AFGRI is committed to the future of agriculture and how innovation can play a role in ensuring the future.

The AFGRI Innovation team spent three days with some of the greatest minds from South Africa, Africa and all over the globe at the SA Innovation Summit. The event covered broad spectrum of topics, a recurring focus of the event was on the agricultural sector and enabling food security across the globe. The world is looking to us to move forward and pioneer innovation in the Agricultural sector.

The event was supported by a partnership from the Swiss Economic Development minister Marie-Gabrielle Ineichen-Fleisch and the Swiss ambassador to South Africa Helene Budliger Artieda who have committed to working with South African corporate innovators and entrepreneurs in building the economy.

Raw and processed agricultural exports. With consumption rising in markets throughout sub-Saharan Africa and Asia, South Africa could triple its agricultural exports by 2030. This could be a key driver of rural growth, benefiting the nearly one in ten South Africans who depend on subsistence or smallholder farming. Capturing this potential will require a bold national agriculture plan to ramp up production, productivity, and agroprocessing.” Source: http://www.africa.com/mckinsey/

The event focussed on topics such as renewable energy technologies, biotechnology, consumer trends, artificial intelligence and robotics, self-driving cars and battery technologies, the ‘Internet of Everything’ and very importantly AgTech (i.e. agricultural technology).

Listening to global CEO’s, CIO’s and entrepreneurs and global futurists reminding us to broaden our minds and to not be blindsided by the global changes that are underway, we cannot do things as we always have in order to remain competitive … “Innovation is how we bring humanity forward…The future is ours to create”.

AFGRI is committed to the future of agriculture and how innovation can play a role in ensuring the future.

Innovative financing needed for growth in demand for farming equipment

AFGRI, one on the largest distributors of agricultural machinery in South Africa, predicts subdued growth in the market for agricultural machinery to 2020, provided farmers can get access to financing.

The market for agricultural machinery in South Africa is expected to grow by between 3% and 5% over the next four years.
Patrick Roux, Managing Director at AFGRI Equipment, says in South Africa the growth in the market for agricultural machinery will be supported by the rapid expansion of technology that will improve yields and make farming more cost effective.

Globally, the agricultural machinery market is expected to grow at a compound annual rate of over 7% during the period 2016-2020, according to global research company Technavio.

In its latest research report on the agricultural machinery market (released in June), Technavio says globally growth will be driven by growing urbanisation, and different initiatives from governments regarding agricultural activities. Many governments, especially in developing countries, are offering credit facilities and subsidies to farmers, which help them in purchasing advanced machinery.

Roux says the growth in the market for agricultural machinery in South Africa will largely depend on cyclical factors, especially seasonal rains, whilst the consolidation in the sector due to the drought of the past few years will also play a role.
He expects a more robust growth in Africa, where the commercial farmers are less mechanised than their counterparts in South Africa. “The high demand for mechanisation will definitely play a role in the growth in the agricultural machinery market on the African continent. The vast new developments in Africa on clearing bush for arable land will force the mechanisation route for all farmers and innovative plans for structured deal making on equipment will also play a role.”

AFGRI has taken the lead with innovative finance schemes in Zambia and Uganda.
In Zambia, AFGRI’s John Deere dealership, in partnership with Zanaco and the Zambia National Farmers Union (ZNFU), provide agriculture asset finance to help farmers mechanise their operations.

In Uganda, the Abba Mechanisation Circle, through AFGRI’s Agricultural Development Services Division, provides farmers with access to mechanisation, which is purchased by AFGRI and made available to them through rental agreements.
Much more is needed in Africa to drive the agricultural sector and increased demand for agricultural equipment. To assist farmers in Africa to increase their yields through the use of modern equipment, government involvement is crucial, and so is the availability of financing for agricultural equipment, says Roux.

According to Roux, this will require the banking sector to take some calculated risks.
He says as Africa is the lowest mechanised continent, the growing demand for mechanisation will drive the market for agricultural equipment. According to the Technavio report this will be supported by the announcement that agricultural departments across the continent will allocate more than US$ 48 million in subsidies to small farmers during 2015-2017.

Roux says in some countries, notably Zambia, there is good support to make finance available for farmers to buy mechanised equipment, but the difficulty to access finance can hamper the growth rate.
Technavio expects that Asia Pacific (APAC) will continue to generate the bulk of the revenue for the global agricultural machinery market. In APAC the market is expected to reach US$74 billion by 2020 compared to US$46 billion expected in North America. APAC has a larger share of the market mainly due to the growing population in this region, which gradually boosts the demand for food. Increased mechanisation is supported by government initiatives such as subsidies for agriculture and credit availability.

