Ex-ante Assessment of Adoption of Small-scale Post-harvest Mechanization: The Case of Groundnut Producers in Malawi, Series Paper Number 44

The study combines household-level demand function analysis and community-level benefit cost analysis to conduct ex-ante assessment of the adoption of small-scale post-harvest mechanization with a case of groundnut producers in Malawi. Based on the needs assessment conducted in 2010, Compatible Technology International (CTI) designed three pieces of labor-saving equipment for post-harvest operations for smallholder groundnut production, namely, lifter (harvester), stripper (thresher), and sheller (dehuller) in partnership with ICRISAT, Department of Agricultural Research Services (DARS), and C-to-C Engineering. The paper attempts to assess the viability of adoption and dissemination of each of these technologies which are technically categorized as “club goods” or “artificially scarce goods” through examining two steps: (1) smallholders' level of willingness-to-pay (WTP) for use of the equipment after seeing the demonstration, and (2) community leaders' preferences for methods of acquisition. The data collection leverages farmer research network (FRN) established in collaboration with farmer organizations, complemented by gender disaggregated household interviews. The analytical output suggests that the WTP for smallholders to use the equipment for their entire volume of groundnut harvest was approximately 2,000 Malawian kwachas (MWK) per acre, MWK 50 per pail, and MWK 35 per pail for the lifter, stripper, and sheller, respectively and that lead farmers’ investment in acquiring these technologies can be recovered in a single post-harvest season. The critical values for farmer group size to achieve breakeven points were 75, 22, and 129 for the lifter, stripper, and sheller, respectively under the base scenario and 127, 37, and 218 under the conservative scenario. Lead farmers’ return on investment (ROI) for one season was 2.3, 10.5, and 0.9 for the lifter, stripper, and sheller, respectively under the base scenario and 1.0, 5.8, and 0.1 under the conservative scenario, which will further increase as multiple seasons are considered. The sensitivity analysis indicated that the result was largely robust to altering the assumptions on group size and fees for using the equipment. The findings suggest that the business of lead farmers acquiring the equipment and renting it out to member farmers is indeed profitable, meeting the necessary condition for sustainable adoption. Other conditions to ensure successful adoption are also discussed