VDMA Ear to the Market Africa

Ear to the Market: Africa 2013/2014 Contact: [email protected] Page 1

VDMA Agricultural Machinery Association

Photo: wetteraukreis.de

Ear to the Market: Africa



Table of Contents

Topic Page

Algeria July 2014 3Egypt June 2014 17Zambia May 2014 29Kenya April 2014 42Nigeria March 2014 57Angola February 2014 70Tanzania January 2014 84Ethiopia December 2013 97Ghana November 2013 113Zimbabwe October 2013 127Mozambique September 2013 140South Africa August 2013 154



Algeria July 2014



Algeria: Interviews

Direct seeding on the rise

20% of Algerias farms are larger than 20 ha. Cereal farms ofhundreds or thousands of hectares are primarily located in North-Eastern Algeria in the area of Setif, Mila, Constantine and Guelma.Some of them are private companies, others are pilot farms. Pilotfarms are state farms. There is nearly 180 of them in Algeria andoften they are as well as or even better equipped than the privateones.

Said Mahnanes farm is a private farm located close to Setif. On 60 hahe and his employees produce wheat, barley, oats and vegetables.Like many other farmers in the region, he is currently very concernedabout the climate: For this year with the conditions of dryness, theharvest is really bad. I will harvest nearly nothing. For the future andwith the climate changes, it is very complex to estimate the harvestquantity. Currently the weather causes a big problem.

For Ahmed Boughendouze, the manager of a 1,700 ha farm producingmainly wheat and barley, it has been the most difficult year in decades:This year is a disaster. We have almost no harvest. Drought persistedthis year and lasted almost 70 days. I have spent almost 28 years onthis farm, but this is the most difficult year and the worst climateconditions. Until early March the cultures were well developed but frommid-March until now it is a disaster. So water is the big problem.

In order to better handle the droughts, which seem to have increased inthe past years, Mr. Boughendouze is planning to change to directseeding: My plan is to change the system. I plan to go to conservationagriculture and avoid the one that is conventional. If we take this year:between September and mid-May we scored 98 mm precipitation. As aresult we had a very small harvest. So if we want to take a strategy todevelop this sector, we need to take the example of this year. Ipersonally see these coming years to be the same as this season. So Isay to myself to better adapt to these conditions especially climatechanges. If we really think about how to successfully manage waterresources, then we must go to conservation agriculture. After that therewill be other perspectives, for example the choice of plant materialsthat are more tolerant to drought conditions. Honestly there is nophilosophy that is brighter and we master the technical aspect.Precipitation will not exceed 130 mm and with this installment wellnever manage to produce good yields. So to overcome this, we mustturn to conservation agriculture - for example reduce and absorb allcosts and expenses associated with plowing, leveling So for thispurpose we will go directly to direct seeding, which will allow us abetter rationalization of water resources.Said Mahnane on his farm

How is the mood in agriculture in the different African countries? What are the major developments? How is the situation onthe agricultural machinery markets? To answer these questions, we regularly speak to the managers of local agriculturalenterprises and to agricultural machinery dealers. This month, we took a closer look at the North African country Algeria.



Algeria: Interviews

According to ICARDA (International Center for Agricultural Research inDry Areas) conservation agriculture has indeed made impressiveadvances in Algeria. In the past two years, the adoption of conservationagriculture has actually more than tripled.

Up to 60% subsidies for agricultural machinery investments

But not only the climate change currently influences the way farms areoperating in Algeria. Due to rural migration, some regions areexperiencing a dramatic lack of agricultural workforce. According to Mr.Mahnane, especially in the past harvest seasons, the labor problem hasbeen huge as a large number of people has moved to the cities and/or toactivities other than agriculture. That has strongly increased the demandfor agricultural machinery, especially in regard to harvesting equipment.

Mr. Mahnane had to pay only between 60 and 70% of the total price forhis harvesting equipment among others a Claas combine harvester, areaper and a collector mower. The rest was paid by the state. In general,the Algerian government subsidizes agricultural machinery investmentswith 20 to 60% of the total sum. Recently, it strongly focused onharvesting equipment, but also subsidies for other kinds of agriculturalmachinery are possible. Normally only locally manufactured/assembledmachinery is eligible to subsidies. If there is no adequate localalternative though, also imported products can be subsidized (this onlycounts for new machinery - machines older than two years are notallowed to be imported anyway.)

Ahmed Boughendouze and his farm lands



Sometimes, the German brands are more or less double the price thantheir Chinese or Indian counterparts but according to Mr. Boughendouzemany farmers are aware of the differences in quality: You find a tractor120 million Centime from India, so that German is 200 million Centime,but the most durable is the German equipment and the most profitabledespite its high expense. Mr. Mahnane adds: It is like the car market: ifI want to buy machinery, I look for the strongest like German machinery -also to guarantee technical assistance for the machinery.

Algeria: Interviews

However, especially in comparison to the rest of Africa, there is actuallya fair number of tractors, combines and implements which are producedor assembled locally. Claas and Same Deutz-Fahr produce combinesand tractors in Constantine and sell their machines under the namesCirta (SDF) and Tessala (Claas). For tractors, the current productioncapacity is 3,000 units. For its Massey Ferguson production, AGCO hasstarted a joint venture with two Algerian partners in Constantine only twoyears ago. By 2017, they want to produce 5,000 tractors. Also the Indianmanufacturer ITL/Sonalika produces tractors in Algeria. Their machinesare sold under the name Algeria Solis.

3,000 new tractors per year

A total of at least 100,000 tractors is in use in Algeria today as well asapproximately 9,000 combine harvesters. Azizane Haroune from AlTractors an Algerian-Tunisian company selling John Deere machinery estimates that in a year approximately 3,000 tractors next to maybe5,000 implements are sold. The brand environment he sees like follows:The oldest and most dominant brand in Algeria is Deutz. After that, wehave the Cirta tractor which has been based on Deutz technology since1973. After these two big brands, we have Massey Ferguson. Lately,Chinese and Indian products such as Mahindra have been beginning todominate the market thanks to their low prices. Other common brandsin Algeria are John Deere of course, McCormick by AGCO, Farmtrac bythe Indian manufacturer Escorts as well as Cetor from the CzechRepublic.

Mr. Haroune from Al Tractors



Interviews

Maintenance and technical assistance remain a major problem

And for many farmers this is exactly the crux of the matter. On Mr. Mahnanes farm, they have Cirta/SDF and Massey Ferguson tractors, a Claascombine as well as a couple of implements from Italy and Spain. Mr. Mahnane explains: For me, the best brand is the one that allows me to seeand obtain spare parts, it is the one that ensures me after sales service. Why are we interested in Cirta? Because we master it well. If you havedamage, you can easily find the solution in terms of spare parts. We are exploiting what is easy and adaptable for us. So we prefer Cirta becausethey have the best availability in terms of after sales service and spare parts. In contrast, for sowing, if you have a problem with a part, then thespares are not really available. For my sprayers, for example, I was forced to change my supplier because I had issues with parts. So I went toAXIUM (Hardi dealer) because they ensure maintenance after purchase and they always ensure parts availability of certain materials.

Ahmed Bougendouzes ag machinery park

Algeria: Interviews



Algeria: Interviews

So at least to some extent, Mr. Mahnane has found ways to get to grips with the issue of finding spare parts for example by switching the brandsof his agricultural machinery. Still everything in regard to the actual repair of the machines represents a challenge to him and his employees: Weface great problems, we do not have the competence to fix the machinery. We can only make adjustments to the installation as well as the usage.For example, if we have a machine that is broken down, currently it is big problem, we do not have the proficiency to repair it. So we do fix itourselves but this remains limited because of our lack of specialist knowledge.

In the opinion of Mr. Haroune from John Deere, many Algerian farmers feel like Mr. Mahnane: In Algeria, farmers are asking for a very simpletechnology. Farmers first worry is a breakdown. Maintenance and technical assistance remain a major problem in the agricultural machineryindustry here in Algeria.

