Leading farm equipment maker, Deere & Co., is installing ‘uber-like’ technology from Nigeria-based agritech start-up Hello Tractor, in its tractors as it looks to break into the African agriculture market.
The technology enables farmers to request for farm machinery via an app, which monitors the movements of the machine and transmits important information such as fuel levels.
Deere & Co. is currently testing the technology – a small black box fitted beneath dashboards – on around 400 tractors in Ghana and Kenya.
The company also revealed plans to roll out the devices across Africa in the second half of this year, offering it to all contractors who buy its equipment on the continent.
This development is targeted at increasing the sales of Deere & Co. tractors in Africa, a continent with the highest poverty rate and least adoption of mechanised farming. With projections showing population growth of two-times its current size by 2050, increasing productivity has become a necessity.
Jaques Taylor, who runs the sub-Saharan African business of John Deere, told Reuters that the continent badly needs more machinery to develop its farming industry but most farmers do not have the scale to justify a large investment.
“We would like to see that every farmer has access to mechanisation,” said Taylor. “The gap that we’ve identified is, how do we connect small farmers with tractor owners?”
And this has given rise to the need to connect tractor owners with those who need it but can’t afford it through an “uber-like” model.
Impeded by low income, small landholdings, and an absence of suitable financial frameworks, the number of tractors on the continent have remained stagnant, even as much of the developing world has embraced mechanisation.
Deere & Co. hopes to fix this and boost its business despite the obvious risk of huge investments in a market that accounts for only a tiny fraction of the company’s global sales presently and where there is no certainty of success.
A greater part of Deere & Co.’s annual revenue of $ 40Bn is accounted for the Americas and Europe. The company refrains from publishing numbers for Africa. Combined revenue from Africa, Asia, Australia, New Zealand, and the Middle East is known to have just hit under $ 4Bn in 2019.
Agrimech – a Nairobi-based agricultural services firm in Kenya, which manages a dozen tractors-for-hire and is paid by farmers to work on their lands – has taken up the offer to have the devices installed on its Deere machinery.
Agrimech hopes the new tech will help optimise its Deere tractors and connect them to new customers, which in turn will help the company to expand.
“They do the technology. We do the management,” said Pascal Kaumbutho, who heads Agrimech.
“Right now, we’re reaching about 1,500 farmers,” he said. “Within the next two or three years, I’d like to reach 20,000.”
Hello Tractor founder, Jehiel Oliver, said that such opportunities exist in markets across Africa, but companies like Deere have lacked the tools to develop them.
“Nigeria alone needs 750,000 (more) tractors to be on the global average,” he said. “Our technology is a market-maker for tractor manufacturers who want to sell into those markets.”
Deere & Co. thinks it can help on the financial front and said to Reuters that it could pull data from the Hello Tractor platform that showed in precise detail how farmers were using its equipment. This information could be used by the farmers – who typically lack credit histories – to help secure bank loans.
This could develop into greater adoption of mechanised farming and consequently grow the agricultural sector on the African continent.
*Source: Reuters