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John Deere Lures Africa’s First-Time Buyers of Tractors

September 12, 2013
 
 

The world’s largest makers of agricultural equipment are looking in Africa for more people like Levy Sinyimba.

The businessman bought his first tractor, a 60-horsepower model, about three months ago after becoming fed up with paying others to plow his 1,000 acres (405 hectares) in Zambia. Sinyimba says he knows other farmers who want to do the same.

Those Zambians are part of an emerging agricultural class in Africa increasingly courted by foreign manufacturers. Sub- Saharan Africa’s 5.6 percent economic growth forecast for 2013 will outpace the developed world’s, generating wealth to invest in crops. Almost half the land available for sustainable farm expansion lies in Africa, meaning it can better feed itself and the growing global population if productivity can be boosted.

Dealers for Deere & Co., the biggest farm-machinery maker, are opening new African sites to sell equipment such as the 5503 tractor, its most popular in the region. The $24,000 price is less than a 10th of some of its machines selling in the U.S.

Fiat Industrial SpA’s CNH Global NV unit says African sales are jumping as much as 20 percent year on year, boosted by farmers making their first purchase.

The companies "are all racing to get there for the next growth wave," Larry De Maria, a New York-based analyst for William Blair & Co., said in a Sept. 5 telephone interview. "It could be a lucrative situation for the equipment makers and solve the potential food shortages in Africa."

 

Self-Sufficiency

 

A lot has changed in the five decades since Moline, Illinois-based Deere entered the continent through apartheid-era South Africa.

Greater political and economic stability and a push by some nations for food self-sufficiency has made the continent more attractive, said Ganesh Jayaram, Deere’s vice president of agriculture and turf sales and marketing for most of Asia and Africa. An abundance of arable, uncultivated land and untapped water supplies also offer "strong tail winds," he said in a phone interview.

Africa has 45 percent of the land suitable for sustainable agricultural expansion, meaning it isn’t protected or forested and has a low population density, according to the World Bank.

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RELATED TOPICS: Machinery, Tractors, Combines

 
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