draft Investment Potential for Agricultural Mechanisation

Use of secondary tillage implements is limited (only plough is
other mechanisation equipment is poor. Frequent break downs
commonly used).
also cause poor loan repayment.
Limited availability of spare parts and trained technicians for Individual agri-business entrepreneurs / farmer groups
operation and maintenance
associations may seek financial assistance for agricultural
mechanisation for :
Operation & Maintenance of Agricultural Equipment
Expand the area suitable for mechanised crop production
Tools
(especially in irrigation areas with 2 harvest per year).
The tractor and its implements play a significant role in Also for bush clearing - to make land available for ranchingmechanised agriculture. Tokeep them working for a long time
requires the use of mechanised bush clearing equipment
at a minimum cost, they require an adequate and timely
(bulldozers).
maintenance. The following are equally necessary.
Improve soil tillage for crop intensification as higher yields can
Suppliers and Availability of Spare Parts
be achieved by making better use of improved seeds, fertilizer,
Training of Tractor Owners/Operators
agro-chemicals, etc.
Possibilities of Service Contracts (attractive for bank lending)
To overcome labour shortcoming in the farm in critical farming
periods (by mechanised ploughing, weedin, harvesting).
5. POTENTIAL FOR IMPROVING AGRICULTURAL
To reduce cost of labour by substituting labourers with power
MECHANISATION
tillers and tractors, or go for complete mechanised crop
Large areas still available for mechanisation ( flat, deep and
production including harvesting, threshing, bagging and bailing.
fertile soil; )
Post-harvest equipment, grading, sorting and packaging
Government will/support through policies on mechanization of
equipment and materials.
crop production and increased productivity.
Farmers will to use farm machinery
Source of Funds:
The private sector is allowed and encouraged to acquire Own Funds from Savings.
machinery and provide hire services to farmers for primary and Bank Loan from Commercial -, Community - and Cooperative
secondary agricultural operation.
Banks.
Importation trends show a steady increase in number of Micro-Finance Institutions (MFI) and Rural Financial
imported mechanical power machines.
Institutions (RFI).
Demand for two axle tractors and implements are 1500 1800 Government: Agricultural Input Trust Fund (AGITF); SME
p.a. and increasing
Schemes
Demand for single axle tractors is 1500 2000 p.a. and increasing Cooperatives such SACCOSs and AMCOSs;
There is a potential for establishing tractor mechanisation pools for Assistance to access loans from sources above with
groups of farmers organised in a cooperative or farmers associations
Possibility of Loan Guarantees: GOT; PASS.
or a private tractor company, which is eager to rent out farm
mechanisation equipment (e.g. a tractor hire service company, like 7. HOW PASS CAN HELP DEVELOPMENT OF AGRIC.
TFA/TFSC in Arusha).
MECHANISATION ON FARMS
High Potential Areas for Introduction & Expansion of Agric.
Mechanisation
SAGGOT, this include Coast, Morogoro; Iringa, Mbeya,
Ruvuma, Rukwa.
Central Zone, this include Dodoma; Shingida;
Lake Zone, this include Shinyanga, Mwanza; Mara; (only 4
districts in Kagera: Biharamulo/Chato and Karagwe; Missenyi)
Manyara Regions: Kiteto; Babati and Hanang esp. Bassuto District
Arusha & Kilimajaro Regions: all districts, esp. Lower Moshi
Irrigation schemes and similar irrigation schemes in Same etc.
Coastal Zone, this include Tanga (excl Lushoto), Bagamoyo,
Kibaha, Rufiji Basin, Lindi, Mtwara
6. FINANCING NEEDS FOR AGRICULTURAL
MECHANISATION
Due to the high cost of farm mechanisation, most agri-business
entrepreneurs, commercial farmers or farmers associations (FA),
cooperative savings organizations (SACCOS) and the like need
external financing (loans) to be able to procure new farm
equipments and tools.
In some cases subsidy schemes for farm mechanisation are
available from the government through Armed Forces
Development Organisation (JKT); Agricultural Window of the
Tanzania Investment Bank (TIB); Agriculture Input Trust Fund
(AGITF); some donor funded tractor and/or SME schemes.
Most tractor & farm mechanisation schemes need the technical
support from dealers or technical equipped workshops, because
the operation, maintenance and repairs of many tractors and

PASS TRUST does not lend out money, but can assist
farmers/clients to get bank loans (financial linkage) for

purchasing farm machineries and agro-processing

equipment through;
Making feasibility studies and preparation of business plans for
proposed crop & livestock mechanization and agro processing
and submit it to bank for loan.
Capacity building of farmers groups and entrepreneur
management skills in farm mechanization and agro-processing
, especially in irrigation areas.
Training on operation, maintenance and service of farm
machineries and post harvest technology and agro processing
(for example: for rice and other crops grown in irrigated or
upland farming areas).
Training in agro-processing: operation, maintenance and
service of agriculture processing equipment, rice & maize
milling, coffee hulling; oil extraction from sunflower and other
edible oil products; and processing of other commodities.
Assist in market research and market linkages.
Counselling and assisting in financial management of agribusinesses in mechanized crop and livestock production and
agro-processing.
Backing up loan applications by topping up collateral to level
required by banks.
PASS can provide a lease product for hire-purchase of farm
machineries. This is a new PASS financial products also called
asset based financing.
Copyright 2013, PASS Trust