Farming & Engineering Services (FES Group) is an agricultural solutions company based in Blantyre, Malawi. With a diverse range of services to the sector, the company prides itself in its rich history and exemplary customer service to its customers. The company has recently received investment by leading private equity funds and has also entered the Zambian market to grow its footprint in Southern Africa region
For more than 50 years and counting, one company has straddled the agriculture landscape in Malawi like no other.
Farming & Engineering Services (FES) started its operations in the country in 1967 with a single brand franchise for Massey Ferguson tractors and has never looked back, adding more world famous brands to its stable and expanding its service offerings to its customers across the country with a sense of purpose and focus.
And now, 53 years later, the company is undergoing a new phase of transformation, after new investors joined the business, with its new strategic direction geared towards the broader Southern Africa region and beyond, while seeking to adopt new technologies of the future to tap into new opportunities in the agriculture and related industries.
Led by Mike Aldworth, the Group Managing Director, an agriculturalist with significant experience in farming contracting operations in the country, the company is set to undergo a transformation, as it taps into the more than 140 years experience of its team who are professionals from different countries and backgrounds in the agricultural, technical, industrial, financial and management fields of the industry.
Aldworth, who also has an extensive background in the banking industry, believes that FES Group’s success is due to two main factors: “For me it would be two key things to follow: stick to your core business: for us agriculture is our core business and it is a big space; and two, is to diversify within your core business.
“That has been our saving grace through thick and thin, tough economic times, political upheaval: that our business is diverse, so if the retail side is under pressure because of global economic issues or oil prices, then our contracting business picks up because our customers start to realize that maybe they should spend more on irrigation and not spend on buying a new tractor.”
Growing beyond Malawi
FES prides itself for the range of services it provides to the agriculture and related industries in Malawi. And Aldworth and his team is focused on delivering on this goal, to every customer they serve, and to deliver the services using the latest technology.
“We are an agricultural solutions company operating in the modern era. We embrace technology to farm as efficiently as possible and we offer our agricultural markets a complete solution package in one company. We have multiple products: irrigation, agronomy, drone services and we sell tractors and implements. We service and sell parts and we have an emerging farmer department that looks after their specific needs.”
Having started off as a single brand sales franchise for the famous Massey Fergusson tractors in 1967, the company’s longest partnership, and which it proudly continues to serve, Aldworth reveals that FES has over the course of the past five decades, had a slight evolution in its business, as it expanded the scope of its services and partners in the agricultural equipment distribution and servicing in Malawi.
FES offers its integrated agricultural solutions to the agricultural sector in Malawi through its branches in Blantyre and Lilongwe and depots in Dwangwa and Nchalo, to a broad customer base of commercial estates, small-to-medium-scale farmers and multinational corporate clients and is the single largest investor in Malawi’s agricultural equipment industry, providing turnkey solutions, maintenance, spare parts and direct access to equipment for agricultural contracting services.
The company’s customers have access to dedicated on-site workshops, engineering shops, a large contracting fleet and fully mobile field-service workshops, which is served by a dedicated team with local experience and expertise.
While the Malawian market has been the home base for decades, the company also services clients in Zambia, Zimbabwe and Mozambique.
In early 2020, FES expanded its business into Zambia, where it acquired the assets of agricultural equipment supplier BHBW Zambia, thereby securing the Massey Ferguson and Challenger franchises for Zambia to add to its Malawian dealerships. FES intends to expand on the product range and replicate its successful business model of equipment dealership combined with precision contract farming and other agricultural solutions in Zambia.
Aldworth says that Zambia, which has a much more developed agricultural industry than Malawi, offers good prospects for growth of their business as the company strategizes to grow and offer its services closer to the Zambian market, where it has since recruited an in-country team and opened offices. He adds that the company is excited with its entry into Zambia, since they do have a lot of skills and experience to share with the Zambian agriculture sector.
Diversified equipment solutions, global brands
FES holds the leading position as the single largest distributor of several international brands of agricultural equipment in Malawi as the sole franchise holder in the country across a diverse number of areas, and as it enters Zambia, it has expanded the distributorship model and services it offers the industry.
The company has exclusive distribution deals for mechanized agriculture and precision technology with leading international brands such as Massey Ferguson, Challenger, Bomag, Baldan, Falcon and Trimble, where the company offers its clients in-depth technical, industry and managerial skills, innovative turnkey solutions, maintenance and pare parts plus full after sales, maintenance and backup support services for its range of tractors, harrows, rippers, planters, ploughs, ridgers and GPS positioning equipment.
