John Deere (Africa) CEO talks about tractor sales and farming trends on the African continent

How John Deere has achieved success in the African market, Jacko Beyers, Managing Director of John Deere Africa & Middle East, also talked about trends in agribusiness and agricultural equipment on the African continent. John Deere, a US brand of Deere & Company, makes tractors and other agricultural equipment. In Africa, the company sells agricultural equipment through a third-party dealer network.

Q. – What are some of the biggest untapped opportunities in agriculture that you see in sub-Saharan Africa today?

A.-The opportunity doesn’t really depend on one crop, it has more to do with an untapped business model. Over the last decade we have been fortunate enough to explore this across the continent through our business operations and pilot projects, and we have gained insight into how to help farmers achieve large-scale increases in yields.

The business model I’m talking about is a contract model for purchasing agricultural equipment; not all farmers in Africa can afford such equipment, like a tractor or a seeder, but the transformation happens when communities, neighbours or even families collectively invest in agricultural equipment. Making this equipment more accessible to communities across Africa means greater farmer productivity, higher yields and even job creation in the local economy.

Ethiopia is a great example of this. Whereas five years ago we launched 60 pilot projects with tractors, this year we delivered 950 tractors there. We have seen the same thing in Nigeria , which is more developed in terms of farmers’ access models to agricultural equipment, but equally benefits when more communities own agricultural machinery.

In terms of agriculture, some of the crops that have benefited from this model include small grains and row crops such as soya beans. In the West, we often think of technology as an unmanned tractor. However, the simple use of a seeder that can properly distribute the seed depth along with suitable fertiliser is an excellent example of a technology that can be transformative for smallholder farmers in Africa. This has also been the case in Ethiopia, where farmers have been able to increase yields of small grains such as barley, wheat and even teff; and in Nigeria, where we have had success with maize.

Much of this success has to do with land preparation; proper tillage and planting the seeds at the right level with the right row spacing. Ghana is another great example; By using a seed drill to get the seed at the right depth, farmers have seen a difference in yields of up to seven tonnes per hectare. They used the same fertiliser, seed and spraying techniques but had higher yields due to improved planting methods with mechanisation.

Q. -Smallholder farmers in Africa usually have relatively low purchasing power. What strategies and innovations has John Deere implemented to make tractors and other farm equipment more affordable for African farmers?

A.-We worked closely with a university in Germany, which conducted a study according to which tractors were distributed for free across the continent. Curiously, 49% of these tractors were lying fallow or out of service after just three years. This suggests that to be successful, farmers have to have some skin in the game and pay for some of the machinery, otherwise they won’t be able to use it to its full potential.

This has been confirmed by some of the projects we have been working on over the last decade, and we require farmers to invest between 10% and 30%, depending on the machinery. Can all farmers afford it? No, but it’s amazing when communities put this investment together. This reduces costs for individual farmers and tends to reduce the likelihood of default as well. We have found that when they invest together, families and communities look after each other and make sure no one defaults on payments.

We work with the public and private sectors to find the right financing so that African farmers can access the equipment and technology they need. Our division, John Deere Financial, is working closely with private sector organisations across the continent to develop financing models that will help bridge the gap between farmers.

It’s important to bring in products that make an impact and are designed for the needs of African farmers. Sometimes even simple technological solutions make a big difference. Farmers prefer to see things for themselves first, so we try to make our products affordable so they can see the full benefits of mechanisation.

Q.-You’ve been with John Deere for more than 15 years, how has the agricultural sector in sub-Saharan Africa changed over that time?

A.-What’s interesting is that the continent’s large agro-processing companies are just a click away from the technology available in the rest of the world. From tobacco farms to sugar mills, these companies are getting bigger and bigger and they are increasingly aware of the products available and expect to have access to them. For example, you see companies in West Africa now producing for Europe, and we will see more large corporations on the continent producing on a large scale and using technology to do so.

In terms of small farmers, I think one of the biggest changes is that they now have access to some forms of agricultural technology but not others. For example, when I was in Ethiopia, I met a farmer who was using an ox and a wooden plough to cultivate his fields, but then he stopped and pulled out his smartphone to show me current commodity prices. It struck me that he was using a smartphone but still using an ox and a plough. So there is a huge opportunity for farmers to take a leap to a new level of technology in their operations.

Q.-Tell us about some of the agribusiness trends you are seeing in sub-Saharan Africa?

A.-One interesting innovation is conservation tillage. When farmers cultivate the same way year after year – say with a disc plough – a layer of hardened soil (a hard layer) forms, which prevents effective water absorption and drainage. This is often exacerbated by the effects of climate change, such as severe thunderstorms when large amounts of rain fall in a short period of time.

With conservative tillage, you can use something like a small ripper to break down the hard soil layer so that water can penetrate the ground. We like to demonstrate this when we meet farmers, after using a tractor with a small ripper we pour a big bucket of water over the soil and after 10 minutes the penetration depth is 50 cm, allowing the plants to root more deeply. This is an example of a basic technique, but it can have a huge impact across Africa.

The other trend we are seeing is that technology is becoming more available across all scales of agricultural operations. Although our high-performance tractors have not depended on a driver for more than a decade, most people don’t realise that the same technology is available for smaller tractors, and can even be fitted to third-party machinery. This means that farmers have more opportunities than ever before to use technology to increase production capacity.

There is also an increased focus on sustainability, whether through reduced fuel consumption by machinery or more precise planting and application processes to avoid waste.

Q.-Name one African country that has a particular opportunity for growth in John Deere sales?

A,-We are optimistic about the region and there are quite a few countries where we would like to expand. Ethiopia comes to mind, they are doing all the right things to get to the next level and you can see improvements. It’s like a snowball effect, and the improvements in agriculture are helping to boost its overall GDP.

Also in Nigeria, Kenya and especially Zimbabwe there is a big opportunity. If you look at what the Zimbabwean government is trying to implement, we feel it is a country with a lot of potential.

Overall, we want to continue our presence on the continent. We don’t want to ignore any one country because they are all important, just at different stages.

Q.-Explain some of the biggest challenges in running a pan-African agriculture-focused business?

A.-One of our main assets is our dealers who farm, even though it can be cyclical. The challenge has been to help them grow their business. We have partly solved this problem by recently announcing the expansion of our construction and forestry product range to 18 countries in South and West Africa, where they were not previously available. We have been piloting this for the last three years in West Africa and we are very excited about this next step for several reasons.

Firstly, our dealers are investing heavily in technicians, training and spare parts for our agricultural products. By adding construction and forestry product lines, we can help them balance demand and spread risk in each country. One industry may rise and another may fall, but this allows our dealers to keep operations stable throughout the year.

The construction and agricultural industries work closely together in Africa. If there is no infrastructure to get products to the main road or to the cities, it is also a problem for the farmers. We have carefully designed this model and want to do it right to take our dealers and customers to the next level.