US equipment firm targets farmers with contract model

US farm machinery manufacturer John Deere is targeting Kenyan farmers with a contractor model that will see the firm sell tractors to specific farmers who will lease tilling services to others at a fee.

Most smallholder farmers cannot afford to buy their own tractors, relying instead on hired machinery that can be hard to access in the peak planting season and at unpredictable prices.

John Deere said in a statement Tuesday that under the contractor model, it will identify specific farmers who will use the tractors to till their fields and their neighbours at an appropriate fee, thus gaining an extra revenue stream while offering mechanised farming to other smallholder farmers.

“The contractor model allows smallholder farmers to solve the problem of access to expensive mechanisation equipment but also provides potential for them to evolve into fully fledged micro enterprises, which can provide employment,” said Francois Marais, a director at John Deere’s Kenya dealer Mascor.

“To support the rollout of this contractor model we have established 11 remote service centres in Kenya to assist smallholder farmers in isolated communities with servicing their vehicles, sourcing parts as well as backup services,” said Mr Marais.

Smallholder farmers looking to buy tractors often find that they can’t raise enough cash from their operations to afford one, while banks have been reluctant to lend to them due to a combination of unpredictable cash flows and the lack of formal business structures in their operations.

The result has been a shortage of tractors to service smallholder farmers, whose average size is about 1.7 acres, according to the Food and Agriculture Organisation (FAO).

There are about 15.9 million smallholder farmers in the country.

Kenya has registered between 1,900 and 2,700 new tractors every year since 2013, and while the number is growing it remains insufficient to serve all the farmers seeking to mechanise their operations.