Said Mahnanes ag machinery park



Algeria: Agriculture

z Agricultural production} Crop production:

z Potatoes 3,3 4,2 million tz Wheat 2,6 3,4 million tz Dates 600.000 800.000 tz Olives 400.000 600.000 tz Grapes 400.000 600.000 tz Tomatoes 700.000 800.000 tz Onions 1 1,2 million tz Chilies and peppers 380.000 430.000 tz Water melons 1,2 1,5 million tz Apples 380.000 400.000 tz Oranges 580.000 820.000 tz Apricots 200.000 290.000 tz Vegetables 540.000 560.000 t

} Animal production :z Cow milk 2,1 2,4 million tz Sheep meat 200.000 250.000 tz Chicken meat 250.000 tz Cattle meat 100.000 120.000 tz Eggs 260.000 310.000 tz Sheep milk 300.000 340.000 t

z Agricultural area} Total country area: 2.381.740 sq km} Agricultural land: 17,4%} Arable land (in use): 3,2%



Algeria: Agricultural Machinery

Agricultural machinery import Algeriain million Euro

Source: Federal Statistical Office Germany

0

50

100

150

200

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

from World

from Germany

Main origin countries of ag machinery imports

Ag machinery import 2012

Tractors 86,8 m Spraying & fertilizing 3,8 m Soil cultivation 7 m Harvesting 24,5 m Seeding & planting 3,8 m Irrigation 7,2 m Transport 0,8 m Not categorized/parts/others 46,3 m Total 180,2 m

Import 2013 (preliminary): 269 million Euros (+ 49%)



Algeria: Agricultural Machinery

z Agricultural machinery dealers and manufacturers (selection) / agricultural region (in orange)

Source: http://www.infoplease.com/atlas/country/algeria.html

PMAT Direction Generale (Massey Ferguson dealer), Algiers

AGCO tractor production,Constantine

Firme Algerienne du tracteur (New Holland dealer), Algiers

EURL Mixtrade (Claas dealer), Algiers

PMA / CMT tractor andcombine production underlicense SDF (Cirta) andClaas (Tessala), Constantine

SARL Al Tractors (John Deere dealer), Algiers



Algeria: Fairs and Exhibitions

z FIA - Foire Internationale dAlger } May 2015, Algiers (anually)} Organized by CFCIAF (Chambre de

Commerce et dIndustrie Algro-Franaise) } http://fia.safex.dz/

z Sud Agral} December 2014, Biskra (annually)} Organized by Krizalid communication} http://www.krizalid-dz.com/Accueil.html

z Sipsa Agrisime & Sipsa-Agrofood} May 2015, Algiers (annually)} Organized by ExpoVet} http://www.expovet-dz.net/

z Agroexpo Siafil Filaha} November 2014, Algiers (anually)} Organized by ExpoVet} http://www.expovet-dz.net/



Algeria: Basic Country Figures

z Economy} GDP 2013: 216 billion USD (+3,1%

compared to previous year)} GDP per capita 2013: 5.668 USD} GDP agriculture (of total 2012): 8,4%} Labor force: 11 million} Employees in agriculture: 14%} Inflation 2013: 3,9%} Industries: petroleum, natural gas, light

industries, mining, electrical, petrochemical, food processing

} Resources: petroleum, natural gas, iron ore, phosphates, uranium, lead, zinc

} Ease of Doing Business: 152 of 185} Global Competitive Index: 110 of 144} Corruption Perception Index: 105 of 174} Human Development Index: 93 of 186

z Politics and state} Capital: Algiers} Administration: 48 provinces} Head of state: Abd al-Aziz Bouteflika} Government leader: Abdelmalek Sellal} Minister of Agriculture: Abdelouahab Nouri




GDPin billion USD

Source: World bank

5785

102117

136

171

138162

199 208

0

50

100

150

200

250

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Foreign Direct Investment Stockin billion USD

Source: United Nations Conference on Trade and Development

6,2 7,18,1

9,911,6

14,2

16,919,2

21,823,3

0

5

10

15

20

25

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012




z Demographics} Total population:

32 m} Population density:

14 inhabitants per sq. km} Population growth 2014:

1,9% (est.)} Fertility rate:

2,8 births per woman} Ethnic composition:

99% Arab-Berber, 1% Europeans} Urban population:

73%} Below 15 years:

28%} Illiteracy rate:

27%

z Languages} National language:

Arabic} Further languages:

French, Maziria, Berber

z Religion} Major religion:

Islam} Minority religions:

Christianity (very small minority)

z Currency} Name of currency

Algerian Dinar (DZD)} Exchange rate:

1 EUR = 107,82 DZD (07/2014)



Algeria: Contacts

z Agricultural section of German Embassy in Morocco (also responsible for Algeria)} 7, Zankat Madnine, B.P. 235, 10 000

Rabat} +212 537 / 21 86 00} [email protected]

z Chambre Algero-Allemande de Commerce et dIndustrie (AHK) } 11, rue Mohamed Khoudi, El Biar, 16000

Alger} +213 21 92 18 44} [email protected] } http://algerien.ahk.de

z GIZ Algeria} Lotissement El Feth - Villa n 24

El Biar, Algiers} +213 21 920988} [email protected]} www.giz.de

z German Embassy in Algeria } 165, Chemin Sfindja (ex. Laperlier),

Algiers} +213 21 74 19 56 } www.algier.diplo.de



Egypt June 2014



Egypt: Interviews

We rarely own agricultural machinery, we rent it from thegovernment

Magued Akhnoukh is the manager of a 85 acre farm focusing on sugarbeet and cane as well as wheat, maize and soya beans. All the harvestis sold to governmental institutions such as the Principal Bank forDevelopment and Agriculture or state-controled agriculturalcooperatives. Mr. Akhnoukh explains: The government is the biggestcustomer for us and for most farms in Egypt because wheat and thosecrops are subsidised by the government. The government helps thefarmer by paying a bit more for wheat and maize. We are an agricultureoriented country, if the government wouldnt support this area, then theywouldnt be doing their job.

Also for agricultural machinery, Mr. Akhnoukh relies on the government:In Upper Egypt, we rarely own agricultural machinery, we rent it fromthe government. 95% of the farms do not have their own machinery butthey rent it from the government and the bigger farms maybe fromprivates. I just send a deposit using my ID or I pay the full pricedepending on how long I will need the machine. Per day I only pay adeposit. The government then sends the machines which are suitable forthe land depending on its size and its location. We rent tractors,harvesters, levellers, ploughs, planters and so many more. Every yearthe brands are different. Most of the farmers do not really care aboutbrands though since the government would replace it if something goeswrong with the machine. So farmers do not really worry about thetechnicality of the machine. The process is made easy by thegovernment and it is really the only option a lot of the farmers have interms of having a mechanized farm. One machine costs more than thenet profit of a farm for a whole year given that we are not including spareparts, maintenance and all the other costs.

How is the mood in agriculture in the different African countries? What are the major developments? How is the situation onthe agricultural machinery markets? To answer these questions, we regularly speak to the managers of local agriculturalenterprises and to agricultural machinery dealers. This month, we took a closer look at the North African country Egypt.



Egypt: Interviews

The big companies go for the big names

Mahmoud Samir works for Golden Seven Egypts Massey Fergusondealer. With seven employees, the company has been operating in thesector since 2011. The government only rarely belongs to theircustomers it is rather the larger private farms which purchase MasseyFerguson machinery: Our products are too expensive for thegovernment. The government only wants cheap machinery.

Mr. Samir basically sees four main customer segments agriculturalmachinery dealers can focus on in Egypt: We have the main one whichis the government. Under the government we need to think of twoaspects. The first aspect is the fact that the government supplies a lot offarmers in Egypt with machines. The second aspect is the fact that thegovernment actually owns some land and requires some machines forthat. To get the machines, they usually use bids. They put out a bid andwhoever they find the cheapest - biggest criteria - wins the bid. Asmentioned, this is usually other brands than Massey Ferguson.

Then we have the companies (customer segment number two). Thosecompanies are either big or medium or small. Big companies are Daltex,Dima, Maghrabi, Sekem that are 1,000 acres and more. Mediumwould be Marina, Raga, Shabrawi, Sudani 50 acres and up. Theydont necessarily own the land but they rent. This is where landcontracting happens: some owners just rent out land to farmers and thenthey take percentage of the profit. By the way, not only the governmentdoes bids for agricultural machinery - there are also big companieswhich do bids and choose the best for them. But that would put intoaccount quality also - not like the government which only puts intoaccount the price.

And then you have the small farmers (customer segment number three)with small land - families with ten acres or even less. Last you have thecontractors (customer segment number four) who buy used tractors andmachines and rent them to people. They usually only buy big brandnames like John Deere and Massey Fergusson. Often they get it fromabroad they only care about the brand name.

