Drought, shortages sharpen interest in improved efficiency
By MATEUSZ PERKOWSKI
Switching to a linear irrigation system has cut Bob Zielinski's water and electricity use by half.
The labor required to move the wheel lines and hand lines that Zielinski, who farms in Oregon's Willamette Valley, once relied on has been largely eliminated.
"The amount of effort is minimal. The idea is the machine does the work," he said. "It's all about saving the buck."
The promise of water, electricity and labor savings is driving irrigation investment decisions across the United States. Sales of irrigation equipment are booming in 2012, and experts say the ongoing summer drought may inspire further demand among farmers.
Drought-stricken farmers in the Midwest see the value of irrigation machinery now that reduced yields have driven up crop prices, said Brent Mecham, industry development director for the Irrigation Association trade group.
"You would be making a lot of money right now," he said.
Beyond immediate weather considerations, the irrigation market has a lot of room to expand over the long term as farmers upgrade their irrigation equipment and methods, Mecham said.
"The potential to grow is still very strong," he said. "It's not at saturation by any means."
Despite the irrigation industry's robust sales, flood irrigation remains the dominant method among farmers, he said. "Surface or flood irrigation is inexpensive, but it's the least efficient."
Crop prices have traditionally been so low that many growers couldn't justify buying pressurized irrigation equipment, Mecham said.
With crops becoming more valuable in recent years and water supplies becoming scarcer, more advanced irrigation technology makes financial sense, he said.
Lenders may also persuade farmers to invest in irrigation equipment to prevent crop failure, Mecham said. "I think it will become a risk aversion requirement down the road from the banking point of view."
Sales of irrigation equipment have surged nearly 17 percent during the first half of 2012, to $390 million, according to Valmont Industries, the brand's owner.
"The external environment worldwide for agriculture is as strong as we've seen in a long time," said Mogens Bay, Valmont's CEO, during a recent conference call with investors.
Rival manufacturer Lindsay Corp., which makes Zimmatic irrigation equipment, has also seen strong increases in sales.
Irrigation sector revenues have climbed 32 percent, to $367 million, during the first three quarters of the company's most recent fiscal year.
Reinke, a privately held manufacturer, does not disclose its revenue figures but demand for the company's products has followed the same trend.
"Our system sales are up again this year fairly significantly," said Tim Goldhammer, vice president of marketing for Reinke.
With the severe drought in the Midwest, farmers who have traditionally relied on rain for irrigation may come to see center pivots as an insurance policy, he said.
"There's large parts of the country where guys who have never seen the need for irrigation equipment are now starting to reconsider," Goldhammer said.
The drought's effects on irrigation equipment sales will likely become visible in autumn or next year, rather than immediately, said Bay of Valmont Industries. "This is the time farmers are worried about growing a crop, not putting in new equipment."
Labor and energy concerns are also spurring investment in irrigation equipment, said Val Tancredi, salesman at Stettler Supply Co. in Salem.
Lower water pressure requirements for linear and pivot irrigation systems translate to reduced pumping and thus less electricity usage, Tancredi said.
Linear and pivot systems also reduce the need for workers, who would have to periodically move "big gun" sprinklers or wheel line irrigation equipment, he said.
"Most farmers are trying to become more efficient and labor is a major expense," Tancredi said.