In contrast to this rapid growth, the agricultural machinery market in North America has reached maturity and is expected to witness slow growth due to a decline in the price of commodities and a weak forecasted economic cycle in North America.

AFGRI extends financial services offering to Northern Cape

AFGRI, the leading agricultural services, food processing and grain commodities company, is expanding its financial services offering through a working relationship between UNIGRO Financial Services and KLK Landbou.

UNIGRO Financial Services, one of the businesses in AFGRI’s financial portfolio, is spreading its wings to the Northern Cape in line with its strategy to expand beyond the areas where it is currently doing business.

Early in 2016 a working relationship with Northern Cape-based KLK Landbou Limited was established. This relationship was put into place to enhance KLK’s offering to their clients and to enable KLK to supplement their services through UNIGRO’s relationships with various insurers. This co-operation is now being expanded to include UNIGRO’s lending products.

UNIGRO not only provides crop insurance, covering hail, extended hail, wind, transit, fire, frost and multi-peril, but also asset insurance, health, wealth management and planning, medical aid as well as credit life insurance which provides farmers with security against production loans.

Traditional lending products such as term loans, hire purchases and production loans are augmented by innovative financial solutions such as UNIGRO’s revolving credit facility.

Theo Potgieter, Insurance Director at UNIGRO, says the agreement offers new opportunities to both entities. “UNIGRO together with KLK will be able to expand its crop insurance and asset insurance offering to established as well as emerging farmers in the region, whilst KLK will have the opportunity to target large corporate clients with the assistance of UNIGRO. The working relationship will place emphasis on the KLK clients especially those not insured via KLK”.

The agreement with KLK was followed in February by the establishment of a working relationship between UNIGRO and Indwe Risk Services, a leading personal, business and specialist risk and insurance advisory business.

This agreement allows Indwe access to UNIGRO’s expertise in agricultural insurance and financial products, while UNIGRO will gain by utilising Indwe’s full range of risk advisory services.

Potgieter says the collaboration with Indwe creates an opportunity for UNIGRO to expand into Africa through Indwe’s Allied Africa Broker Network, an integrated network of independently African-owned and operated short-term insurance brokers.

As a parting comment, Potgieter indicated that in hard times, such as those currently being experienced in the agricultural sector, purchases such as insurance and cover, are often the first areas to be cut back, unfortunately to the detriment of the farmer, should anything unforeseen happen. “In times like this, it is much better to approach your broker or relationship manager, and discuss possible options, rather than cancel policies and cover outright,” said Potgieter.

AFGRI extends service offering in the Western Cape through acquisition of Agrico mechanisation business

Agrico (Pty) Ltd has announced its intention to divest its mechanisation division, including its John Deere dealerships and other import agencies. It has agreed to sell the bulk of the division to AFGRI Equipment (Pty) Ltd as a going concern, pending regulatory approval. It intends to sell the balance of the division to other existing mechanisation dealers. The acquisition includes Agrico’s John Deere dealerships in Belville, Caledon, Ceres, Malmesbury, Moorreesburg, Piketberg, Rawsonville and Vredendal.

The purchase will be made by the AFGRI Equipment (Pty) Ltd division of AFGRI, which is the preeminent agricultural, golf and turf equipment retailer in Africa and Western Australia. It offers the world’s leading equipment brands and backs these brands with a support network of 25 strategically placed branches.

The acquisition will allow AFGRI to better service farmers in the Western Cape region and beyond, says AFGRI CEO, Chris Venter. “We are pleased with this new addition to the AFGRI group of companies, and are confident that this business is a good fit with AFGRI. It will bolster our existing product range in this market segment.”

Venter went on to welcome Agrico employees and clients into the AFGRI family and indicated that AFGRI is looking forward to a long-term, mutually beneficial relationship. There will be no retrenchments as a result of the acquisition.  “The acquisition confirms AFGRI’s commitment and role in the development and success of the John Deere brand in South Africa and Sub-Saharan Africa,” he went on to say.

The acquisition of the various mechanisation agencies further extends AFGRI’s national footprint to ultimately benefit its clients.

With roots extending back to 1904, Agrico has 28 branches across South Africa. “Agrico will increase its focus on its water-related business and own-manufactured products. It will strengthen its presence in all areas currently served while expanding into sub-Saharan Africa. It retains over 800 of its 990 employees and will be further investing in its South African manufacturing- and retail operations,” said Walter Andrag, CEO of Agrico.