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  IN THIS ISSUE                                         July 2014 

How2Sell_logo_Drip%20Irrigation2.pngTapping Drip Irrigation Efficiencies as a Sales Opportunity

Water shortages aren’t the only reason producers are investing in drip irrigation.

Currently, nearly half the food and fiber sold in the U.S. comes from irrigated agriculture on about 16% of the nation’s farmland. Of those 56-plus million acres of watered fields, less than a million of those acres are watered with subsurface drip irrigation — a technology that allows nearly total control over crop inputs and root zone moisture.

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Broad-acre subsurface drip irrigation has become a significant business division of Stotz Water across the Western states. Here J.L. Echeverria, left, and Chad Odom, center, owners of O&E Farms, and Stotz Water’s Joey Rosztoczy, inspect the first cotton crop on O&E Farm’s initial Arizona SDI conversion.

PHOTO COURTESY OF STOTZ WATER.

While drip systems have been commonplace in orchards, vineyards and vegetable operations selling high-dollar produce, the installation costs for subsurface drip tape and related pumps and filters have produced “sticker shock” for many broad-acre row-crop and hay producers with installation costs ranging from $1,500-$3,500 per acre. That’s changing, however, particularly as growers begin to measure water use efficiency against increased regulation on use of ground water and the drilling of new irrigation wells.

In the West, large equipment dealers are finding adding subsurface drip irrigation systems to their product and service portfolio is a good way to expand their business with an existing customer base. It’s not as easy as taking on a new line of equipment, but with proper capitalization and hiring the right people, the business fits well and is providing growth for a number of formerly “all iron” dealerships as more farmers seek to maximize the use of their inputs and stabilize per-acre production.

Farm Equipment visited with two large equipment dealerships that have made subsurface drip irrigation a significant part of their business, and with the sales manager of an irrigation system provider that began as an apple orchard business watering its own trees. It now serves irrigators across the northeastern U.S. from Illinois and the Great Lakes states to New England. All are serving row-crop and hay producers with drip systems.

Responding to Needs

Jason Behrend, director of business development, Stotz Equipment, Avondale, Ariz., says Stotz Water was created a little over a year ago when the long-time John Deere dealership (23 stores in 8 western states) discovered demand for drip irrigation expertise among its top customers during monthly “think tank” meetings.How%20To%20Sell%20Drip%20Irrigation_Takeaways.jpg

“It was a combination of John Deere’s interest (at that time) in irrigation and our premier customers voicing the need for better water management assistance,” he explains. “We visited with some select growers in Arizona and decided to sell 20 acres of subsurface drip technology to get started.

“After 6 visits with growers, we had 1,275 acres that customers wanted to convert. They were telling us they had allocated the money for drip irrigation but hadn’t found anyone they wanted to do business with. They said ‘If you get into it, we’ll do it,’” Behrend says. “We were blown away at how quickly it came about.”

Despite having 1,275 acres committed to the project, Stotz backed down to 380 acres, created the Water Division and hired a manager. They did the installation and watched the crop throughout the season, taking soil, moisture and tissue samples throughout the process.

“We’re with our growers from design through the installation and start-up. Then we stay with them all the way through the season the first year with warranty work, flushes, maintenances along with the soil and tissue sampling and monitoring field moisture levels. It’s as turnkey as it can be,” he explains. “We want nothing to reflect poorly on our core equipment business. We have a reputation to uphold, and we are determined to provide a service that will add value to our customers’ businesses.”

In the first year, Stotz Water installed 2,000 acres of drip systems, and Behrend says the company has done virtually no promotion, other than one direct-mail piece and having an attuned machinery sales staff cognizant of their customers’ needs.

“Our crews are going non-stop, through mainly referrals and word-of-mouth,” he says. “Our goal is to do 5,000 acres per year, and we think there’s 100,000 acres in our company’s footprint to convert.”

Changing Input Dynamics

Richard Arias, division manager, RDO Water, a division of RDO Equipment Co., which has 70 dealerships in 9 states selling John Deere ag and construction, Vermeer and Topcon equipment, says RDO Water is a year-old brand arising from RDO Equipment’s purchase of his family’s irrigation business last November.

