IJERD – International Journal of Environmental and Rural Development (2020) 11-2

Research article
erd

Economic Impact of Rice Tractor and Combine Harvester
Custom Services in Northwest Cambodia
DALIN SUN*Graduate School of Agriculture, Tokyo University of Agriculture, Japan
Email: da.lin3019@gmail.com

TOMOHIRO UCHIYAMA
Faculty of International Agriculture and Food Studies, Tokyo University of Agriculture, Japan

NINA N. SHIMOGUCHI
Faculty of International Agriculture and Food Studies, Tokyo University of Agriculture, Japan
Received 15 January 2020

Accepted 12 December 2020(*Corresponding Author)

Abstract Agricultural machinery has become significantly important to carry out farm workand to address labor scarcity in Cambodia. However, rural areas face many challenges suchas lack of farmers’ improper machinery utilization and lack of skilled operators in order toimplement agricultural mechanization. The effective use of tractor or combine harvester (CH)requires not only management knowledge and experience, but also proper the economicevaluation. This study aims to determine the potential of rice tractor and combine harvester
custom service to create an economic advantage for the agricultural machinery owners. A
survey of 28 tractor owners (group T), 21 CH owners (group CH), and 23 tractors and CHowners (group B) in Banan District, Battambang Province was conducted in March 2019.
The result indicated that the annual custom service area by group T, CH, and B were 133.4
ha, 213.1 ha, 398.9 ha (tractor 180.8 ha, and CH 216.1 ha), respectively. The average
operating cost was estimated at 30.0 USD/ha for group T, 58.9 USD/ha for group CH, and26.2 USD/ha (tractor) and 56.3 USD/ha (CH) from group B. Among the costs incurred,depreciation cost was the highest cost, followed by diesel and labor costs. In some cases,owners tend to offer higher pay to skilled operators to work for them especially during thepeak seasons. The break-even point per year were estimated at 116.4 ha for group T, 117.5
ha for group CH, and 113.0 ha (tractor) and 109.6 ha (CH) for group B. In general, custom
service by group seemed to vary on the field and infrastructure conditions, operators’ skill,frequently machine breakage, and owners’ desire to gain profit. Therefore, this study suggeststhat the owners should prolong the economic life of tractors or CHs by conducting properand regular maintenance that will eventually lead to decrease break-even area.
Keywords tractor, combine harvester, custom service, operating cost, break-even point,
payback period

INTRODUCTION
In some areas of Cambodia, rice farming system has been changed in agricultural sense from single
cropping to double cropping per year and transplanting method to direct seeding method. Also, theuse of animal powers has been declined from 47% in 2001 to 33% in 2013 (Chhim et al., 2015). Dueto urbanization, the size of rice cultivated land has been reducing, and productivity is also declining
due to non-availability of inputs such as fertilizers, labor inputs, and machineries. According toMinistry of Agriculture Forestry and Fishery (MAFF) Cambodia, the total labor force was decreasingfrom 57.6% in 2009 to 45.3% in 2014.
Agricultural machinery has played a significant role in increasing agricultural production bycompleting farm operations in time, reducing production costs, and address labor scarcity (Chan etal., 2014). Currently, Cambodia has imported hundreds of modern farm machineries to enhance land
preparation or harvesting proportionally. The number of tractors increased 5-fold from 2,602 unitsⒸ ISERD128

IJERD – International Journal of Environmental and Rural Development (2020) 11-2

in 2001 to 13,701 units in 2015. The number of CHs increased 18-fold from 325 units in 2006 to5,893 units in 2015. The most common model utilized by farmers is Kubota. However, theimplementation of mechanization in a rural area still faces many challenges, such as impropermachinery use, the high cost of machinery, and lack of skilled operators (Abu et al., 2015). Due topoverty, some farmers found it difficult to access all inputs and acknowledge in modern farmmachinery. And there are available the custom services (custom service refers to a business that ismanaged by either group or individual person to provide farming operation with any farmmachineries in the set of rate or fee) from other farmers to other farmers but the demand is still notenough (Banan district annual report, 2017). The effective use of a tractor or combine harvester
requires not only management knowledge and experience but also proper economic evaluation.
OBJECTIVE
This study aims to determine the characteristics and the awareness of farmers about various aspectsof mechanization; and examine costs and profitability of the business to create economic advantage
for the owner.
METHODOLOGYFig. 1 Map of Cambodia and Banan District
Source: Google image