The customers of Golden Seven are primarily large-scale private farms.The government, contractors and small farms are rather served by otherbrands. In Mr. Samirs opinion, the most prominent brands in Egypt arethe Indians - primarily Mahindra with a tractor range of up to 80 HP - theChinese and also New Holland, which have been quite successful inselling machinery to the government. In addition, Belarus is well rootedin the market. They sell about 200 tractors per year primarily to smallerfarms. John Deere again is rather common too. Their clientele,according to Mr. Samir, are rather the large farms which look formachines with a minimum of 160 HP.

Sherif Yousef works for The Transorient Company - Egypts official JohnDeere agent. Mr. Yousef confirms Mahmoud Samirs view: Thegovernment is big but they usually go for cheap machines. Then thereare big companies that own land and they go for big names as they canafford it. We usually sell to The Nile Company and a big company calledEl Rakhaa which is Saudi Arabian. These are our two biggest clients atthe moment. Small companies go for the same brands that thegovernment goes for. Our personal clients are the medium to bigcompanies that are owned by foreign investors like the Saudi Arabians.



Egypt: Interviews

Per year, The Transorient Company sells about 50 John Deere tractorsbetween 90 and 220 HP as well as more or less 50 implements. To Mr.Yousef, John Deere, New Holland and also Lamborghini have been themost important brands in Egypt at least so far: Europeans are tooexpensive for the market at the moment. The Asians are getting better interms of accessing the market as they are very price oriented and caneasily make prices very low. Therefore they are attracting thegovernment and the small lands which is more than 60% of the marketat this point.

All hopes rest on President Sisi

Egypts agricultural sector - like basically the whole country - is currentlytorn between a deep insecurity caused by the events of the past threeyears and burgeoning hopes associated with the new president AbdelFattah al-Sisi.

The Egyptian Revolution took place in 2011 as part of the Arab Spring.One of its results was the resignation of Muhammad Husni Mubarak,who governed from 1981. Turbulent times followed. A Military Councilruled until Mohammend Mursi took up his office only to be overthrownagain shortly after. Again a Military Council was implemented until lastmonth official parliamentary elections were held. These saw formermilitary chief al-Sisi as clear winner.

Like many other Egyptians, also Mr. Samir from Golden Seven placesgreat hopes in Sisi: In the past three years everything has been on hold.There have been no new land projects and therefore the market wasstagnant. Were waiting for president Sisi who promised he would startto focus on agricultural projects. There are a lot of lands that could beused for agriculture and in the past, the government used to help ingetting this done with projects. But for the past few years nothing hashappened. We are now hoping that president Sisi will start doing thatagain. Therefore, the potential for the agricultural machinery marketcould increase.

Mr. Akhnoukh, the cereal farmer, hopes that the new government willfinally bring a feeling of security to the sector: The mood is the generalmood of the country it is uncertain. If the government falls like in thepast couple of years, the industry falls. At this point everyone is hopefulthat the new government helps this industry back on its feet. In the pastthree years, there has been insecurity because there are people whohave taken away the farms - criminals have been taking away the farmsfrom people ever since the revolution. The owners have zero tominimum to do when this happens because of the lack of regulation. Andthe police has been lacking involvement ever since the revolution. Thenew government has been communicating that the security will be betterand hence everyone can be more relaxed. The last three years havebeen a burden on everyone in this industry.

Mr. Yousef from The Transorient Company adds: I expect a big changein the coming years now that president Sisi has taken over thegovernment. At least thats what I am hoping for.



Egypt: Agriculture


z Tomatoes 8,1 8,6 million tz Rice 4,3 5,9 million tz Grapes 1,3 1,4 million tz Wheat 7,2 8,8 million tz Dates 1,4 1,5 million tz Potatoes 3,6 4,5 million tz Oranges 2,4 2,8 million tz Onions 2 2,3 million tz Sugar cane 15,7 16,5 million tz Olives 390.000 470.000 tz Mangoes 600.000 790.000 tz Strawberries 240.000 tz Chilies and peppers 650.000 670.000 tz Sugar beet 7,5 9,1 million t

} Animal production: z Cattle meat 430.000 440.000 tz Chicken meat 750.000 800.000 tz Buffalo meat 400.000 tz Buffalo milk 2,6 2,7 million tz Cow milk 3 3,3 million t

z Agricultural area} Total country area: 1.001.450 sq km} Agricultural land: 3,7%} Arable land (in use): 2,8%



Egypt: Agricultural Machinery


Agricultural machinery import Egyptin million Euro


0

20

40

60

80

100

120

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

from World

from Germany


Tractors 34,5 m Spraying & fertilizing 8,4 m Soil cultivation 4,9 m Harvesting 10,7 m Seeding & planting 0,6 m Irrigation 2,9 m Transport 0,2 m Not categorized/parts/others 47,6 m Total 109,8 m

Import 2013 (preliminary): 96 million Euros (- 13%)



Egypt: Agricultural Machinery

z Agricultural machinery dealers (selection)

Source: http://www.infoplease.com/atlas/country/egypt.html

Golden Seven (Massey Ferguson), Cairo

Trans Orient Company forMarketing (John Deere), 6th October City

ECAD (New Holland), Cairo

El Watania Company forImport (Claas), Alexandria



Egypt: Fairs and Exhibitions

z Sahara} 21st 24th September 2014, Cairo (annually)} Organized by Sahara Expo} http://www.cicc.egnet.net/



Egypt: Basic Country Figures


compared to previous year)} GDP per capita 2013: 3.114 USD} GDP agriculture: 14,5%} Labor force: 28 million} Employees in agriculture: 29%} Inflation 2013: 9%} Industries: textiles, food processing,

tourism, chemicals, pharmaceuticals, hydrocarbons, construction, cement, metals

} Resources: petroleum, natural gas, phosphates, gold, iron ore


z Politics and state} Capital: Cairo} Administration: 27 governorates} Head of state: President Abd al-Fattah

as-Sisi} Government leader: Prime Minister

Ibrahim Mahlab} Minister of Agriculture: Ayman Farid

Abouhdid




GDPin billion USD

Source: World bank

83 79 90108

131163

189219

236257

0

50

100

150

200

250

300

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012



21,3 23,528,9

38,9

50,5

60,066,7

73,1 71,675,4

0

10

20

30

40

50

60

70

80

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012






80 inhabitants per sq. km} Population growth 2014:



99,6% Egyptian, 0,4% others} Urban population:

44%} Below 15 years:

32%} Illiteracy rate:

26%


Arabic} Further languages:

Egypt-Arabic, Nubian, Berber, French, English


Islam} Minority religions:

Christianity (app. 10 %)


Egypt Pound (EGP)} Exchange rate:

1 EUR = 9,74 EGP (06/2014)



Egypt: Contacts

z German-Arab Chamber of Industry and Commerce (AHK)} P.O. Box 385, 11511 Ataba, Cairo} +202 33 36 81 83} [email protected] } www.ahkmena.com

z GIZ Egypt} 4d, El Gezira Street, 3rd Floor

11211 Zamalek-Cairo} +202 27359 750} [email protected]} www.giz.de

z German Embassy in Egypt} 2, Sh. Berlin (off Sh. Hassan Sabri)

Cairo Zamalek} +202 2728-2000} [email protected]} www.kairo.diplo.de

z Germany Trade and Invest in Egypt} 21, Sh. Soliman Abaza, Mohandessin/

Giza} +202 3 333-8494} [email protected]} www.gtai.com



Zambia May 2014



Zambia: Interviews

Double-digit growth rates in Zambias agricultural sector

Mr. Munalula is the owner of a 70 ha farm close to Lusaka. He and histwelve employees primarily cultivate maize - to a lesser extent alsocassava, soy beans, millet and sorghum. However, most of his incomeMr. Munalula generates by hiring his 45 HP tractor and his ploughs toother farmers. His clients are small-scale farmers in the nearneighborhood as well as medium-scale farmers with farms rangingbetween a dozen and several hundred hectares. Most of them do ownfarm land sometimes vast areas - but cannot afford agriculturalmachinery, others do not know how to use the technology. Per hectare,Mr. Munalula charges about 450 kwacha which is around 50 Euros. Weask Mr. Munalula if he sometimes also works for other farmers withoutbeing paid: No, unless they are people we know like our neighboringsmall scale farmers. We relate well, we can maybe exchange theycan have our tractor, we can exchange with their water pumps whenour water pumps are not working very well its people we know whowe deal with for free.

