Evolution of the use of agricultural machinery

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EVOLUTION OF THE USE OF AGRICULTURAL MACHINERY IN SOUTH AFRICA

INTRODUCTION

Mechanisation is one of the innovations that was introduced in African agriculture in the 1940s. Mechanisation has evolved, in both its nature and composition, resulting in changes in its use on the farm. These changes are various and have different impacts on the use of inputs such as labour. Of particular interest in the recent past, is the labour debate in South Africa, specifically the effect of tractorisation on labour input use. Policy questions arise in relation to innovations in mechanisation, its use, and how this may negatively affect labour use, leading to farm consolidation (Sunding & Zilberman, 2001). To answer these sometimes politically charged questions, an investigation into the evolution of agricultural machinery is required. Among other factors, mechanisation is linked to a number of topical issues in agriculture, such as technical change, factor proportions or intensity, research and development, trade, and climate change. Tracing the evolution of agricultural machinery will therefore enable informed policy decisions to be made in terms of mechanical input use. The changes in agricultural machinery need to be quantifiable over time to inform future policies. These changes include the use of bigger machines in terms of power and the switch from 2WD to 4WD tractors.
Agricultural machinery use in South Africa has evolved because of the technological changes that have taken place over time. However, in the monitoring and reporting of the national agricultural machinery and implements, these changes are ignored. In fact, the reporting style has also deteriorated, from disaggregated statistics to aggregates, thus leaving a number of questions unanswered in terms of how machinery and implements have evolved over time. In tracking the changing structure of agriculture, the Agricultural Censuses/Surveys serve as a valuable source of information. This is particularly true if the method remains consistent in terms of its basis of elicitation (and reporting), particularly the level of detail. In the early years before the first round of the World Agricultural Census of 1930, detailed attention was given the development of a uniform basis to conduct the census in terms of methodology to elicit information and to report the results in an effort to provide internationally comparable data on the structure of agriculture (International Institute of Agriculture, 1939). The decennial rounds of the World Agricultural Census provide guidance to countries in collecting structural data using standard concepts, definitions and classification (FAO, 2010).
Agricultural surveys were based on a sample of the frame for the census were conducted for the inter-census years in many of the member countries of the United Nations (before that the League of Nations). South Africa participated in this endeavour since 1918 and complied to these guidelines in both the variable coverage and the detailed level of reporting, albeit with the primary focus on commercial agriculture. On the other hand, Censuses and Surveys systematically excluded black farmers in the homeland areas and self-governing territories after 1975. The detailed scope in terms variables covered and the level of aggregation in reporting began to deviate from the norms provided by the FAO since 1983 and more pertinently so, since 1993 (Liebenberg, 2013).
The sampling frame of the agricultural census/survey changed to include commercial farms only registered for tax from 1994. Statistics South Africa defines a commercial farm as a farm producing agricultural products intended for the market usually registered for both value added tax and income tax (Statistics South Africa, 2010). Information is sourced in an increasingly aggregated form that varies from year-to-year in terms of composition. With specific reference to capital expenditure, Table 2.1 below shows that very little, to no, information is provided on the composition of the different capital items included within each aggregated capital category, for instance the survey for 2005 (Statistics South Africa, 2006).
Table 2.1 shows the evolving nature of the categories against which the data elicited from farmers was reported on capital expenditure on new machinery. The data reported in census and survey reports are indicated with a “C” or “S”, respectively, against the aggregate reported for the category. The changing nature of reporting in the Agricultural Census/Survey reports from 2005 through to 2012 is immediately clear. The proportional ratio of tractors to the total expenditure on new machinery and equipment through to 2007 can be used to better reflect the changing nature of tractorisation when using the annual AGFACTS estimates on new tractor sales. However, from 2008 the varying nature of reporting severely compromises the usefulness of the agricultural survey as a source of information on structural change in capital investment.
Expenditure on tractors now forms part of the aggregate of other capital items, such as motor vehicles and office equipment, from 2008 to 2010, and from 2011 it was aggregated with plant, machinery and implements. This restricts this analysis in that the exact amount of expenditure on tractors is not computable but is required to form the basis for estimating overall expenditure of machinery and implements. Data available from the overlapping years of each survey report proved useful to form a rough estimate of the share of tractors to overall machinery sales for the years since 2007. Using tractors as the main mechanical input on most farms in South Africa, the next section explains how tractorisation has evolved over time in South Africa.

