Grow more with less – The corporate tagline and driving ethos behind Netafim’s groundbreaking drip irrigation technology encapsulates their 40-year-old breakthrough discovery and continues to drive their promise to deliver sustainable agro-technologies to a rapidly evaporating world.
Irrigating three fields – Netafim’s expertise extends to three lines of business: Irrigation, Greenhouses and Bio-Energy. Each business area is dedicated to defining and creating smart, relevant water management solutions that improve bottom line yield for farmers and maximize natural resource conservation.
Numbers that stay afloat – Presence in over 100 countries, 35 subsidiaries, 13 production facilities, 2,500 employees worldwide, 31% global market share, 19% growth per annum over the past six years on average, $1.7 billion in revenue in 2008
A mandate for change – Netafim is a charter member of the CEO Water Mandate, a UN-sponsored global initiative that fosters private collaboration between the public and private sectors with a focus on developing strategies and solutions for containing the emerging global water crisis.
Lessons in H2O – To further spread the water preservation agenda and to close knowledge gaps where they exist, the Company has established Netafim Academy which reaches out to clients, existing and potential, assisting them to learn how to become efficient and productive food producers. Its mission: to strive to help communities, large and small, to increase their capacity to feed themselves even in the most arid of conditions and the remotest of locations.
TLV Insider had the privilege of interviewing Israel Makov, Netafim’s Chairman of the Board:
Netafim is a major Israeli success story on a global scale.
What is it that you brought to the irrigation and water management field that didn’t exist before?
Netafim pioneered the field of drip irrigation some 45 years ago and has since been working diligently to transform the water management solutions industry for the better. Our impact on the proliferation of sustainable agriculture has been profound; in essence, we began to introduce sustainable water solutions to the market long before the sustainability buzzword was even coined. Developing solutions for a young country like Israel where water has always been scarce and infrastructure was virtually non-existent demanded the type of breakthrough innovation that could lead to a genuine paradigm shift in how crops were grown.
Fortunately, the drip irrigation products, systems and techniques that we introduced to the Israeli market proved to be a major catalyst in bringing about a bountiful harvest on otherwise arid land. Netafim proved that the centuries-old model of flooding fields could be replaced by something far more effective that actually increased crop yields significantly while contributing to soil and water conservation. Our systems leverage the most out of the available water supply, maximizing the efficiency of brackish or recycled wastewater and contributing significantly to saving our precious fresh water resources.
Can you discuss some of the trends in water sustainability today as they pertain to agriculture and tell us how Netafim solutions address these concerns?
To understand the politics surrounding water management today, you need to realize just how scarce the world’s water supply is. 97% of the water in the world is found in our oceans and seas and therefore unavailable for agricultural purposes or human consumption. Of the remaining 3%, two-thirds are unreachable, locked in the frozen wastelands of the earth’s glaciers and polar icecaps. That leaves a mere 1% of the world’s fresh water for everything else – from the basic need to drink and bathe to growing crops and irrigating our public parks. Considering the growth of the world’s population and the ever increasing demand for food it’s not difficult to comprehend the strain on the world’s water supply and the urgency that needs to drive the efforts for its conservation.
Agriculture is by far the biggest culprit in water mismanagement. 70% of the available fresh water supply goes to agriculture. Of this, 88% is still delivered through the ancient method of flooding – a gross excess that we simply can no longer afford if we wish to save the future of our planet. Flooding is more than wasteful, it’s inefficient and harmful. A flooded field is a field with diluted natural nutrients that subsequently requires more fertilizer which contaminates the soil and then seeps into underground water wells. And crops that grow in a flooded field expend a lot of energy in spreading their roots to gain hold in the soil, which adversely affects its quality, nutritional content and flavor.
Drip irrigation has a significant bottom line impact: more yield per acre, better quality crops, far less water consumption and significantly reduced damage to the environment. On a per hectare basis, an onion crop grown using a Netafim irrigation system will provide 42% more yield, use 50% less water and even reduce time to harvest by 20%. Cotton fields grown with drip irrigation increase their yield by 25% and reduce water consumption by 25%. In essence, there is virtually no cultivated crop that doesn’t stand to gain considerably from drip irrigation.
At Netafim, we see drip irrigation gaining a strong foothold in many key regions and influencing trends. We have a growing business in India and China where the governments are currently very active in subsidizing CAPEX investments for migrating to drip irrigation systems. We are seeing a growing demand for lo-tech drip solutions in Africa, where even a rudimentary adaptation of our technology can transform yields and boost rural economies dramatically. We’ve also seen growing demand for our systems in Australia, which has endured close to a decade of successive drought, and California where water is consistently scarce and brackish.
Discuss your foray into the bio-energy market. Is it merely an adaptation of your core technology to a new market or does it require a whole new area of knowledge and product development on your end?
Drip irrigation is a developing science. Every crop has its own behavior and unique challenges that we need to address. So we invest a lot of research dollars into maximizing drip irrigation for every crop and ecosystem. That’s how we expanded into the greenhouse market and that’s how we have successfully moved into the bio-energy market. Biofuel crops require huge tracts of land which naturally present serious irrigation challenges. We discovered best irrigation practices for sugarcane – one of the more sought after biofuel crops – and have managed to achieve impressive results: 170 tons per hectare as opposed to 120 tons with conventional flooding methods and a water savings of 40%. We are never content to rest on our laurels; we’ve even developed a successful drip irrigation solution for rice paddies which has the potential to totally transform how that water-intensive crop is grown.
Do you encounter barriers of entry in any of your target markets due to cost or technology/system preference?
Installing drip irrigation systems are exceptionally cost effective for both small and large scale projects. On average, the return on investment in migrating to a tailor made Netafim system is between two-to-four years. Clearly, financing any venture of this nature may be problematic if there are no available resources or investors, but that is no more a barrier of entry here than in any other industry. And given the fact that government subsidies for drip irrigation are becoming more and more prevalent because of its inherent cost efficiency and positive environmental impact, we find that we are welcomed in both developed and developing markets.
How difficult is it for you to stay ahead of the competition in terms of R&D investments, IP development and market share?
Netafim is way ahead of the curve in terms of R&D, IP and services. We pride ourselves in coming up with creative approaches in leveraging our technology in the cultivation of virtually all major food and biofuel crops. Our professional team of agronomists is onsite to ensure that a system is properly installed, implemented and monitored. No one can compete with us in terms of providing farmers with a complete working solution. That’s why by and far we continue to command the largest market share in the global sustainable ago-irrigation industry – a position we have maintained since we arrived on the scene in the early 1960s and have no intention of relinquishing.
What are the most compelling arguments you can give to investors to maintain Netafim in their portfolios as opposed to other sustainable water solutions companies?
We have managed to maintain the number one position in the sustainable irrigation market for four decades because of our unwavering dedication to addressing the diverse needs of each and every crop and our commitment to the conservationist “grow more with less” approach to water resources. We don’t cut corners on research and product development; corn behaves differently than tomatoes or sugarcane and each deserves to be studied properly so that the drip irrigation system can serve it with optimized efficiency and resource management. The heritage of the drip irrigation revolution can be clearly traced to Netafim and so, I believe, will its future trends and innovations be defined by our efforts.
Netafim Website