Willingness‐to‐Pay for 4‐Wheel Drive Tractor Hiring Services by Smallholder Farmers in the Central Highlands of Amhara Region, Ethiopia

About 15.6 million households are involved in farming in Ethiopia, of which only less than 1% have used motorized farm machinery. Some of the reasons mentioned for the low use of mechanization are small land holdings, land fragmentation, diversification, and rugged topography. However, world experience showed that under such circumstances, farm machinery like tractors and combine harvesters can be used under a “fee‐for‐service model.” This model can be an option for enhancing mechanization in Ethiopia, too. This study aimed to investigate the demand for 4‐WD tractor hiring services of smallholder farmers in the highlands of the Amhara region, where no such experience exists at all. Samples were drawn from two districts of the region, and data were collected using the contingent valuation survey method. The results from the double‐bounded model analysis showed that about 90% and 64% of smallholder farmers were found willing to hire a 4‐WD tractor for the first plowing and planting services, respectively. These results indicated that there is an enormous demand for farm machinery hiring services in the study area. The average prices farmers were willing to pay (WTP) for first plowing and planting services were US$40.35 and 33.14/ha, respectively, while the cost of hiring out a 4‐WD tractor was estimated at about US$38.23/ha. Though the profit is thin (US$2.09) positive profit indicates that tractor hiring out can be a future business venture in the study area. Hence, the hiring service model should be advocated to expand agricultural mechanization in the region.