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Irrigation Booms in Heartland

November 28, 2012
By: Ed Clark, Top Producer Business and Issues Editor
While producers have no control over the weather, irrigation allows them to control the amount of water their crops get. For most, the returns are worth the investment.  

High production costs persuade producers

Since 2007, irrigation has mushroomed in states such as Indiana, Illinois, Michigan, Ohio and, to a lesser extent, Iowa, tripling the growth rate from 1997 to 2007 in some cases. Increasingly, center pivots, pipelines and diesel engines used to power irrigation systems are emerging in areas that have historically relied on rains from above. Now, more farmers are tapping water that’s below.

It’s all about money and controlling the one important variable that is impossible to control: the weather. As such, irrigation has emerged as the latest and possibly the hottest new trend in the heartland.

"I don’t know where you can get the kind of return on investment that you get from irrigation," says Rex Ochs, a corn and soybean farmer in Grovertown, Ind. "My motivation to invest in irrigation? Push yield, get better income from the farm and boost my bottom line."

In the first phase of a long-term plan, Ochs irrigates 380 of his 1,400 acres. "I plan to irrigate more; I’m buying three more pivots," he says.

Though it seems almost too good to be true in hard-hit Indiana—near the epicenter of this year’s record-setting drought—Ochs averaged 220 bu. per acre corn inside the pivot overall, with yields on some of his best irrigated ground of 330 bu. to 340 bu. per acre. This compares to just 90 bu. per acre outside the pivot.

For first-time irrigators, Ochs advises buying from a dealership with an established track record of providing excellent service. "Talk with other irrigators in the area; it will prove to be valuable," he says.

"It costs about $800 per acre to grow a crop. That’s a large number to plant a crop and just hope for some rain."

Financials Make Sense. Cold, hard cash tells the story—nearly $1,000 per acre more income from Ochs’ irrigated fields in 2012. "I’m 43, and if ever there was a time to invest in irrigation it’s now," Ochs says.

He admits 2012 has been a highly unusual year, making the irrigationdryland yield spread incredibly dramatic. "In a typical year, I’ll get 70 bu. to 80 bu. per acre more from irrigation. Even using corn prices of a modest $5, that still comes to an extra $375 per acre. These are big numbers," Ochs says.

Assuming more normal years, it takes four to five years to pay for the roughly $1,000 per acre it takes to irrigate, factoring in all costs. However, if 2013 is another drought year, the irrigation unit will have paid for itself in two short years.

Underscoring Ochs’ experience are financials from all of the top four irrigation companies: Lindsay, Valley, Reinke and T-L Irrigation. All report brisk U.S. sales in 2012, a sizable share of it from states east of the Mississippi River.

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FEATURED IN: Top Producer - December 2012

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