This study is conducted in Banan District, Battambang Province. Located 28 km away fromBattambang city, this district is also one of the largest rice-growing areas in the province. There arealso a prevalent large number of farmers using tractors and combine harvesters. The total rice fieldarea of this district is 47,321 ha, of which 38739 ha are wet season rice and 8,582 ha are dry season
rice (Banan district annual report, 2017). Kamping Pouy and Kanghot dam is the main irrigation
system that brings the water to supply the whole district for farming usage.
Primary data were collected through farm questionnaire survey of randomly selected 72
machinery owner-farmers in Banan district in March and August 2019. The respondents were further
divided and categorized into tractor owner-farmers, CH owners, and tractor and CH owners. Datawas obtained both in wet and dry seasons for land preparation and harvesting paddy rice. The
collected data included a year of purchase, initial purchase price, hectares of tractor and CHutilization, operator wage, repair and maintenance, and fuel costs, and rates of service charge.
Simple descriptive methods cost and return, break-even, and payback analysis were utilized.
RESULTS AND DISCUSSIONⒸ ISERD

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IJERD – International Journal of Environmental and Rural Development (2020) 11-2

General Characteristics of Respondents
The 72 respondents were categorized into three groups: namely group tractor (T) has 28 tractorowner-farmers, group combine harvester (CH) has 21 CH owner-farmers, and group both (B) has 23
tractors and CH owner-farmers. Table 1 show average age of the owners was 40 years, with at least
14 years in farming experience. There is no significant difference between those groups.
Table 1 General characteristic of machinery owners
ItemsnAverage family size (persons)Average member involves in rice farming (persons)Average age (years old)
Average farm experience (years)
Education background (years)

Group T
28
3.8
1.8
43.4
14.9
7.8

Group CH214.0
2.1
42.1
14.2
7.5

Group B
23
3.5
2.0
44.6
16.1
7.3

Source: Field survey, 2019

Fig. 2 Percentage of machinery owners accessed to information
In this study, approximately 20% of machinery owners have attended training programs related
to tractor and CH at least one time a year. According to the interviewed owners, training programs
are related to managing, maintenance and repair, and operation of machinery properly, which isusually provided by the Kubota dealer. Yet, there was no training provided by the provincial
department or extension workers.
The rate of machinery owners’ access to information related to tractor and CH is still limited.
Those three group owners commonly received the information from intermediate agents, such asneighbor farmers, friends, and relatives, and some received information from the dealer rather thanfrom the provincial department (Fig. 2).
Tractor and Combine Harvester Utilization
In the survey area, most tractors and CH worked seasonally with an average of 200 days/year. The
variation of working days between tractor and CH is due to differences in local climatic conditions
and land conditions. Tractors work mostly concentrated on land preparation (plowing, harrowing,and rotavating) and the working hours about 7 to 8 hours/day with an average capacity of about anhour/ha. CH work focused only on rice harvesting and frequently can harvest at least 4 to 5 ha/day(about 2 hours/ha).
Table 2 shows that total annual utilization of group T was from the owners’ farm (40%) andremaining (60%) was custom service. Group CH, approximately 85% of CH was from custom
service. Besides, annual utilization of a tractor and CH on group B owners’ farm was 36% (tractor),and 28% (CH), and remaining from custom service. This result means that tractor or CH owners onlyoffered custom service during the rice cropping season and after they completed with their farm.
Aside from that, machines are stored in the shed or parked in open area when they not in use.
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IJERD – International Journal of Environmental and Rural Development (2020) 11-2

Table 2 Average annual use per tractor and CH by group machinery owners
Items
Group TOwn farm
Custom service
Group CHOwn farm
Custom service
Group BTractor
Own farm
Custom service
Combine harvester
Own farm
Custom service

