Joint Venture in Agricultural Machinery

Barloworld group and Munich-based BayWa plan has set up a joint venture for the supply of agricultural equipment into sub-Saharan Africa

LISTED distribution group Barloworld and Munich-based BayWa plan to set up a joint venture for the supply of agricultural equipment into sub-Saharan Africa.

The establishment of the joint venture, in which each of the partners will hold an equal 50 percent shareholding, is still subject to the approval of the competition authorities.

However, the partners anticipate commencing operations at the middle of this year in Zambia by offering consulting, sales and services, including for the Allis-Gleaner Company (Agco) brands Challenger and Massey-Ferguson.

The joint venture will be part of Barloworld Handling, which incorporates the group's agricultural mechanisation business Barloworld Agriculture.

Barloworld chief executive Clive Thomson last year expressed excitement about the growth prospects in agriculture in sub-Saharan Africa.

The group in 2010 confirmed its agricultural arm, which then already distributed premium tractor brands Massey-Ferguson and Claas, planned to also start distributing two ranges of low-cost tractors from India and South Korea.

Explaining the rationale for the establishment of the joint venture, Thomson said yesterday agriculture in Africa offered significant growth opportunities to those able to provide solutions.

"It is estimated that the continent has more than 60 percent of the world's uncultivated arable land required to feed 9 billion people globally by 2050.

"Barloworld's understanding of local mechanisation requirements, combined with our strong focus on aftersales infrastructure and service, makes expansion beyond southern Africa a natural progression.

"Together with BayWa we look forward to building on shared competencies to provide region-specific resources and solutions to the agriculture value chain in Africa," he said.

John Blackbeard, the chief executive of Barloworld Handling, said it viewed BayWa's many years of successful operations in the agricultural equipment business, coupled with its expertise in Agco equipment, as a particularly positive aspect.

"Barloworld Agriculture is also a long-standing Agco distributor and our existing Agco distribution network, combined with our strong Africa know-how, provides the joint venture with a strong operational platform.

Roland Schuler, the member of BayWa's management board responsible for the agricultural equipment business unit, said the use of modern agricultural technology that was geared towards the needs of the market could be instrumental in improving productivity, particularly in less technically advanced markets such as Zambia where agricultural operations were heterogeneous.

Schuler believed BayWa and Barloworld could contribute their experience from successful mechanisation projects at farm operations of all sizes.

Source: Business Report

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Taxonomy

• Joint Venture
• Agriculture
• Governance & Planning