Mr. Munalula tells us that the farming sector in Zambia has developedvery fast during the past years: As you know we are under developed,but the good part is we are a fast growing economy. At the momentfarming has become a business. You find more and more people aregoing into farming. Particularly commercial farming due to investorsthat are investing money into their projects. I think we will be gettingmore competition from the large scale farmers.

How is the mood in agriculture in the different African countries? What are the major developments? How is the situation onthe agricultural machinery markets? To answer these questions, we regularly speak to the managers of local agriculturalenterprises and to agricultural machinery dealers. This month, we took a closer look at the Southern African countryZambia.

To Mr. Elias Mbewe - marketing manager at ag machinery dealer SaroAgro in Lusaka this development is beneficial: Basic demand is high.You know farming now is a business. A lot of them are getting into thiskind of business. And there is a growth in demand now.

Indeed, since 2009 the annual growth rate in Zambias agriculturalsector has been double-digit. Also the number of commercial farms hasincreased by more than 60% since then. Today, there are about800,000 small-scale farmers with up to 5 ha in Zambia, about 50,000emerging farmers with 5 to 20 ha, 740 large farmers with up to 150 haand 15 agricultural companies with several hundred or severalthousand ha.

Mr. Munalula on his farm



Zambia: Interviews

Support of cooperatives & abolishment of maize subsidies

Mr. Nabuyanda has purchased his 80 ha farm 150 km west of Lusakain the year 2000 when he retired from the mining industry. Primarilybecause he needed money to finance his childrens education but alsoin order to remain self-sufficient and independent of other people.Currently, five employees together with their families work on the farm.Mr. Nabuyanda owns nine cows and his employees milk about 100liters daily by hand as most farmers in the region. In addition theyplant maize and keep some beef cattle. Mr. Nabuyanda tells us that hisfarm belongs to a cooperative: Our intention in the cooperative is thatwhen we put our milk together, we can have a large output of milk tothe processor. The government is willing to support dairy farmersbecause milk has been stated to be the most nutritious thing for theaverage Zambian. So they have come in to try and help farmers alsothrough cooperatives. Farmers have been able to access loans at alower interest. The government is supporting that industry. Indeed,Zambia has been really successful in establishing cooperatives in thedairy sector. The government is now trying to transfer this successstory to other branches such as crop cultivation.

Mr. Nabuyanda though intends to completely move away fromcrop/maize cultivation in the long run in order to focus on dairy only.Like many other farmers in Zambia, he feels the effects of thegovernments recent decision to abolish the subsidies on the price ofmaize. The maize price had been subsidized for many years whichmade many farmers, especially small-scale, focus on the cultivation ofthe crop. However, last year, the government decided to abolish thesubsidies from 2014 on. According to Mr. Nabuyanda producing maizenow is not economic anymore: The most important crop is maize asstaple crop but we are trying to move away from spending most of thetime on maize but rather spending more time with dairy. We found outthat with dairy activities you are receiving better output and also betterin terms of your sales than in maize. Right now the price of maize islower than your inputs, so you find out you spend more money trying toproduce maize and find that you are running into a loss.

Mr. Nabuyandas farm



Zambia: Interviews

Ag machinery market quadrupled within three years

Both Mr. Nabuyanda and Mr. Munalula own some agriculturalmachinery but also depend on manpower and animal power in regardto many activities. The plan is to purchase more agricultural machinery in order to speed up operations, to improve the quality of the harvestor milk, but also because workers are becoming more and moreexpensive.

Saro Agro, the company Mr. Mbewe works for, sells tractors andtractor- as well as ox-driven implements such as ploughs, seeders,planters, reapers and shellers many of them from India. There are noimport duties on agricultural machinery in Zambia a decision by thegovernment in order to support mechanization. Last year, Saro Agrosold about 200 tractors - with a 60 HP model for about 14.000 Euros asbest-seller. The total tractor market in Zambia is estimated to bearound 500 to 600 units. The combine market again is estimated to beabout 40-50 units. Also here Saro has about 50% market share. Weask Mr. Mbewe who their main customers are: We sell more to thesmall farms and to the emerging farmers. There are also commercialfarmers with 1000+ hectares that selectively buy the products but Ithink we sell more of our products to small farms, about 10, 15, 20hectares. For emerging farmers we are talking about maybe 50hectares and above, maybe 100 or 200 hectares. Indeed manycommercial farmers in Zambia import their equipment directly from themanufacturers so that the dealers main customers are primarilysmaller farms. In total, Zambias market volume in regard to agriculturalmachinery actually quadrupled between 2010 and 2012. Currently,especially sales of planters, ploughs, two-wheel tractors as well asirrigation equipment grows rapidly.

Mr. Mbewe is of the opinion that German technology has good chancesin Zambia: I just love their brands. German products, there is nocompromise. The make good, good quality. Those products, I will saywe need them in Zambia for our terrain. Just as you and me know thatour terrain is quite bad. A product you are bringing in the country mustwithstand to that particular terrain. And the Germans are strong andreliable brands.

Mr. Mbewe from Saro Agro



Zambia: Quotes by Industry Experts

The government strongly supports the establishment of huge farm blocks. The blocks are about 100,000 ha in size and can be an interesting investment opportunity.

Half of the country is suitable for arable farming but only 15% is actually used. That leaves 53 million ha unused. Water resources are sufficient 40% of Southern Africas fresh water resources run through Zambia - and the climate is favorable. By means of irrigation, harvest is possible all year long.

With adequate irrigation this is going to be a very interesting market for harvesting technology. However, so far only 50,000 ha are irrigated the potential is about 420,000 ha.

For an African country, a strong democracy and rather stable and peaceful but its economic policy is still a little erratic.

Between 2011 and 2015 probably the 9th fastest growing economy in the world. But they suffer a lot from energy shortages.

They are building a demonstration and training center North of Lusaka where also German agricultural machinery manufacturers, the German Agricultural Ministry and the Zambian National Farmers Union as well as GART are involved. From the companies so far Claas, Amazone, Lemken andPttinger as well as Europlant, Riela, Fliegl andRauch are participating. Apart from that, also AGCO purchased a 148 ha model farm close to Lusaka. There is a lot happening right now.

Zambeef one of the largest agricultural companies in Zambia - got a credit from the German Development Bank and became very successful.

Nearly nowhere in Africa and in the world land reserves are as large as in Zambia. Zambia is double the size of Germany but only 13 million inhabitants.

Zambia National Farmers Union is one of the strongest farmers unions in Africa. Small-scale as well as large farmers are involved. In the near future, they want to establish professional machinery rings with the help of SACAU.



Zambia: Agriculture


z Maize 2,9 3 million tz Cassava 1,2 1,3 million tz Sugar cane 3,5 3,9 million tz Cotton lint 84.000 86.000 tz Tobacco 59.000 62.000 tz Vegetables 320.000 350.000 tz Cotton seeds 70.000 180.000 tz Soybeans 100.000 200.000 tz Groundnuts 110.000 280.000 tz Wheat 170.000 250.000 tz Tropical fruit 82.000 83.000 tz Pulses 30.000 32.000 tz Sweet potatoes 160.000 250.000 tz Rice 49.000 52.000 t

} Animal production: z Cattle meat 67.000 74.000 tz Game meat 36.000 38.000 tz Chicken meat 43.000 44.000 tz Eggs 50.000 55.000 tz Pig meat 23.000 tz Cow milk 89.000 tz Goat meat 8.000 9.000 t

z Agricultural area} Total country area: 752.610 sq km} Arable land (pot.): 47% } Arable land (in use): 15% (of the 47%)



Agricultural machinery import Zambiain million Euro


0

10

20

30

40

50

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

from World

from Germany

Zambia: Agricultural Machinery






Zambia: Agricultural Machinery


Source: http://www.infoplease.com/atlas/country/zambia.html

Saro Agro (Argo, TAFE), Lusaka

AFRGI (John Deere), Lusaka

Power Equipment (Massey Ferguson), Lusaka

Danatrac (New Holland), Lusaka

Kempston Agri(Claas), Lusaka

CAMCO (Chinese brands), Lusaka



Zambia: Fairs and Exhibitions

z Agritech Expo Zambia} 17th 18h April 2015, Chisamba near Lusaka} Organised by Spintelligent (German pavillion

organised by DLG)} www.agritech-expo.com

z Agriculture and Commercial Show of Zambia} 31st July 5th August 2014, Lusaka} Organised by Agricultural and Commercial

