Growth Of Modern Service Providers For The African Agricultural Sector

This paper describes how modern service providers have emerged in the African agricultural sector, a subject that has been vastly understudied. The paper looks at providers of modern rice mills, power tillers, combine harvesters, and production services at a highly productive rice irrigation scheme in Ghana. These service providers earn net profits that are greater than the profits they would likely achieve from simply expanding rice production without investing in respective machines, suggesting that higher returns primarily induce the emergence of these modern providers. Surpluses and experiences from their years of rice production are likely to have provided the primary finance and knowledge required for entry. The service providers emerged by exploiting both the economies of scale and the economies of scope, keeping rice production as the primary source of income, instead of specializing only in service provisions. Key policy implications are also discussed.