“We know that a peaceful world cannot long exist, one-third rich and two-thirds hungry.” Jimmy Carter
We’re running out of food and it’s getting WORSE.
A challenge and an opportunity
World population continues to grow and is expected to reach 9.7 billion by 2050. Demand for food is exploding. Supply, however, is under pressure. Studies have shown that crop yields have been decreasing due to climate change and extreme daytime temperatures. Climate change has also affected the availability of water. Since the 1970s the land area affected by drought has doubled. Arable land is becoming more scarce.
Netafim’s vision is to Grow More With Less – helping to bridge the gap between food supply and demand.
Founded in Israel in 1965, Netafim pioneered the drip-irrigation revolution and introduced the world’s first drip-irrigation system. Based on a revolutionary discovery that slow, balanced water drip leads to extraordinary plant growth, Netafim developed drippers that “adapt to the variations of inlet pressure and clean themselves automatically, maintaining a uniform flow rate regardless of water quality and pressure”. Netafim has since grown and evolved to offer a wider set of products and services ranging from drippers, emitters and greenhouses to crop management technology and irrigation system design and implementation. Netafim is currently the micro-irrigation market leader with 30% market share, offices in 110 countries, 17 factories and over 4000 employees.
With micro-irrigation market (drip and sprinklers) projected to grow at 18.3% GAGR between 2016 and 2021, and reach $6.81 billion by 2021, the opportunity for Netafim is clear. To seize this opportunity Netafim must face some difficult decisions. What products or services to focus on? Which countries to target? How to employ technology to its benefit?
How is Netafim capturing growth?
Locations Netafim is focusing on entering new markets, especially in developing countries. Last month, for instance, Netafim acquired an irrigation company from Costa Rica, as part of its expansion into Central America. Netafim is also growing organically. In May this year, for example, it opened its first production facility in China.
Products & Services Netafim has been focusing more and more on large projects. For instance, earlier this year Netafim was contracted to provide end-to-end solution, from design, engineering and infrastructure, of water transportation, advanced irrigation systems, control systems, and agronomic consultation for a $200M, 7,000 hectares sugar cane project of the Ethiopian government’s sugar company.
Innovation Netafim focuses on product innovation and on harnessing technology to save water, fertilizers and energy while increasing yields. In 2016 Netafim won the Technical Novelty Competition at FIMA, the International Agricultural Machinery Fair, for its DripNet PC™, a compact integral pressure-compensated dripper.
Moving forward an additional opportunity Netafim should pursue is mobile and digital technological innovation and its application in drip-irrigation, especially in developed countries. Although agriculture represents only ~2% of GDP in developed countries, compared to over 20% in developing countries, developed countries still offer a sizeable opportunity. The U.S. agriculture industry, for example, is valued at $1 trillion, yet as of 2013, less than 10% of irrigated agricultural land used micro-irrigation. As time passes drought will affect an increasing number of developed countries. For example, between 2012 and 2014 California experienced the most severe drought in 1,200 years. As farmers and growers in developed countries turn to drip irrigation to replace water intensive irrigation methods, they will look for user friendly and easy solutions. As they’ve grown accustomed to mobile technologies improving other aspects of their lives such as payments, commerce, marketing and others, so will they expect for their fields and farms. Mobile systems that control irrigation and fertilization remotely, without the need to physically be in the field, are already emerging. As many other industries, drip irrigation too will be transformed by digital and mobile technologies.
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 Source: United States Department of Agriculture Economic Research Service, Ag and Food Sectors and the Economy, accessed October 2016 http://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/ag-and-food-sectors-and-the-economy.aspx
 Source: United States Department of Agriculture, Census of Agriculture, 2013 Farm and Ranch Irrigation Survey, Tables 6,28,30, accessed October 2016 https://www.agcensus.usda.gov/Publications/2012/Online_Resources/Farm_and_Ranch_Irrigation_Survey/
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