Kpandai Tractor Investment Exercise

1 Oct

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Here’s a quick little exercise for you (note that the investment numbers from my Tweet a month ago have changed)…

In talking to the staff in the MoFA office, one of the big issues in the district is a lack of tractors. It used to be that the Government would provide tractors to the District MoFA offices and they would pay them off by collecting money from farmers for plowing and harrowing (leveling) their fields, but they took all of the tractors back when it turned out that most MoFAS offices were using the tractors mainly on the fields of the office staff for free (this was a general trend, not specific to my district).

So now tractors are only available through the private sector at around 30GHC/acre ($24 Canadian), which is the same price that the MoFA office used to charge when they had tractors.  There are currently only 15 serviceable tractors available in the district and during high demand periods they must be brought in from surrounding areas.  As a result of the lack of tractors, only 500 of the 1,000 acres of rice seeds that the Kpandai MoFA office had to distribute last year could be planted in time.  And this is only one of the crops grown in the area along with yams, cassava, cowpea, maize, etc…

So here’s the deal. The Government wants there to be more tractors in the district in order to promote development, but they don’t want to just provide them, so they’ve brokered a deal for Brazilian tractors and they are offering them to private investors for 20,000GHC/each ($16,000), with only 4,000GHC ($3,200) down and the rest repayable quarterly over the next 3 years (an interest free loan).

Farmers will pay between 20-30 GHC/acre and a tractor can plough around 10 acres/day. In a typical season, a tractor might work 150 days taking into account seasons and maintenance. It costs around 11 GHC/acre for fuel and around 1,000GHC/year for maintenance.

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The MoFA office thinks that the District could easily use around 5 new tractors. If you lived in the Kpandai district and you had the money, would you be interested in investing?  What are the main risks and potential issues that you see?

If enough people respond, I will provide some more details about the current status.

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2 Responses to “Kpandai Tractor Investment Exercise”

  1. Mark MacKinnon October 3, 2010 at 12:40 am #

    Abbott, are you trying to compete with Kiva?

    The numbers you offer look fine, as long as the investor has assurances that parts will be be readily available in the long-term. Is that a derelict Ford sitting in the mud? Is it parked there because people can’t get parts for it? Are there more like it? If that’s the case, and I lived in Kpandai and had money, I might invest in a parts import operation. Either way, it seems like there are good opportunites to make money and get those fields tilled.

    Great work you’re doing there!

    • markwjabbott October 3, 2010 at 7:43 am #

      Hey Mark,

      Excellent points! Spare parts is definitely a big issues. There are some old jalopies over here that put the American cars in Cuba to shame! I met a guy yesterday named Mike the Mechanic who the people I was with described as a genius who could fix any car. I also met a gy at the one computer center in town who spent the whole day trying to fix a computer printer that was certainly designed to be disposable.

      So spare parts and repairs are a big issue, but one that he locals are already very familiar with.

      Mark

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