Society of Zambia} www.acsz.co.zm

z Zambia Copperbelt Mining and Agricultural Show} 29th May 2nd June 2014, Kitwe} Organised by the Agriculture and Commercial

Show Society} www.cacss.co.zm



Zambia: Basic Country Figures

z Economy} GDP 2012: 22,2 billion USD (+6,5%

compared to previous year)} GDP per capita 2013: 1.530 USD} GDP agriculture (of total 2013): 19,8%} Employees: 6,3 million} Employees in agriculture: 85%} Inflation 2013: 7,1%} Industries: copper mining and processing,

emerald mining, construction, foodstuffs, beverages, chemicals, textiles, fertilizer, horticulture

} Resources: copper, cobalt, zinc, lead,coal, emeralds, gold, silver, uranium,hydropower


z Politics and state} Capital: Lusaka } Administration: 10 provinces} Head of state and government leader:

Michael Santa} Minister of Agriculture: Robert Sichinga




GDPin billion USD

Source: Worldbank

4 57

11 12

1513

1619

21

0

5

10

15

20

25

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012



5 55 6

78

910

1112

0

2

4

6

8

10

12

14

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012






15 inhabitants per sq. km} Population growth rate:

2,9%} Fertility rate:


21% Bemba, 14% Tonga, 7% Chewa, 6% Lozi, Nsenga 5%, 4% Tumbuka, 4% Ngoni, rest others

} Urban population: 39%

} Below 15 years: 46%

} Illiteracy rate: 39%


English} Further languages:

Bemba, Nyanja + more than 40 others all members of Bantu language family


Protestant} Minority religions:

Catholic, natural religions, Hindu, Islam


Kwacha (ZMW)} Exchange rate:

1 EUR = 8,63 ZMW (06/2014)



Zambia: Contacts

z Southern African German Chamber of Commerce and Industry (also responsible for Zambia)} 47 Oxford Road, Forest Town 2193,

Johannesburg} +27 11 48 62 775 } [email protected]} www.germanchamber.co.za

z Agricultural Section of German Embassyin South Africa (also responsible for Zambia)} 180, Blackwood Street, Arcadia, Pretoria

0083} +27 12 / 4 27 - 89 29 } [email protected]

z Zambia National Farmers Union } ZNFU Head Office, Farmers Village,

Tiyende Pamodzi Road, Showgrounds, P.O Box 30395

} +260-211-252834 / 252649} [email protected]} www.znfu.org.zm

z GIZ Zambia} Kariba Road, Plot 6469, Lusaka} +260-211-291918-20} [email protected]} www.giz.de



Kenya April 2014



Kenya: Interviews

Average field sizes decreasing

The Kapsuswa farm is 1,200 ha large and located in Western Kenya.Its main focus is maize, tea and dairy. Charles Boit, the director of thefarm, tells us that the majority of farms in his area are either small- ormedium-scale. While medium and the few large-scale farms focus onmaize, wheat or barley, small-scale farmers primarily produce maizealso as well as a couple of bean varieties and some other vegetables.A minority of the small farms use tractors for land preparation and/orplanting. Typical medium scale farms usually have tractors of up to 100HP, ploughs, chisel ploughs as well as harrows and maize/wheatplanters. Large farms again are usually well equipped with all kinds ofmachinery. These farms are primarily located in Central Kenya in thearea surrounding Mount Kenya and also in Western Kenya in the areaof the upper and lower Rift Valley. Apart from a few exceptions, farmland is in private hands in Kenya. The government does own a coupleof farms and in some parts of the country land is also being leased (e.g.in the area of Narok where Massai who do not farm themselves lease land to the locals or to Europeans), but in general leasing is stillrather exceptional.

How is the mood in agriculture in the different African countries? What are the major developments? How is the situation onthe agricultural machinery markets? To answer these questions, we regularly speak to the managers of local agriculturalenterprises and to agricultural machinery dealers. This month, we took a closer look at the East African country Kenya.

Mr. Boit from the Kapsuswa farm



Kenya: Interviews

In contrast to many other regions in Africa, agricultural land seemsrather scarce in Kenya as Mr. Boit tells us: There are very few largefarms around left. If you were to say you want 3,000 acres, you will notfind it. In arable land, you will have to go somewhere where you willset up irrigation, clear bush but even if you are clearing bush, it is notarable land, it is land that is not useful. The reason why the governmentis doing the Galana irrigation project (plans for a large government farmbased on irrigated fields in the North Rift) is because they have run outof land elsewhere. Their best option is not to go to a dry place, the bestoption is a nice wet place where its raining with subtropical weather,where the soils are good. But if you have been forced to go to Galanato do your project, it basically tells you that there is no land left forpurposes of agriculture.

Also Mr. Nyalechea owner of the contractor firm Skyfire Enterprises confirms this trend. Usually, in addition to the contractor business, herents about 50 acres of land to produce maize and wheat on it, but rightnow he finds that the situation on the land market has changed: At themoment there is high competition of land, so when you want to rent afarm for planting maize or wheat, it is very expensive. Like now the ratehas gone up. Sometimes up to ksh 5,000 per acre (appr. 50 Euro), so itis very challenging and very difficult to get, so we decided to major oncontracting. When you look for a piece of land next year, it will haveincreased by two thousand. Farming is a lucrative business so now theland owners are taking advantage, so they increase the price. It willreach a time where you will find that it is not economical anymore.

But agricultural land is not only becoming more expensive in Kenya, itis also becoming more and more small-structured. As the populationgrows, the land sizes reduce because parents usually give their land inequal shares to their children (and most families have 3-4 children).xxxx

Although Mr. Boits farm is much larger than the average, the systemhas been the same only now his family is trying to revert it: We hadeven a prime example of subdivision. My grandfather had 3,000 ha buthe subdivided it into huyu amepata huyo 600, huyo 700 (this one hasgot 600, the other one 700 etc.). He subdivided it into sectors. We areas a family trying to bring it back to 3,000 now. So that we can do it allas one project. But it is very difficult because people have their ownplans. You know you cant plan for everybody but in reality it will makemore sense to do the land as 3,000 ha, not to do the land asindividuals. At the end of the day though, whether you like it or not, thesubdivision of land will occur. It will have the single biggest impact onour production, on our capacity to produce.

The Kapsuswa farm



Kenya: Interviews

Ken Wanjohi from CMC is feeling this trend already. CMC is dealer forNew Holland, Case IH and Nardi. CMC is projecting to sell about 750tractors and 300 implements in the current financial year. Currently,60% of the tractors they sell are between 40 and 80 HP and the trend isgoing further and further to lower HP classes as fields are becomingsmaller and smaller.

CMC usually has about 50% market share, so Mr. Wanjohi estimatesthe total tractor market in Kenya to be about 1,500 new units. He tellsus that many tractor manufacturers entered the market recently: Oursales have been growing although we have had a lot of other entrantsin the market. John Deere came about a year ago and they are doingwell. We also have a lot of Asian tractors that have come in, Mahindraand others and Japanese Kubota. In the last three years we haveheard about eight new tractor brands coming into the market which wasinitially dominated by New Holland, Massey Ferguson, Same andLandini.

Mr. Wanjohi from CMC

On CMCs premises



Kenya: Interviews

Counties are the new target group

CMCs biggest customer segment are small-scale farmers with two orthree ha land who also use their agricultural machinery to work theirneighbours fields. Medium-scale farmers again make about a third ofCMCs sales but also large farms of up to 10,000 ha belong to theircustomers. We ask Mr. Wanjohi if they have any other customersegments: Cooperatives are there but not very active in terms ofmachinery. We also have the government. Last year our country wentinto devolution, which is the devolved system of government, and nowwe have counties. And with the strength of counties, as you can see,we are receiving LPOs every day. Because every governor wants toget food security and unlike the national government, which was notlooking into individual areas, these guys have gone in full force with thepurchase of agricultural equipment. Thus this year we are seeing thegovernment maybe having about 15-20% of market share. Previouslythe government was also involved in farming but bureaucracy andother issues led to purchase of 20 tractors in a year which was notenough to jump start anything. But with counties, we are at 60-70tractors within the few months that they have been operational,therefore we are heading in the right direction with the government.

