Africa is a growing market for agricultural equipment that is often ignored, said Martin Richenhagen, president, chairman and CEO of AGCO Corp., a Duluth-based manufacturer of agricultural equipment.
Rapid population growth in developing regions, like Africa, means potential business for AGCO, Mr. Richenhagen said during a Nov. 5 breakfast meeting hosted in Buckhead by the University of North Carolina Kenan-Flagler Business School and sponsored by the German American Chamber of Commerce.
“The forecast is that the population in Africa will more or less double in the next 20 years, and that creates of course an important growth,” Mr. Richenhagen told GlobalAtlanta in a telephone interview after the speech.
He added that there is a lack of mechanization in many countries in Africa, creating opportunities for AGCO to fill in the gaps with its tractors, combines and other equipment tailored to certain markets.
While there are no specific plans for a manufacturing facility in Africa, Mr. Richenhagen said that he hoped to have one there in the future.
“The labor cost in Africa is pretty cheap so that means that … one day I could also think about having an assembly operation in Africa,” Mr. Richenhagen said.
Mr. Richenhagen said that AGCO is already one of the main providers of agricultural equipment in Africa as a result of early investment in the 1960s. AGCO has training facilities for farmers in various countries including Tanzania and Ghana.
He added that Russia is an important developing market because of the need to replace outdated equipment with modern technology.
China is a huge market that also lacks mechanization in some regions, opening up opportunities for foreign companies that can meet its burgeoning demand.
AGCO is opening a factory in the city of Changzhou, China, and recently announced plans to open another plant in Daqing in northeastern China.
Mr. Richenhagen noted that expanding into Russia and China was not without difficulty. In China business development requires negotiations with the government, and both countries are volatile and lack true democracy, he said.
AGCO continues to expand in Europe through acquisitions. It recently purchased Sparex Holdings Ltd., a supplier of tractor parts based in the United Kingdom and also plans to take over the remaining stake in its Italian joint venture, Laverda S.p.A., by the end of the year.
Mr. Richenhagen said in the phone interview that these acquisitions are part of an overall strategy to offer a broader catalog and greater variety of agricultural products.
“We are looking into certain acquisitions … to make our product range even more complete than it is right now,” said Mr. Richenhagen.
In his speech to the business school, Mr Richenhagen noted that as a global company reaching out to more and more markets, AGCO encourages employees to learn multiple languages, particularly Japanese and Russian.
For more information on AGCO, visit www.agcocorp.com.