In Africa, John Deere knows it’s empowerment first, then sales

John Deere is empowering villages in Sub-Saharan Africa through the SMART proposition.

In October 2019 a group of John Deere volunteers traveled to villages in Nigeria to participate in harvest season as part of Deere’s Rayuwa project. Rayuwa, which means “life” or “livelihood” in the local Hausa language, helps educate smallholder farmers on good agricultural practices. The goal of the program is to produce more food, and in turn help reduce poverty and hunger, while increasing childhood education.

This story looks at Deere’s business footprint on the continent and what makes Sub-Saharan Africa unique and complex.

Jacques Taylor sees Sub-Saharan Africa as farming’s last frontier.

On a continent where nearly 20 percent of the world’s population lives and hunger has its own season, it’s easy to see why.

Taylor, John Deere’s managing director for Sub-Saharan Africa (SSA), points to one attention-grabbing statistic: The continent is home to 60 percent of the global total of uncultivated, arable land. Meaning, of the world’s available farmland, six out of every 10 hectares sits in SSA.

The easy question follows. Why not just plant that land?

“It’s not as simple as that,” Taylor said. “Nowhere in the world, in the business of agriculture, are there two such distinct farming communities as there are in Sub-Saharan Africa.”

Taylor describes SSA as a “dualistic market.”

“There are small pockets of large agriculture and large pockets of small agriculture,” he said.

Blurring that distinction, Taylor added, is the key to ending world hunger.

And the key for Deere is to grow at SSA’s pace, which is modest at best.

“As a business, our responsibility includes 50 countries,” Taylor said, pausing to let the number carry weight. “We operate and provide service from Senegal in the west to Ethiopia in the east and everything south.”

SSA’s large-scale operations are very similar to what you see in the United States or Brazil, he said.

“These customers are early and eager adopters of technology. They have and want our biggest and most innovative products,” Taylor said. “They might have businesses of 100,000 hectares or more.”

But, he added, those customers represent about 20 percent of the region’s food production. Smallholder farmers produce 80 percent of the food in Africa, and in Nigeria that number approaches 90 percent. While there is no official definition of smallholder farmers, they are categorized as owning three hectares (7.4 acres) or less of land. In SSA it is often quite less, with many owning as little as one hectare. They rarely farm as a business, often putting seed to soil as a means of survival.

One goal for Rayuwa is to turn farming from survival to a business. To get there, yields must increase, and a surplus must follow. During a harvest event in October village farmers were focused on the results.

Poverty’s stranglehold

Economically, nations are no longer seen through the First or Third World lens. For the better part of 50 years, various organizations, including the United Nations and World Bank, have referred to countries as “developed,” “transitioning economies,” or “developing.” There is another level of distinction used to create one more layer at the bottom – “least developed.” While 33 African nations make that level’s list, Nigeria is not one of them.

However, 40 percent of people in SSA live in extreme poverty, defined as living with less than $1.90 a day. It is this type of poverty that prevents the smallholder farmer from moving forward.

Sub-Saharan Africa’s rare combination of exclusively large or small farmers with nearly none in-between is a by-product of that poverty. And its ripple effect can be vicious.

Poverty clogs development by stifling primary education, the transfer of knowledge among cultures, and, most critically in Nigeria, from advancing to mechanized farming. All of it stops smallholder farmers from waking up tomorrow and deciding to add 100 hectares to their operation.

Also unique, and a major factor in SSA’s development Taylor said, is the practice of “ill-defined property rights.”

In most African countries, there is no clear title to land. It is mainly owned by the communities, with the farmer negotiating a “permission to occupy” (PtO) the land from the village chief. The PtO has no fixed period and can be revoked at any time, Taylor said. That ambiguity hinders long-term investment in agriculture, especially at the commercial level. Also, Taylor added, given the ill-defined property rights, land cannot be offered as security, making it increasingly difficult to get loans from financial lenders.

A few African countries have clear title policies – such as South Africa, Namibia, and Botswana – by way of title ownership and/or long-term transferable leases.

So, in places like Nigeria, much of the unused arable land sits, and the hunger remains.

For now.

Deere’s push forward

The company’s focus, Taylor said, is working with tractor leasing agencies whose goal is to make affordable mechanization possible for smallholder farmers.

Agencies like TOHFAN (Tractor Owners and Hiring Facilities Association of Nigeria) locate farmers who have the ability to pay to lease tractors. Often, multiple farmers will work together to lease a tractor to till or plant their fields. It’s John Deere that sells the tractors to agencies like TOHFAN.

“Our focus is equipping the contractors through the SMART proposition,” Taylor said.

Broken down, SMART stands for:

S - Solutions for small farmers
M - Mechanization for yield
A - Access to finance
R - Reliability for lower cost
T - Technology and education

A complete SMART system (mechanization, quality seed, fertilizer, suitable tillage practices) can bring upwards of a 200 percent yield increase. In the last seven years, more than 30,000 farmers in SSA have been trained on the SMART system.

Tractors not only make smallholder farmers more efficient, they can provide jobs– five jobs per tractor to be exact.

“With each tractor you now have an owner, driver, technician, booking agent, and scheduler,” Taylor said. “They can be, and often are, quite a boost to the local economy.”

Growth with purpose

Currently the mechanization adoption rate in SSA is below 10 percent mainly because smallholder farmers aren’t able to raise yields. The Rayuwa project is focused on solving that.

“From a business perspective, the goal is to have a value proposition that can talk to large ag customers, as well as talk to emerging (beginning) or smallholder farmers across Africa,” Taylor explained. “That’s the challenge we have as Deere and the challenge our dealers have across the continent.”

Currently, there are 21 John Deere dealer owner groups throughout the continent marketing through 198 outlets or dealer touchpoints. A touchpoint can be a dealer outlet, a sub-dealer, or a remote service center.

“India, for example, has more than 1,000 dealer outlets,” he said. “We have 198 touchpoints in SSA, which includes 155 dealer outlets. This shows the opportunity for us as Deere to increase our coverage in order to effectively target and serve the market. I’m not saying 1,000 is where we need to be, but 198 is not where we can stop either.”

“The business for John Deere in Africa is more than just the supplier of agricultural equipment. It’s really around developing agriculture sectors and then creating a market for ourselves. This is an empowerment role.” —Jacques Taylor, John Deere’s managing director for Sub-Saharan Africa (SSA)

For context, Taylor said, Africa is three times the size of the United States and nine times the size of India.

Taylor said Deere added 63 new touchpoints in the last 12 months. A touchpoint might be a dealer outlet, a sub-dealer, or a remote service center. Deere identifies technicians in key communities and will train them, linking them with a dealer in the country.

“The business for John Deere in Africa is more than just the supplier of agricultural equipment,” Taylor emphasized. “It’s really around developing agriculture sectors and then creating a market for ourselves. To me, as I look at the rest of our operations around the world, Nigeria is unique. This is an empowerment role.”

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In Africa, John Deere knows it’s empowerment first, then sales

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