Simplicity as purchase criterion

Apart from the small-scale contractors Mr. Wanjohi describes, thereare also more and more professional contractors in Kenya such asSkyfire Enterprises. Skyfire currently operate two combines for wheatand maize and a 175 HP tractor for harrowing and chiselling as well asa boom sprayer and a baler. Next to the owners Mr. Nyalechea andhis brother four drivers work in the company as well as a mechanic.At this time of the year, business is rather calm as Mr. Nyalechea tellsus: Contracting is a seasonal affair, like as you are seeing now themachines are idle, they are under service. We anticipate to startharvesting in July in Narok, so July, August, September up to the endof January, lets say February. That is seven months.

Skyfires combines



Kenya: Interviews

Skyfire is paid per ha. For maize, the average is 3,500 ksh per ha,harrowing is about 1,500 per ha and chiselling around 2,000. Skyfirescustomers are mainly private or governmental farms between 200 and3,000 ha - sometimes though also small farms with only a couple of harequest their services. In the near future, the company wants to investin a new combine and also in a plough because according to Mr.Nyalechea, the demand for ploughing is increasing. When it comes tothe purchase of agricultural machinery, Mr. Nyalechea usually attachesgreat importance to easy handling and simplicity: The problem ismechanics - we dont have people to repair. If for example today youbuy a tractor which is an automatic and the automatic system fails, youtake them back to the dealer and I am telling you, they cannot repair it.Just throw away your tractor. I went to ADC (governmental farm) theother day and I found two tractors lying idle - they are very new. Whenyou ask ADC what is the problem with these tractors, they tell you thegear system is automatic. They called the dealer to repair it, but theycould not do it, so they just removed the engine and disposed the otherparts. Very unfortunate.

Mr. Boit from the Kapsuwa farm is of a similar opinion. On his farm,they are very well equipped with machines such as disc and chiselploughs, harrows, wheat and maize planters, combines, a baler and aforage harvester none of them older than five years. Their tractors -Massey Ferguson, New Holland, John Deere and Ford are allbetween 60 and 170 HP. Mr. Boit says: The most important thing fortractors is serviceability. We chose based on simplicity of use andrepair. You got to be able to repair it. My combine right now is deadbecause it had a problem last year this is April and I havent receivedthe spare parts. We expected the spare parts three weeks after weordered them. First time the wrong part came, then we ordered again,since then it hadnt arrived, so the combine is just sitting there doingnothing and its in pieces. The problem we face with high techequipment is that anything that is highly electronic immediately has axx

service problem because you generally cannot get somebody toservice it fast enough so we try to remain as mechanical and as simpleas possible. South Americans (much of his equipment is by Westernbrands manufactured in South America or India) are in betweenEuropean equipment and third world equipment but they are very hardyequipment, they are easy to repair, easy to maintain, easy to look after.Anybody can look after it, it is not high tech electronic equipment thatneeds a specialist. In most cases I find that specialists are required forEuropean equipment. You cant calibrate it yourself, you cant do thisyourself, you need somebody else to come. Generally the trend offarmers is to remain with what you define as simple, robust equipment -nobody wants something that they cant fix tomorrow themselves. JohnDeere recently came back in the Kenyan market and I was verysurprised. They didnt come in to sell the high-end tractors that they willbe selling in the US or whatever. They came to sell equipment that wascoming out of India for example. It is much cheaper to produce and sell- generally speaking they seem to be doing very ok.

Part of Mr Boits ag machinery park



Kenya: Quotes by industry experts

Doing business is not as complicated as in many other countries in the region.

Parts of their agriculture are pretty well developed already, also its food industry, but many areas in Kenya are not suitable for arable farming.

Relatively stable and peaceful country. And not least due to tourism they are used to dealing with people from the West.

As part of the German Food Partnership potato cultivation is supported in Kenya a project called potato initiative. German companies like AGCO, Beinlich, Grimmeand Lemken are involved.

The biggest and most advanced economy in east and central Africa. And the population is comparatively well educated.

In September 2013, Kenya signed a treaty for the delivery of Brazilian agricultural equipment worth 82 million Euro basically 2,000 tractors which will be distributed to small-scale farmers for a subsidized price.



Kenya: Agriculture

z Agricultural production} Crop production (in million tons):

z Mangoes 0,6 2,8 m tz Maize 3,4 3,6 m tz Potatoes 2,4 2,9 m tz Tea 0,4 m tz Bananas 1,2 1,6 m tz Dry beans 0,4 0,6 m tz Sugarcane 5,3 5,8 m tz Tomatoes 0,4 0,5 m tz Pineapples 0,3 0,5 m tz Avocadoes 0,2 m tz Vegetables 0,6 0,7 m tz Cabbages 0,6 0,8 m tz Cassava 0,9 m tz Wheat 0,5 m t

} Animal production (in thousand tons): z Cow milk 3,600 3,700 k tz Cattle meat 400 500 k tz Camel milk 900 k tz Camel meat 600 k tz Goat meat 300 500 k tz Eggs 900 100 k tz Sheep meat 400 k t

z Agricultural area} Total country area: 580.370 sq km} Arable land 9,5%



Kenya: Agricultural Machinery

Agricultural machinery import Kenyain million Euro


0

10

20

30

40

50

60

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

from World

from Germany






Kenya: Agricultural Machinery


Source: http://www.infoplease.com/atlas/country/kenya.html

CMC Holdings (New Holland), Nairobi

FMD East Africa (Massey Ferguson), Nairobi (+ Eldoret, Nakuru, Mobasa)

TATA Africa (John Deere), Nairobi (+ Mombasa, Nakuru, Meru, Nanyuki,Eldoret, Kitale and Kisumu)

Farm Engineering Industries (Claas), Kisumu



Kenya: Fairs and Exhibitions

z Agritec Africa} 23rd 25th June 2014, Nairobi} Organized by Radeecal Communications (India)} www.agritecafrica.com

z Agri Food Tec East Africa} 1st - 3rd September 2014, Nairobi (premiere)} Organized by Planet Fair, Trade and Fairs East

Africa, DLG} www.agrifoodteceastafrica.com

z Foodagro Kenya} 3rd 5th October 2014 Nairobi (annually)} Organized Expogroup} www.expogr.com

z Regular exhibitions by Agricultural Society of Kenya in many agricultural regions of Kenya} www.ask.co.ke



Kenya: Basic Country Figures

z Economy} GDP 2013: 45,3 billion USD (+5,9%

compared to previous year)} GDP per capita 2013: 1.045 USD} GDP agriculture (of total 2013): 29%} Labor force: 20 million} Employees in agriculture: 75%} Inflation 2013: 5,8%} Industries: plastic, furniture, textiles,

clothing, cigarettes, flour, agriculturalproducts, oil refining, aluminum, steel, lead,cement, commercial ship repair, tourism

} Resources: sodium carbonate, gypsum, lead, gold, silver, copper


z Politics and state} Capital: Nairobi} Administration: 47 counties} Head of state and government leader:

President Uhuru Kenyatta} Minister of Agriculture: Felix Koskei




GDPin billion USD

Source: World bank

1315

1923

2731 31 32

3437

0

5

10

15

20

25

30

35

40

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012



1,0 1,1 1,1 1,2

1,9 2,02,1

2,32,6

2,9

0

1

1

2

2

3

3

4

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012






67 inhabitants per sq. km} Population growth 2010-2015 avg:



17% Kikuyu, 14%Luhya, 13% Kalenjin,10% Luo, 10% Kamba, 6% Kisii, 4% Meru, rest others





Swahili, English} Further languages:

Numerous indigenous languages


Christianity } Minority religions:

Islam, indigenous beliefs


Kenya shilling (KES)} Exchange rate:

1 EUR = 117,94 (04/2014)



Kenya: Contacts

z Delegation of German Industry and Commerce in Kenya / German Business Association / GIZ Nairobi} Riverside Drive, Riverside Mews Bdg. (German House), Westlands, Nairobi} +254 20 214 00 08} [email protected] } [email protected]} [email protected] } http://ahk.de

z Agricultural Society of Kenya} +254 20 26 41 067} [email protected]} www.ask.co.ke