NHH
28

21

Average operated land (ha)
133.4
53.0
80.4
213.1
31.0
182.1

%
4060
1585

23
181.2
65.6
115.6
216.1
60.6
155.5

3664
28
72

Source: Field survey, 2019

Total Cost of Tractor and Combine Harvester Custom Service
Table 3 shows average annual operating cost, which calculated both custom service and the owners’
farm. Tractors and CH operators are the owners, owners’ relatives, or hired operators. Approximately
80% of tractor and CH operators are hired operators who have reimbursed on a hectare basis.
Machinery owners commonly contracted operators during land preparation and harvesting.
Sometimes machinery owners tend to offer higher pay to skilled operators to work for them,especially during peak seasons.
Table 3 Average operating cost per tractor and CH operation
Items
Annual operated land (ha)a. Fixed cost (USD)
b. Variable cost (USD)
RepairOperators
DieselCommission broker
c. Total annual cost (c=a+b)
Total operating cost (USD/ha)Group TTractor
133.4
1,832.0
2,169.7
60.0
388.7
1,648.2
72.8
4,001.730.0Group CHCH
213.1
5,574.9
6,981.8
423.4
1,291.3
5,133.6
133.5
12,556.7
58.9

Group BTractor
CH180.8
216.1
1,895.7
5,205.0
2,841.6
6,963.4
89.0
296.9
509.5
1,597.2
2,164.8
4,971.7
78.3
97.6
4,737.3
12,168.4
26.2
56.3

Source: Field survey, 2019
Note: Fixed cost consists only depreciation

As a result, average operating cost was estimated at 30.0 USD/ha for group T, 58.9 USD/ha forgroup CH, and 26.2 USD/ha (tractor) and 56.3 USD/ha (CH) from group B. Diesel is the highest
single cost of total variable cost, followed by labor and repair cost. The higher cost of diesel andrepair may be due to differences in machine age, annual use, operator skill as well as field conditions.
Few machine owners revealed that they commonly did not use the aging tractor or CH for providing
custom service because of low power and high risk of failure.
Fig. 3 presents the relationships between total operating costs per hectare and the annual use of
three group owners. In order to derive a function for each cost, the least-squares regression method
was used to determine the best fit function. The total operating cost is taken as the dependent variable(y) and annual use rates as the independent variable (x). The curves describe in terms of data points
related to the above cost items per hectare to annual hectares of use. The r square value could explainat 83% and 84% of the observed variations in group T and B, respectively. This result indicated that
there is a significant contribution to the annual use of decreasing total costs. The total operating costsⒸ ISERD131IJERD – International Journal of Environmental and Rural Development (2020) 11-2of machinery owners per hectare show a quick decline with an increase in annual use. The result
suggests that there is a great potential to reduce total operating costs by increasing annual use (ha).

Group TGroup CH
140.0

y = -0.0733x + 112.62
R = 0.8447

Total Cost (USD/ha)

120.0
100.0

80.0
60.0
40.0
20.0
0.0
0200

400
600
Annual Use (ha)

800

1,000

Group B

Fig. 3 Relationships between total cost per hectare and annual use
Service Charge and Profitability of Tractor and Combine Harvester Custom Service
Normally, farmers contacted machine owners before any operations to secure their place to beavailable on time. In addition, farmers usually asked the same custom service providers of theprevious year because they have been satisfied with that service. But in some emergency cases,
farmers made decision to choose a new custom service provider who can respond to their needs.
The service charge of ploughing ranged from 25 USD to 29 USD per hectare, and rotavating
ranged from 27 USD to 33 USD per hectare. The harvesting operation depends on the rice varieties
and season (wet and dry season). The service charge of wet season rice varieties is about 85 to 90
USD per hectare, while the price of dry season rice varieties ranged from 68 to 80 USD per hectare.
In some cases, it found that the rate of harvesting service was a bit higher than the average
estimated. The reasons were that rice stalks are bent and difficult to harvest, so hiring farmers had topay higher rates according to an agreement made by farmer and machinery owners.
Table 4 Average profitability per tractor and CH operationItemsAnnual operated land (ha/year)
Service charge (USD/ha)
Annual revenue (USD/year)
Annual cost (USD/year)
Annual profit (USD/year)
Profit (USD/ha)Break-even area (ha/year)
Payback period (years)

