The Present and Future of Agricultural Mechanization in Latin America
On November 4th, IICA and IFPRI hosted a seminar on the “The Present and Future of Agricultural Mechanization in Latin America”. The objective of this seminar was to analyze global trends and the current situation of agricultural mechanization in Latin America, with the hope of identifying factors that limit its use in agriculture and to propose possible actions, to help improve the use of mechanization, particularly by family and small-scale agriculture producers.
Miguel García Winder, IICA Representative in the United States opened the seminar stating that it is important to learn how to make agriculture more competitive and sustainable. He emphasized that to address the challenges of agriculture, innovation and technology is required. Additionally, Miguel Robles, IFPRI Research Fellow shared that without a doubt agricultural mechanization helps to generate greater yields and help to improve income in rural families.
The first session focused on the current mechanization situation in Latin America and the global perspective. Pablo Elverdín, IFPRI consultant, presented preliminary results of a study conducted to ascertain the current situation of agricultural mechanization in Latin America, making reference to intra-regional differences, types of producers and supply chains. Scott Shearer, Professor at the Ohio State University, shared prospects of agricultural mechanization at the global level. Key take home messages from this session were: the low penetration of mechanization in Latin America compared to other regions, demand for machinery concentrated in few countries, the stock of tractors is old and in many cases obsolete, and mostly used in large scale production systems (e.g.: sugar, pineapple, soybeans, corn, etc.).
To sum up this session the moderator Priscila Henríquez, specialist in management of technological innovation at IICA stated that Latin America has tremendous potential to feed the world and mechanization can help with this while also learning from others globally. Though there is still margin for production increases by expanding the agricultural frontier, the main source of production growth will be improvements in productivity, and mechanization will be the key driver, given that its penetration level in Latin America is so low.
In the second session the perspective from representatives of producer organizations in the region were presented. They shared the views of farmers on their needs for mechanization and the challenges they face to solve them. Additionally, producers shared successful experiences on how they have solved the problems of mechanization in their organizations and countries.
As a summary of this session, the moderator Valeria Piñeiro, economist from IFPRI, stated that if the sector is not profitable, then there will be no investment, therefore it is essential to improve infrastructure and expand coverage of services. A major limitation for expanding the use of machinery in the region is the scale of production, calling for solutions that not necessarily compromise the current state of property rights or the size of farms, but that requires an important push to improve the organization and associations of farmers. Another important challenge is the adaptation of machinery to different topographies and systems of production, with high predominance of slope land agriculture and important areas destined to the production of vegetables and fruits.
In the third session, the perspective of manufacturers of agricultural machinery were shared. The panelists explained the main obstacles faced in the region, plans and projects implemented to meet the demands of producers and the policies considered necessary to improve the mechanization levels in the region.
To summarize, the moderator of this session Daniel Rodríguez, Agribusiness and Marketing Specialist from IICA, highlighted some of the obstacles mentioned by the panelists, which may affect the expansion of operations by manufacturers in Latin America. Such obstacles include lower prices and price volatility of agricultural commodities as a disincentive to invest in mechanization; political instability observed in some countries, and the existence of certain regulatory framework that inhibits the adoption of mechanization. In order to take advantage of opportunities, companies must be able to adapt their products to their client needs. It is also important to move from a diagnostic process to an action plan for mechanization in Latin America.
The fourth session focused on mechanization through agricultural service providers. Service providers discussed their business models for the provision of agricultural services while identifying the constraints that prevent service providers to have greater reach and impact. They shared recommendations to improve the delivery of such services and how their business models could meet the needs of family farming and small-scale producers.
The moderator of this session Miguel Robles from IFPRI summarized points made by the service providers stating that providing services and machinery to cover producer needs is one potential approach to bridge farmers needs, suggesting the importance of learning from current and past experiences and develop alternatives to implemented elsewhere. To successfully expand the provision of mechanization services to small and medium farmers, the help of governments is crucial, and the inclusion of mechanization services could be part of an integrated support package that includes financing, infrastructure, technical assistance and associativity. This is one example of how the private sector that manufactures and delivers machinery, can complement well with the public sector, as a provider of public goods.
The final session of the seminar centered on the policies to promote agricultural mechanization in Latin America. Representatives from Ministries of Agriculture from Peru, Ecuador and Guatemala provided insight into this topic and discussed areas that require support to achieve a better impact.
At the end of this session, the moderator, Maximo Torero, from the World Bank , emphasized the need to study the effectiveness and efficiency of policy instruments to expand mechanization in the region. Governments are experimenting with different interventions, sometimes with good results, but in occasions with bad or unintended negative impacts. Some of the instruments that have been utilized include the provision of subsidies for the machinery acquisition (including donation of machinery, particularly tractors) and financial support to adopt the use of tools, equipment and machinery , the design of programs suitable for different topographies, production systems, scales of production and climates that incorporate other services that are complementary for mechanization, direct financial support, tax and tariff benefits, irrigation investment, certified seeds, subsidized crop insurance, input subsidies for fertilizers and pesticides, training and support for organization of farmers.
In the closing remarks for the seminar, Joaquin Arias from IICA stated that is important to think about the way forward in agricultural mechanization in Latin America. International institutions such as IFPRI and IICA, can play an important role promoting horizontal cooperation so that knowledge among countries and different actors flows more rapidly allowing a quicker and more efficient adoption of technologies. Also important is the political advocacy so that governments have better understanding and willingness to implement policy instruments that are more effective and efficient to promote mechanization in a sustainable manner, especially among small and medium farmers.
For more information about this event contact joaquin.arias@iica.int, v.piñeiro@cgiar.org or m.robles@cgiar.org
More information about this event: http://www.iica.int/en/events/present-and-future-agricultural-mechanization-latin-america
*The opinions expressed in this newsletter are those of the authors and they do not reflect the position of the Institute on the topics presented.
*This post appears in the IICA Delegation in the USA Newsletter - September - December 2016