Crop prices and farmland values power irrigation forward
When you get in your car and leave the house, there are inherent opportunities and risks. As 2014 approaches, irrigation manufacturers face a similar situation. Wacky weather and cash on hand motivate farmers to invest in irrigation, but waning crop prices could bring the surge in sales to a halt.
"The interest in systems is bigger now than it was this time last year," says Neil Lunzmann, director of sales for Reinke Manufacturing Company in the east region.
Sales figures from Lindsay Corporation and Valmont Industries lend support. This spring and summer, irrigation sales grew 12% to 39% compared with the same period in 2012 for the two publicly traded irrigation companies.
Lunzmann expects crop prices might challenge irrigation sales toward the end of 2014, but for now, forward contracting will provide farmers with the money they need to invest in water systems. In Nebraska, 2014 might be a down year for pivot investments because demand there has been based on conversion of flood irrigation to pivots, and many farmers have already made the switch.
While there’s certainly a correlation between crop prices and pivot purchases, the irrigation industry doesn’t need to worry, if corn prices stay in the $5 to $6 range, notes Luke Wickman, district sales manager, T-L Irrigation Company.
"If you have access to water and you have flat enough ground … you’re going to irrigate," he adds. Farmers might have thought less about irrigating during the wet spring, but as dry conditions crept back into the Corn Belt in recent weeks, strong demand returned.
The trend of erecting pivots remains widespread, says John Kastl, product manager for equipment at Valley Irrigation. In Illinois and Indiana, with traditionally fewer irrigated acres than western states, more farmers view pivots as a form of crop insurance. In the southern U.S., mechanized irrigation brings the efficiency farmers need to pump from aquifers where usage limits are enforced.
Innovations flow. One trend that illustrates farmers’ drive to bulk up on irrigation is the tremendous uptick in corner arm sales. At Reinke, corner arm sales more than doubled in the 2012-13 fiscal year compared with the preceding year, Lunzmann says.
High land prices have made it economically feasible to invest in the systems, which cover between 20 and 50 additional acres that the primary span can’t reach. But the technology isn’t cheap: A new 1,300' pivot with a GPS-guided corner runs between $100,000 and $110,000, he says, while the same pivot without a corner runs between $65,000 and $70,000.
Reaching acres that previously were untouched by irrigation remains a focus at Valley, which introduced the industry’s first corner in 1974. The company’s latest technology, VFlex Corner, features an 8000 series span and an upgraded steerable drive unit. Options include three length choices, mechanical or electronic sprinkler sequencing, and wire or GPS guidance.
Providing farmers with the information they need to more effectively schedule irrigation means recording more data points. Lindsay recently introduced a suite of products, including soil moisture sensors, rainfall sensors and weather stations, that can be integrated with FieldNET, the company’s wireless irrigation management system, via cellular or radio communication. The soil moisture sensors are powered by solar energy and can be buried at multiple depths to track the water profile of the soil. In most cases, only one soil sensor is necessary per field, unless two or more different soil types are present, says Kirk Biddle, national sales director for Lindsay.
"We’re headed toward an integrated platform of plug-and-play add-ons that allow a grower to manage his operations more efficiently," Biddle says. Investment in variable-rate application remains a priority, as does using water resources wisely. Lindsay has purchased Claude Laval Corporation, a California-based company whose filtration technology cleans water pumped from rivers and ponds for optimal nozzle performance.
Bends in the road are inevitable for irrigation companies and drivers alike. But unknowns aside, farmers won’t be putting the irrigation industry in the back seat anytime soon.
You can e-mail Nate Birt at email@example.com.
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- October 2013