Group T
Tractor
133.4
32.0
4,268.8
4,001.7
267.1
2.0
116.4
11.9

Source: Field survey, 2019
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Group CH
CH
213.1
80.2
17,090.6
12,556.7
4,533.9
21.3
117.5
3.4

Group B
Tractor
CH
180.8
216.1
32.5
79.7
5,876.0
17,223.2
4,737.3
12,168.4
1,138.7
5,054.8
6.3
23.4
113.0
109.6
8.23.6

IJERD – International Journal of Environmental and Rural Development (2020) 11-2

Table 4 presents the average profitability per tractor and CH operation. As a result, group T,CH, and B received a profit from the operation were roughly 2 USD/ha, 21.3 USD/ha, and 29.7
USD/ha (tractor 6.3 USD/ha, CH 23.4 USD/ha). Moreover, the annual utilization of tractor and CH
required for economic feasibility was evaluated using break-even analysis. The result indicated thatthe break-even areas per year were estimated at 117.4 ha for group T, 117.6 ha for group CH, and112.8 ha (tractor) and 109.8 ha (CH) for group B. This means that after an additional hectare of either
tractor or CH used would make a profit for the owners. Moreover, the payback period was estimatedto be at 11.9 years for group T, 3.4 years for group CH, 8.2 years (tractor) and 3.6 years (CH) forgroup B to earn back investment.
CONCLUSION
There were no significant differences in characteristic respondents and approximately 20% fromthree group owners aware of training programs about tractor and CH, which is usually conducted bythe dealer. Yet, there were no training programs on proper management, repair, and operatemachinery provided by extension workers or department of agriculture engineering.
Generally, farmers contacted machine owners before any operations to secure their place to beavailable on time, and they usually asked the same service providers of the previous year. Amongthe operating costs incurred, depreciation cost was the highest cost, followed by diesel and laborcosts. In some cases, machinery owners tend to offer higher pay to skilled operators to work for them,especially during the peak seasons. Regarding profit, the utilization of tractor and CH under current
conditions was profitable for machinery owners. Three group owners should increase annual use
beyond the break-even areas by providing more custom service to other farmers in order to earn backthe investment on tractors or CH. This result suggests that the break-even area and payback period
analysis can also give an indication for farmers to decide whether to purchase a new tractor or
combine harvester or ask more custom service.
Therefore, this study recommends that the owners should prolong the economic life of tractorsor CHs by conducting proper and regular maintenance that will eventually lead to shorten the breakeven areas and payback period in order to gain more profit. Additionally, the government or privatecompany should provide special training programs for the machine operators, farmers, andmechanical extension officers on proper management, repair, and operation. Also, the local
government should setup the formula for ensuring the fair prices of the custom service.
REFERENCES
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Banan District. 2019. Annual district report of 2017 and 2018. Battambang Province, Cambodia.
Chan, S., Lytour, L. and Santy, S. 2014. Status and prospect of agricultural mechanization in Cambodia. United
Nations Centre for Sustainable Agricultural Mechanization, 7-11.
Chhim, C., Buth, B. and Ear, S. 2015. Effect of labor movement on agricultural mechanization in Cambodia.
CDRI Working Paper Series, No. 107, Cambodia Development Resource Institute, Cambodia.
IRRI. 2016. Combine harvesting in south and southeast Asia: Current status and trends. International Rice
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MAFF. 2016. Annual report for agriculture, forestry and fisheries 2000-2016. Ministry of Agriculture, Forestryand Fisheries, Phnom Penh, Cambodia.
Thangavel, A. 2009. An analysis of the impact of mechanization in paddy cultivation in Thanjavur District ofTamilnadu. Ph.D. Dissertation, Department of Post Graduate Studies and Research in Economics, India.

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