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African agricultural mechanization could lead to a mechanization divide, where only large farms have access to machines. Technological solutions such as scale-appropriate machines and institutional solutions like service markets offer hope for more inclusive mechanization. Two-wheel tractor-based service markets combine both technological and institutional elements, but there is limited research on their economic viability and challenges.

We analyze the economic viability of two-wheel tractor-based service provision based on data from service providers in Ethiopia, Burkina Faso, and Zimbabwe. We also examine the institutional framework conditions for such service providers based on qualitative interviews with these service providers and stakeholders such as machinery dealers, spare parts providers, and banks.

Two-wheel tractor-based service provision is economically highly viable, largely due to multifunctionality. Post-production services such as threshing and transportation are particularly lucrative. However, the emergence and economic sustainability of service providers can be undermined by bottlenecks such as access to finance, knowledge and skills development, access to fuel and spare parts, and infrastructure problems.

This is the first study on the economics of two-wheel tractor-based service provider models. Past studies have focused on large four-wheel tractors, but two-wheel tractors are different in many aspects, including regarding investment costs, repair and maintenance costs, capacity, and multifunctionality.

Agriculture in Ethiopia relies heavily on traditional farm power sources and is designated by the lowest farm machinery access, in contrast to other Sub-Sahara African (SSA) countries. The purpose of this research is to analyze the heterogeneity of mechanization service transactions and factors determining farmers' cooperation in mechanization clusters and willingness to accept land consolidation.

The authors conducted a cross-sectional survey of producer households in major crop production areas in the Oromia, SNNPR, Amhara and Tigray regions. The sampling design involved three stages: districts were selected using a stratified sampling approach accompanied by simple random samples of kebele units and producer households in the second and final stages, respectively.

This study’s results show that mechanization service costs, service relationships, clustering and land consolidation exhibit significant heterogeneity across the study areas. Cluster farming was found to be advantageous against diseconomies, rationalized by upgrading the mechanization scale. The probit model parameterization of the probability distributions reveals that household, land, crop, mechanization service, remoteness and location-related factors determine participation in mechanization clusters and willingness to accept land consolidation.

Fostering cooperation by focusing on constraints and demand of users is suggested to reduce transaction costs and expand hired mechanization services to unaddressed areas. The findings are relevant to most SSA countries where mechanization development is hampered by land fragmentation.

Limited information is available on agricultural mechanization development for smallholder farmers, particularly in Ethiopia, and this study adds empirical evidence about the synergy between cluster farming and mechanization, horizontal coordination and alternative supply models.