Nigeria March 2014



Nigeria: Interviews

Its booming, buyers are always there

Mr. Ibrahim Jezhi is the manager of a 50 ha farm producing maize, beniseeds and beans. In the near future, he wants to starts cultivating alsoyams, cassava and grass as animal fodder. Mr. Jezhi does not worryfinding a market for his products: The agriculture market is veryfavorable. Anything you produce no problem, it is booming. Buyersare always there available for us, we dont need to find them. IndeedNigeria is booming. Not only does the population explode in size 180million people already with an annual increase by 4 to 5 million - also anew consumption-oriented middle class is developing rapidly. Supermarket chains and malls seem to sprout out of the ground.Consequently the food demand is increasing exponentially. However,Nigerian farmers are not even close to being able to cope with thedemand the country is forced to import food en masse. Nigeria isworldwide the second largest rice importer after the USA. Also hugequantities of wheat, sugar and milk powder are imported. With modernand efficient production methods Nigeria would be able to feed itself the soils and the climate are favorable for agriculture. However, still thelarge majority of Nigerian farms is below 5 ha in size and has noaccess to qualitative seeds, fertilizers or modern agriculturalmachinery. There is a couple of medium sized farms such as Mr.Jezhis which are at least partly mechanized. Especially in the North,also some large farms of about 50 and 200 ha can be found. Theowners are often wealthy politicians as Mr. Jezhi tells us: There is onein Ulla owned by the current governor of Adubwa Moritala Yako. A lotof the big farms are owned by this governor and located in differentxxxx

How is the mood in agriculture in the different African countries? What are the major developments? How is the situationon the agricultural machinery markets? To answer these questions, we regularly speak to the managers of local agriculturalenterprises and to agricultural machinery dealers. This month, we took a closer look at the West African country Nigeria.

Ibrahim Jezhi

parts of the country. There is also one in Kaduna and there is also onein Kifya. The politicians and the retired generals own the large farmsbecause they have a lot of money to produce. We cannot buy as manytractors as they can. We farmers cannot compete with them, they arebigger mainly because of the machinery. If we had money or properfunding we could definitely compete with them. They dont haveexperience.



Nigeria: Interviews

Actually Mr. Jezhi had another farm before this one where he used toplant rice. However, the government took that one and Mr. Jezhi had torelocate. The same happened to Mohammed O. Maaki. He is theowner of Oriya Farm Ltd. The company started in 2007 with 1,200 haland but last year the Federal Government took it away for public useso Mr. Maaki had to move. Now he has about 350 ha and a staff of 30plus some seasonal workers. Currently they produce yam, cassava,soy bean, beni seeds as well as sesame seeds and pineapple whichthey usually sell directly to food processing factories. Mr. Maaki tells usthat he observes signs of a structural change in Nigerian agriculture:Fewer people are remaining with farms. So technically there must bechanges. Many people are not going into farming and moving fromagriculture. People prefer white collar jobs so young men want to go tothe city and get a job and make money. While Mr. Maaki observes thenumber of farms decreasing, Mr. Jezhi sees the individual farmsincrease in size: Generally in Nigeria, the farms are getting larger,because the operations are increasing daily. We also have a bigpopulation, so we need more farms to get more food to feed thepopulation. The only problem is machinery - it is too expensive.Indeed, on Mr. Jezhis farm they have two Massey Ferguson tractors,however, operations like planting and harvesting are still donemanually. Raising capital for modern agricultural machinery is still amajor problem for many medium-scale and of course also small-scalefarms in Nigeria.

The government is more into oil

Agricultural machines are usually paid cash, getting credits only seemsrealistic for large and capital-intensive farms. The government againcurrently does not offer any major programs to support mechanization.Mr. Maaki, whose farm is actually pretty well equipped with tractors,planters, sprayers and combine harvesters, tells us that there was aprogram in 2008. In that year, the state purchased a large number ofxxx

Mr. Maakis harvester

Mahindra tractors and sold them to farmers at reduced prices. That isalso how Mr. Maaki got his Mahindra tractor. Today he considersMahindra as his favorite brand reliable and spare parts are easilyavailable as he says. After 2008 though not much happened to supportagricultural mechanization in Nigeria. For the government, rather theproduction of oil seemed to be the major focus of attention in the pastyears. We ask Okoli Chijioke, regional sales manager of TATA Africa(John Deere distributor), what is missing in the Nigerian market: Iwould sum it up in zero agricultural mechanism support. They [thegovernment] are not helping at all the farmers and they are having ahard time adjusting. The Federal Govt. recently approved the sum ofN15billion (about 66 million Euro) for loan to farmers to be given out atsingle digit interest rates. But we really need to ask ourselves, who isthis money going to? Because, we as the equipment suppliers dontactually feel the impact of such funding. Theres a lot of corruption inthe system. Also the Central Bank of Nigeria has a scheme calledcommercial agriculture credit scheme, but frankly speaking we dontfeel the impact of these guys.



Nigeria: Interviews

Mr. Jezhi adds: They only remember you during campaigns, this iswhen they give subsidies for fertilizers and the caterpillars and tractorsare put in the Ministry after campaigns for their own farms. Theyprovide very few farmers support. Mr. Maaki is of a similar opinion:Politics on agriculture is only on regimes, not on real life. So they say Iam going to supply this, I am going to supply that but they disengage.They dont take farming seriously, they are more into oil. Theprocedures and the processes are done in a way that the farmers dontlike it. The rules and regulations done as an excuse for support tofarmers are not liked. The other side of the coin is that, apart from thefact that the state does not seem to engage a lot into the support of thefarmers, it does not seem to intervene much into entrepreneurialfreedom either as Mr. Maaki explains: The state doesnt tell you toproduce this amount of crop, you just pay taxes. And the prices aredependent on demand and supply. Its a completely free market.

Nigeria a hard place

TATA Africas head office is in Lagos. The company has existed for sixyears, the agricultural department for two years now. TATA is theexclusive partner of John Deere in Nigeria. Their main customers arecontractors but also small or medium scale farms as well as somecooperatives and a few state farms. In Nigeria, the company primarilysells tractors, many between 225 and 350 HP. But also tipping trailers(FT10), sprayers (MS10) and seed/fertilizer drills (SD10) as well ascultivators (SC12) and disc ploughs (DP10/1003) are in their portfolio.Their annual target is to sell 90 tractors. In total, that is across allbrands, about 400 new tractors are sold in Nigeria in a year. In 2012,the government communicated that all custom duties on agriculturalmachinery imports would be abolished. However, dependent on thegovernments narrow interpretation of agricultural machinery, usuallyimport duties are still raised for the majority of machines as also Mr.Chijioke from TATA is telling us: If you are importing CKDxxxxxxxxxxx

(complete knock down meaning that parts are imported and thenassembled locally) you are going to be paying about 5-6% to customsin taxes. TATA imports fully assembled machinery and on eachequipment we pay about 10%. For companies that bring in SKD (semiknock down) their duty is usually less than ours because thegovernment encourages such as they are sure going creatingemployment. Tax Duty should be reduced because, when the OEMsell, considering the tax paid on equipment, the farmer also increasescost of his products and its just a long cycle. At the end of the day theend user suffers the increment in price.

At the end of our interview, we ask the two farmers to give arecommendation to German agricultural machinery manufacturers whowant to become active in Nigeria. Mr. Maaki responds: Most of thefarm machineries are not adapted to the land. Some of them are toolow. They cannot work here because we have stones. They shouldmake further studies on the soil before they introduce the machinery inhere. Also Mr. Jezhi adds: I would recommend that they come downhere and see our land. They see the soil and see the texture. Our landis hard and not soft and its stony so not everything works with it.Finally Nigeria is a hard place.

Mr. Chijioke (right) with our moderator



Nigeria: Quotes by Industry Experts

With more than 170 million people the largest market in Africa and for German companies the second largest export market in Sub-Sahara Africa.

The 4th largest agricultural machinery market in Sub-Sahara Africa.

One of the most interesting and at the same time one of the most difficult and complicated markets in Sub-Sahara Africa. They have extremely high crime rates there and corruption is omnipresent. Especially corruption is estimated four billion USD a year.

Growing middle class which is able to afford a Western lifestyle. Now considered a low middle income country.

Under the German Food Partnership, there is the potato initiative - AGCO, Beinlich, Grimme and Lemken are involved. There is also a plan for a 12 million Euro PPP together with Germany for the support of rice production (CARI).