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EVOLUTION OF TRACTORISATION IN SOUTH AFRICA

South Africa is a net importer of agricultural machinery and the evolution of tractorisation should therefore be viewed in the light of the changes that take place globally, as South Africa imports from various countries around the world. The tractor is the most recognisable farm input in most commercial farms in South Africa. Tractors in South Africa also make up the greater part of the machinery and implements component of the capital formation account (Abstract, 2013). Figure 2.1 below shows the importance of the tractor on the farm processes. At every stage in the farming process, from seedbed preparation, sowing and planting, weeding, inter cultivation, plant protection, harvesting and threshing until the last stage in post-harvest and agro-processing, the tractor plays an important role.
Figure 2.1 above illustrates the importance of the tractor, which is the reason why estimates of tractor values in South Africa are used as a proxy to estimate the value of the rest of the machinery and implements. The tractor is an important farm implement, compared with other machinery and implements. As a result, this necessitates an understanding of the history of the tractor and how it has evolved over time, because tractor trends ultimately affect the valuation of the rest of the machinery and implements in capital formation.
The quality of tractors has undoubtedly changed from the steam engine-powered tractors in the early 1800s to the gasoline-powered tractors used today. The tractors today offer more comfort, as farmers operate in a tractor cabin that is equipped with air conditioning and complex computer systems. As such, farmers are able to easily monitor a number of processes in farming, such as power take off, digital hour, fuel and temperature gauge, tractor working hours, programmable service times and power supply voltage. One of the most recent innovations in the tractor market is the self-driving tractor, launched by the Autonomous Tractor Company in 2012. This tractor allows 24-hour operations on a farm that are programmable from a portable-computer tablet. This follows other innovations, such as two tractors operated by a single driver where the tractors are connected to one unit via satellite navigation and radio communication. One of the tractors would be unmanned, but would perform the same procedures as the manned vehicle.

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DECLARATION 
ACKNOWLEDGEMENTS 
TABLE OF CONTENTS 
LIST OF TABLES
LIST OF FIGURES 
LIST OF ACRONYMS 
CHAPTER 1: INTRODUCTION 
1.1 BACKGROUND AND CONTEXT
1.2 PROBLEM STATEMENT
1.3 CONCEPTUAL FRAMEWORK
1.4 RESEARCH OBJECTIVES
1.5 HYPOTHESES
1.6 RESEARCH METHODOLOGY
1.7 JUSTIFICATION OF THE STUDY
1.8 OUTLINE OF THE THESIS.
CHAPTER 2: EVOLUTION OF THE USE OF AGRICULTURAL MACHINERY IN SOUTH AFRICA 
2.1 INTRODUCTION
2.2 EVOLUTION OF TRACTORISATION IN SOUTH AFRICA
2.3 THE CHANGING NATURE OF TRACTORISATION IN THE CONTEXT OF TRACTOR DRIVE TRAIN 2WD AND 4WD
2.4 FARM PROFITABILITY AND TRACTOR EVOLUTION
2.5 SHIFTS IN TRACTOR SALES ACCORDING TO POWER (KW) CATEGORIES
2.6 CHAPTER SUMMARY
CHAPTER 3: THE REVISED TRACTOR PRICE INDEX 
3.1 INTRODUCTION
3.2 THE INDEX NUMBER PROBLEM AND CURRENT METHODS OF TRACTOR PRICE INDEX ESTIMATION
3.3 APPLICATIONS OF INDEX NUMBERS
3.4 REVISION OF THE LASPEYRES TRACTOR PRICE INDEX
3.5 THE REVISED TRACTOR PRICE INDEX
3.6 COINTEGRATION ANALYSIS BETWEEN TRACTOR PRICES EXCHANGE RATE AND NET FARM INCOME
3.7 TESTING FOR STATIONARITY SERIES
3.8 GRANGER CAUSALITY TESTS
3.9 CHAPTER SUMMARY
CHAPTER 4: THE REVISED MACHINERY INVESTMENT SERIES 
4.1 INTRODUCTION
4.2 RE-ESTIMATING THE TRACTOR SALES VALUE
4.3 REVISITING THE BASIS FOR CALCULATING MACHINERY AND IMPLEMENTS VALUE
4.4 COMPOSITION OF MACHINERY AND EQUIPMENT
4.5 REVISED MACHINERY INVESTMENT SERIES 1995-2015
4.6 CHAPTER SUMMARY.
CHAPTER 5: REVISION OF CAPITAL SERVICE FLOWS IN SOUTH AFRICA 
5.1 INTRODUCTION
5.2 SERVICE STOCK ESTIMATION
5.3 SERVICE FLOW ESTIMATION.
5.4 REVISED CAPITAL SERVICE FLOWS
5.5 CHAPTER SUMMARY.
CHAPTER 6: SUMMARY, CONCLUSIONS AND POLICY IMPLICATIONS 
6.1 SUMMARY AND CONCLUSIONS
6.2 MANAGERIAL IMPLICATIONS.
6.3 POLICY IMPLICATIONS.
6.4 AREAS OF FURTHER INVESTIGATION
REFERENCES 
ANNEXURE

Department of Agricultural Economics

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