In the earth-moving space, FES offers Komatsu brand equipment that are used for excavation, grading and loading in agriculture, construction and infrastructure sectors with full after-sales, maintenance and backup support services to its customers.
It also offers global leading material handling Toyota Forklifts equipment that maximize warehouse space and are safe, efficient and cost-effective for mid-size and large industrial facilities, including food-grade options that meet strict food safety requirements.
In the irrigation sector, the company is the leading sole distributor for Zimmatic and Netafim drip and micro-irrigation systems, centre-pivot sprinklers, hose systems, pump stations and pipeline networks that come in PVC or steel construction. The company has an in-house consultant with specialty in the design and installation of water supply solutions and irrigation systems, while it offers advice, technical support and maintenance and spare parts of water and irrigation systems.
FES has extended its range of services to include power supply solutions, where it offers AJ Power generators with capacity from 10 KW to 3.3 MW, which offer highly efficient and cost-effective off-grid power solutions to its customers across the country. It also offers bulk water supply services including canal excavation, building, modification and maintenance services to manage water flow and the construction of large water storage dams. It is also the exclusive distributor of BOMAG compaction equipment; milling machines, finishers and stabilizers machinery, soil stabilization equipment and binder spreaders.
Beyond the equipment side, FES provides a range of contracting and leasing solutions across the agricultural supply chain using advanced technologies to drive increased yields, productivity and reduce input costs. With precision land preparation for close to 3,000 hectares annually; the company is the largest contracted agriculture services provider company in Malawi.
It also offers equipment leasing and long-term contract solutions services that allow its customers to reduce their capital outlay, which is backed by a well-experienced national team that manages full maintenance service for leased equipment, key supplier support, service agreements, generator maintenance contracts, telecoms tower maintenance, mining services and stock of parts and spares.
The company has adopted the use of advanced technologies and smart farming techniques to solve challenges across the entire agricultural supply chain, thereby minimising input costs and maximising yields and efficiencies through GPS-controlled tractor steering and optimised route planning, GPS real-time data collection with accurate positioning, efficient manipulation and analysis of large amounts of geospatial data to reduces the risk of crop failure, while improving the bottom line for its customers.
To delve deeper into new technologies, the company recently added drone services to its portfolio of services – one of only two licensed operators in Malawi, and soon operational in Zambia. The company’s current drone technology is utilised for topographical surveys, plant health inspection and spraying for pre- and post-emergent herbicides, pesticides and crop ripeners.
More than just equipment
Aldworth says that FES has invested heavily in providing spare parts and support to its range of equipment and services, so that its customers can experience better services and support from its teams of qualified technical personnel.
The company has impressive stock holding that covers its entire range of equipment and also holds consignment stocks with its customers with large fleets, while the technical teams utilize direct online portals to place international orders. It also predominantly transports its spares through airfreight to speed up deliveries.
The firm’s Lilongwe and Blantyre workshops are fully equipped to handle complete rehabilitation, fuel-injection equipment overhauling, engine and transmission rebuilds and spray painting works, while it also does on-site service and equipment repair on-site for isolated customers.
Aldworth stresses that FES success has also been in identifying, recruiting and training the right people to work in the company. He reveals that the company’s technicians receive continuous training and development in their fields from international experts, while also extending training to clients’ operators and technicians.
“We have a very stringent and rigorous maintenance program and we look after our equipment very well, we don’t take any short cuts, we don’t buy any pirate parts and we use only parts from the original manufacturers. We make sure that our tractors should last 20-30,000 hours; this might sound a lot to a farmer but that’s what a tractor is meant to do – it is a diesel engine and if you look after it, it will last a long time.”
“We have learnt to invest in the right kind of staff with the right skills. Southern Africa is a very agriculturally orientated space. There are a lot of people who understand agriculture. Find those people and employ them in your business: you need the best possible person. Getting the right kind of person into your business is the best ever investment possible.”
Modern technology for agro sector
In the last couple of years, Aldworth concedes that from a technology point of view, there has been increased urgency into tapping into new technology to meet the challenges that the agriculture sector in Africa faces, and the company has taken the lead, while adding that farmers in Malawi and Zambia have also not been left behind.
“Food security in Africa is a real issue and climate change is making agriculture more and more difficult because our rainfall patterns are more difficult to predict. The weather is getting hotter and storms that come are more intense, so we just felt that from a business point of view, we needed to push technology into the agriculture market, so that farmers could maximize input costs. FES has a large number of clients, which allows us to invest in top-of-the-range equipment that can get the job done much quicker.”
He explains it could take a typical farmer three weeks to plough out his or her fields using a medium-sized tractor, whereas the latest models can complete the task in a fraction of the time. And the quicker crops such as maize get into the ground, the greater the potential yield come harvest time.
He asserts that technology is the route forward for agriculture in Africa and that from his experience if technology is proven, then adoption rate is high, although it might be a challenge in smaller farms in the Continent. “Technology is widely available and technology is also becoming a lot cheaper than it was 10 years ago, as technology space grows, so do apps become more available and more widely used. It is a huge opportunity.”
He further adds that with reduced incomes from farming and efficiencies brought by technology adoption are critical for present day farmers in Africa to succeed, asserting that climate change is a big issue, with weather patterns changing in Africa: severe storms, flooding and drought.
“In Southern Africa, we have had some very strong storms and cyclones. Cyclone Idai, which came through the Southern Africa region into Malawi, caused huge devastation. In 2019, we also had flooding in Malawi. From an agricultural point of view, the key would be to say we have to use our current resources more efficiently. For example, we have to utilise water more efficiently; so drip irrigation becomes very important. It is quite capital intensive but water usage/efficiency and water foot print is significantly better than any other system.’
He has also called for the adoption of solar technology and look at different crops for different environments, while improving soil fertility.
“Farmers in Southern Africa should look at diversification: can we plant other crops that are traditionally imported? Can we start growing them so that we have availability and also making more efficient use of our resources.”
“We all know that input costs are rising on the one hand and returns from farming are either stagnant, or in many instances, the farmer’s revenues are decreasing because of the rising input costs. We looked at ways to make agriculture more efficient from a smaller space of land.
“We also recognized that, especially in Southern Africa, populations are growing and people need to eat, while arable land is being taken up by villages and towns, so the land that is available needs to be productive than it has ever been in the past – hence the need to get into real technology in agriculture to make it more efficient.”
Contracting business that reduces costs
A majority of farmers in Sub-Saharan Africa have for generations considered the ownership of a tractor and other agricultural equipment and implements as critical to succeeding in commercial crop farming.
While contract farming is relatively established in mature agricultural markets, FES was the first company to offer a full-suite of services in Malawi. It counts the country’s biggest farming estates as its clients and also offers a wide range of products and services to smallholder farmers. In addition to the savings on equipment, farmers can achieve improved yields by outsourcing functions such as land preparation, according to Aldworth.
FES has been a pioneer in moving farmers to a new business model that reduces the need for extensive ownership of equipment by farmers by introducing contract farming solutions, including land preparation, crop spraying, material handling, bulk water management, full maintenance leasing and harvesting.
“About 23 years ago we moved into contracting. We started off with 3 tractors, where we had a full maintenance lease with a contracting company. That business has now grown significantly: we now own about 150 diesel tractors and other equipment, all aimed at agriculture. Along the way in the last 20 years, we have taken on other world-famous brands – Komatsu, Toyota Forklifts, to mention a few. We have expanded our product offering into irrigation, where we are the agents for Zimmatic and Netafim in Malawi,” he informs us.
“What it means is farmers don’t need to invest in capital-intensive equipment only used for a short period in the year. FES will provide the equipment and perform the work on a contract basis at a rate charged per hour or per hectare. One of our expert team members will even provide farmers with advice on the best agricultural practices,” says Aldworth.
He advises that the number one priority for a farmer must be to stretch the assets at the farm by having better, more efficient use of capital, adding that when a farmer owns, for example, a tractor, he may use it only twice a year for about 200-300 hours, while a contracted tractor used by many farmers in a district may be utilized for 2500 hours a year, thereby spreading the capital cost of the tractor over a much bigger area.
“I would advise that the farmer invests in the farm, to upgrade the irrigation systems, apply the right fertilizers, get the soils tested and make sure the water quality is right and make sure to plant at the right time of the year. We can’t control the weather but we can control the irrigation and the capital expenditure.”
Precision agriculture of the future
Aldworth insists that the challenges with climate change and the tightening margins in farming means that African farming has to drift towards precision agriculture to thrive. In this regard, two investments stand out at the company.
The first is the company’s investment in a soil, leaf, oil and water-testing laboratory by the Group – the first independent soil management lab in Malawi. Led by a team of agronomists and laboratory managers, Agrilab performs research and testing and also provides advisory and consultancy services to help farmers increase their yields, improve their crop quality and build a sustainable food supply.
Aldworth highlights the importance of optimal usage of fertilizer in crop farming in Africa. “One of the biggest input costs in growing any crop is fertilizer, but how do you know the correct fertilizer for your crop in the soil conditions you have? The laboratory evaluates the health and fertility status of the soil sample brought in by a farmer and then we can give the farmer the correct fertilizer that the farmer should utilize, so that the farmer doesn’t waste money on fertilizer that the crop or the soil can not utilize. The laboratory gives a more scientific approach to agriculture.”
