CMC gets boost with order for 50 tractors by Butali Sugar

Auto dealer CMC Holdings has sold 50 New Holland tractors to Butali Sugar Mills for an estimated Sh215 million, making it one of the single-largest orders for a vehicles dealer this year.

The tractors were delivered to Butali earlier this month, raising its tractor fleet to 250 units and making it the biggest owner of the New Holland TS6000 models in Sub-Saharan Africa.

The transaction reflects the sugar millers’ position as the biggest buyer of tractors, which has attracted more dealers to the agricultural equipment business.

CMC declined to reveal the total purchase price of the 50 tractors. However, based on the latest Kenya Revenue Authority’s current retail selling price (CRSP) list, the value is estimated at Sh215 million.

Butali bought the tractors to transport sugarcane from plantations to its factory in Kakamega, western Kenya.

“We work our tractors hard, ferrying sugarcane from the fields to our mill on a daily basis within a radius of 30 kilometres around the factory,” said Sanjay Patel, Butali’s chief executive.

“The robust design of this tractor and the modifications made in the TS Series over the years, especially keeping the mechanics simple to operate and maintain, have made this tractor ideal for our business.”

Mr Federico Bellotto, the New Holland business director for Africa and Middle East said the TS Series has over the years earned a reputation for reliability and maneuverability.

Increased investment in sugar milling has boosted demand for tractors in the country, benefitting dealers including CMC and new entrants Toyota Tsusho East Africa.

Data from the Kenya National Bureau of Statistics shows that tractor sales hit a record of 2,032 units last year, nearly double the 1,167 units sold in 2010. This has seen tractor sales rise by the largest margin, beating other automotive segments including passenger cars and trucks.

Toyota launched its agriculture division with the Yanmar and Case brand of tractors in 2014 and was followed earlier this year by Simba Corporation which ventured into the sector with the Italian tractor brand SAME Deutz-Fahr.

READ: CMC loses dealership of tractor brand to Toyota

The new tractor dealers join established firms like Tata Africa, the distributor of John Deere brand, and FMD East Africa which sells the Massey Ferguson brand.

READ: Tata opens Nakuru dealership for John Deere farm machinery

New sugar millers that started operations in the past few years include Butali, West Kenya and Kwale International Sugar Company, which are all privately owned. Most of the established millers like Mumias and Sony Sugar have the government as the majority or significant shareholder.

Butali says it has a raw cane crushing capacity of 2,500 tonnes per day, with its factory fed by sugarcane sourced from 30,000 contracted farmers in the western sugarcane belt.

To collect the cane from the farms, Butali deploys its fleet of New Holland tractors pulling sugarcane wagons, with each unit operating 20 hours per day spread over three shifts.

Tractor dealers are also targeting demand from the government’s push to launch mega irrigation projects including the one-million-acre Galana-Kulalu irrigation scheme at the Coast.

Other large-scale agricultural projects include the proposed Tana Delta sugarcane farming project by Mumias Sugar that will cover thousands of acres.