Using results from the three rounds of Nepal Living Standard Surveys (conducted in 1995, 2003, and
2010), this study empirically assesses whether access to rented tractors or custom hiring services is a
binding constraint on the income growth of farm households in Nepal. Because four-wheel tractors of
medium horsepower are still the primary suppliers of these tractor services, access to these services can
be restricted. First, we investigated the determinants of the adoption of hired tractors as well as the
intensity of their use (measured by real annual expenditures on renting tractors). Results suggest that the
adoption and the intensity patterns are generally consistent with the conventional theory of the demand
for agricultural mechanization, indicating that the supply of these services may be relatively efficient in
meeting the demand. However, adoption is still affected by the presence of tractor owners within the same
village district committee, indicating that the proximity to tractor service providers may still partly
determine accessibility. This second point was more formally tested using matching estimators within the
Terai region of Nepal. It was found that, on average, the supply of tractor services might have evolved to
a relatively efficient level in the Terai so that those who benefited from renting in tractors generally had
access to such services.