Business Essentials for Professionals


Demand Growth In Africa Expected By US Tractor Maker Deere

Demand Growth In Africa Expected By US Tractor Maker Deere
US company tractor manufacturing firm Deere & Co is eyeing expansion in Africa which would be driven increased demand and expansion in crucial markets such as Ethiopia and Zimbabwe. The company said that it anticipates demand for its products in Africa would help increase its growth rate to 8 to 10 per cent annually in the short term.
According to the World Bank, about 60 per cent of all employment in Africa is accounted for by farming. By 2025, analysts expects that more jobs than the rest of the economy would be added by the agriculture sector in Ethiopia, Malawi, Mozambique, Tanzania, Uganda and Zambia.
According to Jacques Taylor, MD of John Deere Sub-Saharan Africa, a green revolution has been triggered in Africa by programs that were inducted about a decade ago – including the World Food Programme among others, which aimed at shifting focus and efforts away from food aid and focus on local production.
"We started to see a commercial market developing for agricultural commodities ... That gave an incentive for farmers to produce more," he said in an interview top the media.
10 African markets, including SA, Zambia, Kenya and Ghana, are currently the target for about 80 per cent of the total shipment of the company to Africa, Taylor said.
"We see three or four countries with significant upside growth potential in the medium-term," he said. "We see opportunity in countries like Angola, Zimbabwe, Ethiopia and obviously Nigeria."
One of the most well known products of the company is its John Deere branded tractors, the current business strategy of the company entails exporting its products to Africa and reaching the market through a network of local dealers.  CNH Industrial and Landini are the main competitors of the company in the market.
In a program jointly with the Ethiopian government, the dealer of Deere in the country is slated to construct an assembly plant in the country for production and supply of farm machinery for the local market which comprises of 100 million people. This is a part of the reform program of the government.
A major transition is also taking place in Zimbabwe following the end of the ouster of the long-time president Robert Mugabe in 2017.
"We have high hopes for Zimbabwe. It used to be the food basket for southern Africa. The potential is known," Taylor said. "Zimbabwe could easily recover and get back to the levels of production they've seen in the past."
The company however is a bit disappointed about the short term future of the South African market, which is a very important market for it, because land redistribution has assume great significance and importance as an election topic before the 2019 polls. Despite the promises made by the government that there would be no threat to food security or growth because of the plan, it has unnerved some businesses.
"We do see it as a growth opportunity for us. There will be new entrants coming into agriculture," Taylor said. "I think for the sake of the sector and the economy, it's important for us to get clarity sooner than later."

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc