Investigation of Factors Affecting on Farmers Investment in Agricultural Machinery: Application of Two-stage Heckman's method

Noting to the importance of enhancement of coefficient agricultural mechanization through investment in agricultural machinery, a study was conducted using survey data of 573 farmers in Khorasan Razavi province. We applied Tobit model and Heckman's two stage method in order to determine factors influencing investment and the amount of capital invested in agricultural machinery. Marginal effect of variables in Probit model showed that farmer’s experience and education levels, acreage, availability of bank credits, own capital, using chemical fertilizers and ownership had positive effect, but age, achievement to rental machinery had negative effect on investment in agricultural machinery. Meanwhile, the results of second stage of linear regression showed the farmer’s education and experience levels, using chemical fertilizers, family labor, acreage, cost of harvesting, own capital, availability of bank credits and ownership had positive effect, whereas age, using leguminous in crop pattern, and achievement to rental machinery had negative effect on the amount of capital invested in agricultural machinery. Keeping an eye on these findings, in order to improve the coefficient of mechanization, a policy package including farm machinery leasing through subsidized credit, establishment of agricultural mechanization bank, land consolidation, creation the sense of ownership and application of proper extension systems is suggested.