Valtra enjoys a small yet significant market share within selected customer groups in South Africa. The importer and distributor Valtrac has three sales locations in the key agricultural regions, and local market share is around ten percent.
Although segregation in South Africa ended in 1994, farms typically remain under white ownership employing black labour. Nevertheless the government is encouraging black ownership by buying farms then transferring them to black ownership although the youth wing of the ANC party has demanded even more radical land reform. Similar experiences in neighbouring Zimbabwe have not been encouraging, however and the agricultural sector there collapsed when it was seen the new owners could not match the expertise of former predominantly white owners, leading reduced yields and eventually famine.
The main factor restricting agricultural output in South Africa is lack of rainfall. “Everything can be bought, except the rain,” is how one farmer puts it. Irrigation is limited particularly in areas where the mining industry has polluted ground water, excessive pumping has lowered water levels elsewhere.
The arid conditions are also responsible for bush and grassfires. Every farmer in South Africa has water bowsers pulled by tractors, and they all participate in fire fighting when required. Just about every farmer has his own stories of being totally surrounded by fire but saved by being in his tractor cab or the water tank.
South African farmers appreciate simple and reliable tractors, as the conditions are harsh, parts centres often far away, and many drivers illiterate. Still, satellite navigation is common and is not considered difficult to use.
200 tractors a year into Africa
The African continent accounts for sales of approximately 200 Valtra tractors a year. Around half of these are manufactured in Brazil and half in Finland. Recently around half a dozen S Series tractors a year have also been sold in Africa.
Africa’s tractor markets are very fragmented with most machines sold on the continent sourced from China. No sales statistics are available for these tractors with their small engines. Just under 20,000 western tractors are sold on the continent each year, of which South Africa accounts for almost half. For comparison, the French market alone accounts for 30,000 tractors annually illustrating that although the African continent is many times larger in terms of both area and population, how few tractors are sold there.
Accordingly AGCO has made Africa one of its focus areas and believes that demand for agricultural machinery there will increase significantly. AGCO is currently building a major parts centre in Johannesburg, South Africa, with additional outlets in Kenya and Ghana. Training farms are being established throughout Africa, and a new office has just opened in Cape Town.