John Deere’s Africa boss talks selling tractors and agriculture trends on the continent
How we made it in Africa speaks with Jaco Beyers, managing director for John Deere’s business in Africa and the Middle East, about agribusiness and farming equipment trends across the continent. John Deere, the brand name of US-based Deere & Company, manufactures tractors and other farming equipment. In Africa, the company sells its agricultural machinery through a third-party dealership network.
What are some of the greatest untapped agriculture opportunities you see in sub-Saharan Africa today?
Opportunities are actually not specific to one crop, it’s more about an untapped business model. We’ve had the privilege to explore this across the continent over the past decade through our business operations and pilot projects, and we’ve gained insight on how to help farmers achieve scale in their yields.
The business model I’m referring to is a contracting model for purchasing farm machinery; not all farmers across Africa can individually afford a piece of machinery like a tractor or a planter, but transformation comes about when communities, neighbours or even families collectively invest in farm machinery. Making this equipment more broadly accessible to communities across Africa means farmers are more productive, improve their yields and even create jobs in the local economy.
Ethiopia is a great example. Five years ago, we started 60 pilot projects with tractors, whereas this year, we delivered 950 tractors there. We’ve seen the same thing in Nigeria, which is more developed in terms of models for farmers to access farm equipment, but equally benefits when more communities own farming machinery.
Agriculture-wise, some of the crops that have benefited from this model include small grains and row crops like soya beans. In the West, we often think of technology as something like a self-driving tractor. However, just using a planter that can space the seed depth correctly, along with the right fertiliser, is a great example of technology that can have a transformative difference for small farmers in Africa. This has also been in the case in Ethiopia, where farmers have been able to increase their yields for small grains such as barley, wheat and even teff; and in Nigeria, where we’re having success with maize.
A lot of this success goes back to land preparation; properly cultivating the soil and planting at the right seed level with the correct spacing. Ghana is another great example; by applying a planter to insert the seed at the right depth, farmers saw a difference in their yields of up seven tonnes per hectare. They used the same fertiliser, seed and spraying techniques but had a better yield thanks to improved planting techniques with mechanisation.
Small-scale farmers in Africa typically have relatively low purchasing power; what are some of the strategies John Deere has implemented to make its tractors and other agricultural equipment more affordable and accessible?
We’ve worked closely with a university in Germany that did a study where free tractors were given out across the continent. What’s curious is that 49% of those tractors were lying fallow or inoperable after only three years. This suggests that to be successful, farmers must have some skin in the game and pay for some portion of the machinery, otherwise they won’t leverage it to its full potential.
This validated some of the projects we’ve worked on over the past decade and we require farmers to put down a 10% to 30% investment, depending on the machinery. Can all farmers afford it? No, but it’s amazing when communities buy into these investments together. It reduces the cost for individual farmers, and usually also reduces the likelihood of default. We’ve found when they invest together, families and communities look after each other and ensure nobody 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, works closely with private sector institutions across the continent to arrange financing models that help bridge the gap for farmers.
It is important to bring in products that make an impact and are developed for African farmers’ needs. Sometimes even simple technology solutions make a big difference. The farmers like to see things with their own eyes first and so we try to make our products accessible so they can see the full benefits of mechanisation.
You have been with John Deere for 17 years; how has the agriculture sector in sub-Saharan Africa changed over this time?
What’s interesting is that large agro-processors across the continent are just a click away from the technology available in the rest of the world. From tobacco farms to sugar mills, these companies are becoming bigger and bigger and have an increasing awareness of the available products and expect access to these. For example, you see companies in West Africa are now producing for Europe and we’re going to see more big corporates on the continent producing at scale, and leveraging technology to do so.
When it comes to smallholder farmers, I think one of the greatest changes is that they now have access to some forms of agricultural technology but not others. When I was in Ethiopia, for example, I met a farmer who was using an ox and wooden plough to tend his fields but then he stopped and pulled out his smartphone to show me the current commodity prices. It struck me that he’s leveraging a smartphone, but still using an ox and plough. So there is a tremendous opportunity for farmers to make that jump to the next level of technology in their operations.
Discuss some of the agribusiness trends you see in sub-Saharan Africa.
One exciting development is conservation tillage. When farmers farm the same way year after year – say, using a disc plow – a layer of hardened soil (a hardpan) develops that prevents efficient water absorption and drainage. This is often made worse by the effects of climate change, such as severe thunderstorms, when a large volume of rain falls in a short time.
With conservation tillage, you can use something like a little ripper to break the hardpan soil layer to allow water to penetrate the ground. We love to demonstrate this when we meet with communities; after using a tractor with a small ripper, we pour a large bucket of water on the soil and after 10 minutes, the penetration is 50cm which enables plants to take root more deeply. This is an example of a basic technique, but something that can have a massive impact across Africa.
The other trend we see is that technology is more available across all scales of farming operations. While our high-end tractors have been driverless for over a decade, what most people don’t realise is that same technology is also available for smaller tractors and can even be placed on non-John Deere machinery. This means there are more options than ever before for farmers to use technology to improve production capacity.
There is also an increased focus on sustainability, be it through improved machinery fuel consumption or more precise planting and fertilising processes to avoid waste.
Name one African country that holds particular growth opportunities for John Deere.
We feel quite bullish on this region, and there are quite a few countries where we’d like to expand operations. Ethiopia comes to mind; they are doing all of the right things to take it to the next level and you can see the improvement. It’s like a snowball and improvements in agriculture are helping raise its overall GDP.
Also in Nigeria, Kenya and particularly Zimbabwe, there are great opportunities. If you look at what the Zimbabwean government is trying to put in place, we feel it is a country with great potential
Overall, we want to continue our presence across the continent. We don’t want to ignore any of the countries as they are all important, just running at different stages.
Explain some of the biggest challenges of running a pan-African business focused on the agriculture sector.
One of our greatest assets is our dealers who are committed to agriculture even though it can be cyclical. A challenge has been to help them grow their businesses. We partly solved this by recently announcing the expansion of our construction and forestry product lines to 18 Southern and West African countries where they were previously not available. We’ve been piloting this for the past three years in West Africa and we’re very excited about this next step for several reasons.
For one, our dealers are making massive investments when it comes to technicians, training and parts to support our agriculture products. By adding construction and forestry product lines, we can help them balance demand and spread risk in each country. One industry may be up and the other may be down, but it allows our dealers to steadily maintain operations throughout the year.
The construction and agriculture industries work closely together in Africa. If the infrastructure is not there to get the produce to the main road or the cities, it’s a problem for farmers, too. We’ve been meticulous in developing this model, and we want to do it right so that we can take our dealers and customers to the next level.