Belongs to Goldman Sachs Next 11 those countries which will significantly impact the global economy.

Tendencies of islamization are increasing and again and again there are bloody conflicts between Muslims and Christians, especially in the North.

Next to subsistence farming there are a couple of large farms focusing on rice, cassava or maize a sector which showed good growth rates within the past years. Although many large farms also belong to government officials. And the food industry has been developing pretty well during the last years.

AGCO considers to start a tractor assembly plant in Rivers and Kaduna. The Indian tractor manufacturer Sonalikaalready has an assembly plant in Nigeria.

Extreme North South divide: the South is much more advanced than the North.

The government buys agricultural machinery and either sends them to government farms or hires them to local farmers.

There are about 20,000 tractors in use. Potential annual market volume is 5,000 tractors.

More and more equipment hiring firms are developing and tractors can be hired for about 70 USD per ha.

In Ekiti State, AGCO is develoing atraining center.



Nigeria: Agriculture

z Agricultural production} Crop production (in million tons):

z Yams 34 - 38 m tz Cassava 42 - 44 m tz Citrus fruits 3,8 3,9 m tz Rice 4,5 4,8 m tz Groundnuts 3 3,8 m tz Vegetables 6 6,2 m tz Maize 7,7 9,7 m tz Sorghum 6,9 7,1 m tz Millet 5 5,2 m tz Cashew 0,8 m tz Taro 3 3,5 m tz Okra 1,1 m tz Cow peas 1,9 3,4 m tz Plantains 2,7 2,8 m t

} Animal production (in million tons): z Cattle meat 0,3 m tz Goat meat 0,3 m tz Sheep meat 0,2 m tz Eggs 0,6 m t

z Agricultural area} Total country area: 923.770 sq km} Arable land: 39%



Nigeria: Agricultural Machinery

Agricultural machinery import Nigeriain million Euro


0

10

20

30

40

50

60

70

80

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

from World

from Germany



Tractors 13,8 m Spraying & fertilizing 8 m Soil cultivation 4,5 m Harvesting 2,4 m Seeding & planting 1,2 m Irrigation 1,1 m Transport 3,3 m Not categorized/parts/others 36,5 m Total 70,8 m



Nigeria: Agricultural Machinery

z Agricultural machinery dealers (selection) / agricultural regions (in orange)

Source: http://www.infoplease.com/atlas/country/nigeria.html

TATA Africa (John Deere), Lagos

Dizengoff (Massey Ferguson), Lagos

Scoa (New Holland), Lagos

Springfield Agro(Mahindra), Lagos

Bertola (Chinese brands), Lagos



Nigeria: Fairs and Exhibitions

z agrofood Nigeria} 28th 30th April 2015 Lagos (premiere)} Organized by fairtrade} www.agrofood-nigeria.com

z AGRIKEXPO West Africa} 20th 22nd May 2014, Lagos (annually)} Organized by 151 Products Ltd } http://www.151productsltd.com/



Nigeria: Basic Country Figures


compared to previous year)} GDP per capita 2013: 1,725 USD} GDP agriculture (of total 2012): 31%} Labor force: 52 million} Employees in agriculture: 70% million} Inflation 2013: 8,7%} Industries: crude oil, coal, tin, columbite,

rubber products, wood, hides and skins, textiles, cement and other construction materials, food products

} Resources: natural gas, petroleum, tin,iron ore, coal, limestone, niobium, lead,zinc, arable land


z Politics and state} Capital: Abuja} Administration: 36 states} Head of state and government leader:

President Goodluck Jonathan} Minister of Agriculture: Akinwumi

Adesina




GDPin billion USD

Source: World bank

6888

112145

166

207

169

229244

263

0

50

100

150

200

250

300

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012



29,3 31,4 26,331,2

37,345,6

54,260,3

69,276,4

0

10

20

30

40

50

60

70

80

90

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012






165 inhabitants per sq. km} Population growth 2010-2015 avg:



29% Hausa and Fulbe, 21% Yoruba, 18% Ibo, 10% Ijaw, rest others





English} Further languages:

Yoruba, Haussa, Igbo, Fulfulde and a multitude of other languages


Islam (North) and Christianity (South)} Minority religions:

Traditional African religions


Naira (NGN)} Exchange rate:

1 EUR = 225,88 NGN (03/2013)



Nigeria: Contacts

z Delegation of German Industry and Commerce in Nigeria} P.O. Box 51311, Falomo Ikoyi, Lagos} +234 12 70 07 46} [email protected]} http://nigeria.ahk.de

z GIZ Nigeria} 4 Julius Nyerere Crescent, Asokoro

FCT Abuja} +234 7044369589} [email protected]} www.giz.de

z German Embassy in Nigeria} Abuja 9 Lake Maracaibo Close, Maitama, Abuja, F.C.T.} +234 9 220 80 10} [email protected]} www.abuja.diplo.de



Angola February 2014



Angola: Interviews

Our great sickness is the fever of imports

Antonio Emilio is the manager of a 110 ha farm focussing onhorticulture as well as sunflowers, potatoes and maize. Recently hestarted to silage the maize as animal fodder something rather new inAngola. Three years ago Mr. Emilio started the farm from scratch.Today about 25 peasants, operators and unskilled workers are active inthe agricultural company. The farm has been very productive so far,however Mr. Emilio cannot sell all the produce in the market: We cometo a point where we are forced to throw away tomato, we are forced tothrow away cabbage, we are forced to damage pineapple in the field,why? Because we have nowhere to sell this product, we have nowhereto market this product. Our great sickness is the fever of imports. Wehave domestic production, this production cannot come regularly andwhen it reaches the market, that same market does not absorb it,why? Because its flooded with imports - things we produce in Angolaare imported from outside.

What makes things worse is the dependence of Angolan farmers onmiddlemen for sales. These middlemen pay the farmers often only asmall part of what they get by reselling the products. Mr. Emilio refersto them as Kinguilas: They are based in the market and haveassembled a network that no one can bypass. So often these are theones that devalue the work that we do. Because they want to buy itcheap then go and fetch profits. The farmer rents a truck to bring thexxxx

How is the mood in agriculture in the different African countries? What are the major developments? How is the situationon the agricultural machinery markets? To answer these questions, we regularly speak to the managers of local agriculturalenterprises and to agricultural machinery dealers. This month, we took a closer look at the Southern African countryAngola.

product to the market, arrives at the market and the cost of selling theproduct is not even enough to pay the truck rental; the poor farmer isforced to tell the motorist to keep the produce and sell it to recover hiscosts. That's because there is no trade policy on prices, on themarketing of agricultural products. There is no policy that stabilizes it,one that can benefit those who produce. The intermediaries never getinto financial ruin or a loss. Now those that produce seldom makeprofits because of the intermediaries. Yes that is our reality which is notnormal. Normally the producer would sell to cooperations or retailersand they sell directly to consumers. The two intermediaries take theirshare and the producer is the victim. If society could only eliminate thisclass of intermediaries that have emerged out there.

Large farms are more for show business

Next to the many subsistence, small and medium farmers, there is anumber of large farms in Angola some are from Colonial times, someare new. The owners are often wealthy politicians, army generals orbusinesspeople. However, not all of these farms are active andproductive as Mr. Emilio explains: We have small, medium and largefarms. Small farms usually are only 50 hectares and they only use upto around 10 to 15 hectares. The rest is residential, touristinfrastructure or leisure and so on. Now the average sized farms areusually those that begin from 50 hectares up to 300 or 400 hectares.



Angola: Interviews

These produce over 50 to 100 hectares. And then we have the largefarms which have less structures as such but vast land. There arehundreds of large farms with over 1,000 hectares, some up to 5,000and 10,000 hectares. Typically these farms are said to be large farms -they are the ones that are able to approach banks for funding. Andmany are able to start but then end up failing. We have many suchexamples. Because the reality of agriculture in Angola is not the bigfarms, because large farms are more for show business. People wantto be seen as though they are larger farmers yet they do not doanything concrete. They do not produce, they have no social impact.Indeed medium farms and small farms and in general peasants are themajor producers. These each producing their two or five or six acres - ifthey are 10,000 of them, imagine how many thousands of hectaresadding it all together. Large farms cannot reach that because of thesystem of structuring a farm, the more equipment you have, the moreorganization

VDMA Ear to the Market Africa

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