“My family started Water Tech Ag Supply in 1981 in the Imperial Valley selling solid-set irrigation equipment. We sold our first drip systems in the early 1990s and that part of our business grew here in California,” says Arias, who is based in San Diego. “We did some acquisitions and built the 7-store system we have today serving the area from Northern Baja up the coast to San Jose and east into Arizona.”

Arias says while the growth of drip irrigation has been slow but steady over the past decade, he sees a change in dynamics coming for drip in the next 4-5 years, despite a steep entry cost for the technology.

“We’re seeing significant interest in switching from flood irrigation and solid-set systems to drip, particularly as more progressive farmers seek to maximize the use of their land and inputs,” Arias explained. “Also, they’re looking at being able to provide sufficient water to their crops in arid conditions, something that sometimes challenges growers with solid-set, center-pivot and flood systems.”

With a lifetime in the irrigation business, Arias says selling drip systems is a “solution driven” proposition.

“There’s a belief that drip irrigation will allow you to produce a crop with less water. The reality, however, is it provides more efficient use of water for the crop with less evaporation and a better way to control fertilizer applications. There’s no waste, so you see improvements in use of inputs, a better quality crop (that hasn’t hit yield limitations) and more pounds per acre.

“That’s why you’re seeing the transformation into drip here with cotton and hay and even in the Plains states with corn, wheat and hay,” he explains.

Arias says drip irrigation provides the technology to touch nearly every aspect of farming from moisture monitoring, fertigation (fertilizing while irrigating crops) and nutrient management, salt levels and some insect controls, but he adds, “the best farmers still walk their fields on a day-to-day basis.”

Currently, RDO Water has about 5,000 acres of new installation per year, and sells renewable parts and pieces for an additional 30,000 acres in California and Arizona.

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The magnitude of equipment needs for sales and service of subsurface drip irrigation systems is evident in this demonstration photo of head pipe trenching and feeder tubes supplying each row of SDI lines. In addition, those who have entered the business say there’s a hefty investment in capable engineers and installation staffs.

Photo courtesy of RDO Water

Inroads in the Midwest

Doug Foster, outside sales manager for Trickl-eez Co., has been working with grain farmers with subsurface drip irrigation since 2012 out of his suburban Chicago office in Aurora, Ill.

With a career in irrigation sales experience ranging from golf courses, nurseries and greenhouses, Foster says he’s enjoying working with upper Midwest row-crop farmers as they begin adopting technology that’s been in use in the Southwest and Plains states for more than 25 years.

“Our first year we had a few customers and now we’re serving about 20 or more new accounts per year,” he explains.

Trickle-eez operates two main parts and system distribution points, one in St. Joseph, Mich., and the other in Bigglersville, Pa. The St. Joseph facility houses a pair of Andros tape installation machines which are leased out to farmers to install the systems — under Trickl-eez supervision.

Most customers interested in drip irrigation systems are already fairly knowledgeable about the technology, Foster explains. But the big problem with many is they aren’t completely versed on agronomic and geologic conditions (rocks and soil barriers) in their own fields.

While Trickl-eez is serving Corn Belt farmers today, its roots go back to company owners John and Sandra Nye’s apple-growing experience and their desire to efficiently water their own trees. They launched the business in 1973 and have located it across the northeastern U.S. “orchard belt” but are welcoming the new interest from traditional commodity crop producers.

“As long as corn prices hold or do better,” Foster says, “I can see us doing up to 1,000 acres of subsurface drip projects a year.

“Our window of opportunity for installation is small — either at the very beginning of the season (about 4 weeks) or at harvest (another 4 weeks). But if we can get a grower to plant soybeans or plant hay, that gives us a longer window to do business,” he says.

Again, it’s dollar signs fueling the new business, Foster says. “Return on investment and savings are the big drivers. Everyone’s looking for 300 bushel corn, and some are pushing 400 bushels. A lot of that has to do with new hybrids and plant populations, but subsurface drip irrigation provides the best opportunity to manage crop growth for maximum yields, and that’s why people are coming to us.”

The Sales Pitch

As prices climb for energy, nutrients, water and equipment, improvements in overall efficiency of production become worth more. That is the basis of the sales pitch all three businesses are using.

