Deere lures Africa’s first-time buyers of tractors

Green Revolution

The value of the African food market may triple to $1 trillion by 2030 on population growth and urbanization, the World Bank estimates. African machinery demand will rise on the back of that growth while Asia slows, De Maria said.

The level of mechanization in African farming is still very low. Kenya had 25 tractors per 100 square kilometers (39 square miles) of arable land in 2009 while Nigeria has almost seven, according to the most recent data from World Bank. That compares with an average of 271 machines in the U.S.

The size of the farm-equipment market in Africa will be about 24,000 to 30,000 machines in 2013, according to Duluth, Georgia-based tractor maker Agco Corp. By comparison, U.S. industrywide tractor sales were 137,776 this year through August, according to the Association of Equipment Manufacturers.

Africa was largely bypassed in the last few decades by the Green Revolution, the name given to the series of improvements in grain and fertilizer technology and in irrigation that boosted crop yields in Asia and Latin America. Sub-Saharan Africa has the biggest gap between actual and potential yields, according to the World Bank.

Learning Center

In Nigeria, the continent’s most populous country, only 40% of arable land is cultivated. It plans to stop importing rice by 2015. Agriculture is Nigeria’s “new frontier for growth,” President Goodluck Jonathan said in July.

As in much of Asia, African farmers work small lots, limiting their access to financing. An average of 1.1 tons of grain per hectare was reaped from 2008 to 2010 in the sub- Saharan region, roughly one-third of the world average, partly because farming technology is costly and under-utilized, the U.S. Department of Agriculture said in a September 2012 report.

To address those issues, Agco has opened a 150-hectare learning center and farm near Lusaka, the Zambian capital, to train local farmers and dealers in modern farming technology. According to Agco, 65% of African farmers work manually. Deere and CNH also help with training.

New Products

“The demand for technology is growing,” Nuradin Osman, Agco’s director of operations for Africa and the Middle East, said in a phone interview from Switzerland. “The demand for higher horsepower is growing.”

Agco, the third-largest farm equipment maker, already has 150 to 200 dealer outlets in Africa. It has opened a parts distribution center in Johannesburg and has started assembling Massey Ferguson tractors in a joint venture in Algeria.

Next year, the company plans to introduce 15 new products for the African market including planters, harvesters and storage units, Chairman and Chief Executive Officer Martin Richenhagen said in an interview. Agco may add to the $100 million it has already committed to investing in Africa, he said.

Deere had 30 dealer locations in east, west and central Africa excluding South Africa in 2010, and according to Jayaram the number will double this year. Deere set up a parts distribution center in South Africa in 2012 to serve the whole continent and has tripled its parts inventory in Africa in the last few years.

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