He adds that they are going to integrate the laboratory’s work with its mechanization and irrigation solutions to further add value to its customers, while a mobile app is in the works. The laboratory, which is a member of GLOSOLAN, the Global Soil Laboratory Network, is working towards receiving ISO Accreditation by the end of 2020.
Secondly, the company is excited about its entry into drone technology in agriculture space, and Aldworth stresses that these new tools will further enhance their technical capability in the region while reducing costs and complexity to the farmer.
“A lot of crops in Africa get sprayed with chemicals to control pests or weeds using airplanes, which are quite expensive, big pieces of equipment and do a good job. However, drones are smaller in size and capacity but a lot more accurate and efficient with a lower cost impact on the farmer’s business. This year, we have seen the impact of using drones. In the past, we sprayed fields using a crop sprayer. We would achieve 70-80% efficiency. With a drone, we have increased spraying efficiency up to 95%. With drones we also have less safety issues. It is a lot easier to manage. I do think it is the way forward in agriculture.”
He adds that from a chemical point of view, there is a lot of focus on what chemicals do to the environment and the drift that it does to neighbours’ farms; with drones you can make a significant improvement on efficient use of the chemicals.
The lab and drone technologies add to FES Group’s technology enabled services, including the use of GPS-guided auto-steer technology on tractors, which improve precision and efficiency in tasks such as land preparation, planting and fertiliser application.
New investors, new horizons
Aldworth reveals that the recent investment by Phatisa, a food-focused African private equity firm supported by a pool of UK and European development finance institutions, Norfund, Mbuyu Capital and DEG is a great endorsement of the founding owner’s business; and shows that “the business model is an attractive business model, it shows that what we are doing is heading in the right direction and am very pleased with that.”
“These are large companies which have significant expectations, and I think we can deliver on those expectations because we have an attractive business model that is also diverse with many revenue streams that take care of any risk issues that any investor may have. From our company point of view, the investment will also open up for us more opportunities in the future. These companies have exposure across the globe and if they like our business model and we are successful in our partnership with them, I can’t see the reason why that business model can’t adopted further on than just Zambia and Malawi. Certainly, we would like to see our model grow into other countries,” Aldworth informs us.
He adds that it was hard work going through the due diligence but it was a great experience.
“We have a fantastic people working for us, we have some really nice ideas and we interacted nicely with them, they asked a lot of questions that made us think a few times about some of our ideas in our business and we took away some learning from these discussions, some of which we could look at in future. Now, we can just focus on growing the business.”
Aldworth believes that even as they grow beyond the borders of Malawi, there are still opportunities to impact the small scale farmers in the country and in Zambia, where they have entered into, revealing that they have had a few strategic thinking sessions on how to put more resources and focus on this sector.
The company has done a pilot project for about 12 months where it investigated the market’s needs and challenges, after which it has created a department to focus on the sector and has employed people.
“We are looking at all the emerging farmers in this country. For example, in the central and northern regions of Malawi, there are a lot of farmers who are diversifying away from crops like tobacco and so we are providing for them mechanical and irrigation solutions and agronomy services plus soil testing services.
For small-scale farmers they offer smaller solutions for quarter or half hectare kits so that those farms can have access to irrigation and other technologies.
“I think it is a significant market and we have some key criteria to ensure that the farmers selected have a sustainable project and have passion for the job. We also sign off take agreements with the farmer so that there is a larger player in the market who will buy their crops and we also engage with financiers to provide critical finance for equipment purchase to these farmers.”
As the future beckons, he says that they are looking at boosting FES Group’s product offering, for example, new irrigation systems, sub-surface drainage systems, further expand the drones business, and boost its bulk water schemes, they want to build dams in farming communities. “As long as it is within our core function of agriculture, we are right,” He says emphatically.
He further highlights the fruits and vegetables sector in the region, which has not been fully exploited to its full capacity.
“What I would want to see more of is the potential development of the export market for these crops. The infrastructure to make this happen needs some attention: cold storage at airports, hot houses during winter etc., especially in Malawi, but it is a lot more developed in Zambia. There is opportunity but I think it should be aggregated, with formal agreements with some of the larger shopping complexes instead of the current informal markets. The weather conditions in Zambia and Malawi are fantastic for growing vegetables.”
His final advice to farmers in Africa? “I would encourage farmers to look around them, reevaluate and think outside the box. With farming, it is hard work, it’s sweat, it’s long hours – let’s make our assets sweat for us, spend your time and resources wisely.” he concludes.