“We have a cotton producer who reduced his fertility and water costs by about 50% and saw higher, cleaner yields, despite planting a month later than optimum for cotton in Arizona,” says Behrend. “That performance was due to better use of inputs through more precise application of water and fertilizer through drip irrigation.”

“In the hay field, where we average 1.25-1.5 tons per cutting on 6 or 7 cuttings a year, we’re well on the curve for 15 ton hay with drip irrigation,” he adds.

Behrend says financial outlooks say there’s a 5-8 year payback for drip systems — 5 years for cotton and 8 years for hay, but with the use of state and federal incentives for upgrades and water savings, growers can see a much quicker return.

Arias agrees, noting one of his customers went from 6 cuttings of alfalfa per year to 9 cuttings resulting in an annual boost of hay production from 9 tons an acre to 13 under drip management. “Plus, he got a premium price because the hay was ‘drip produced’ — a phenomenon we’ve noticed growing over the past 6 months,” he says.

“Drip is allowing us in the desert southwest to compete with countries with much lower costs of operation to produce quality food and fiber,” Arias notes. “The automated technology that accompanies drip irrigation allows for significant labor reductions and boosts in crop quality — what we must have to remain economically viable.”

Foster says more precise control and use of fertilizers with drip is responsible for a 30% decrease in fertilizer use for some of his customers. “You already have an artery system right to the root zone. What water and nutrients the plant uses today you can replace tomorrow. Plus crop insurance on a drip-irrigated field may be $5 an acre compared with $50 an acre on more traditional fields,” he says.

What Does It Take?

All three men say successful drip irrigation systems are specifically designed for the crop, soil, climate and geography and that takes an engineer with specialized knowledge of how water flows, how plants grow and how the soil handles water and nutrients.

“This expertise is vital,” says Behrend. “The designer needs to understand farmers, cropping systems of the area and the history of those cropping systems. He also needs to be familiar with ‘coffee shop’ talk.

“Our first project (in Arizona) was overseen by an engineer from California,” Behrend explained. “People came out nonstop looking at our sites, and once they found out the engineer was from out of state the criticism began. We didn’t make that mistake again. We hired the best guy in Arizona and pushed him to think a bit differently and keep a technological edge. That solved our PR problem with local growers.”

Foster reiterates the need for strong design support for any business wishing to provide sales and service of drip irrigation systems.

“Our owner is an ag engineer, but we have a design department as well as individual sales representatives with design software and experience to help us create systems that will do what we expect them to.

“Installation knowledge is vital to success, too,” he adds. “I’ve never seen a system go in exactly according to the drawings and plans, so having someone on site to make adjustments is necessary,” he explains.

“As a distributor, we carry all materials from pumps to filters, and when we install a system, there’s no buck passing — we are responsible.”

Behrend cautions dealers considering drip irrigation as a “business addition” to their equipment enterprise to push a sharp pencil in the planning stages. “This can be a capital intensive business. You’ll need human assets in a designer who understands physics, hydraulics, pressures, flows and farming. This is crucial to the operation.

“We have a construction manager with a lot of experience in irrigation systems, and we have 4 foremen reporting to him. All have their own specialties such as tape injection, valving, piping, tie-ins, and all are cross-trained. Each of them oversees 5-7 individuals.

“This is boring, monotonous work, but we pay higher than the industry standard with the goal of getting good people and paying them well instead of continually training new staff all the time,” Behrend says.

Behrend says equipment will cost money too, even if you’re in the equipment business.

“You’ll need trenchers, and that’s a big outlay. We started with an Army surplus Cleveland trencher. We paid $120,000 for it and it only had 30 hours on it, but it would only operate at 1.5 feet per minute. We got out of that by buying a Vermeer machine for $400,000 that trenches at 32.5 feet per minute. The increase in productivity was phenomenal.”

Then, there are backhoes, mini excavators, tractors and injection rigs to put tape in the ground, plus pickup trucks and trailers. “We do our own welding and in-house repair work. We want to control the whole experience because we guarantee these systems and the last thing we need to do is jeopardize our company’s reputation with subcontractors.”

Arias offers this advice for dealers considering getting into drip irrigation: “Understand it’s about engineering and the science of irrigation. Get qualified people on your staff, because without them you will not be successful in this industry.”


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