The New Tech Gamers of the California Drought
Farmer Mark Borba is not trying to purchase a shiny new tractor this yr on the World Ag Expo in Tulare, California. He tends to some 9,000 acres of crops within the drought-stricken San Joaquin Valley, and about one-third of it is going to be pulled from manufacturing.
"I’ll wander across the grounds for an hour and see all of the stuff that I might like to purchase, however no approach am I shopping for something," stated Borba, who grows the whole lot from almonds and garlic to lettuce, tomatoes and onions. "We’re over-outfitted as a result of we have got gear to farm 9,000 acres, and we’ll in all probability farm lower than 6,000 due to the drought."
The Expo, which runs by way of Thursday, is the world’s largest outside farm equipment present. An estimated one hundred,000 individuals are anticipated to view the newest ag equipment and merchandise from 1,500 exhibitors, together with Deere, AGCO, Case IH.
However they are not alone: Nontraditional agricultural gear companies are additionally available, displaying off sensible water know-how, agricultural drones, dairy robotics and mechanized harvesting. Others, like AGCO, are amongst longtime gear suppliers which are selling new precision agricultural know-how on the present.
Robert Crain, AGCO’s senior VP and common supervisor of the Americas, stated the row crop equipment is the corporate’s "largest headwind now," whereas equipment tied to extra strong livestock sector "could be very, excellent. The hay enterprise, for instance, and up till very just lately, the dairy enterprise, has been good for us."
Competitors on the Expo is so fierce that there is speak about discounting this yr, notably for used tractors and combines.
"The used gear has been flooding the market," stated Charlie Pitigliano, who manages about 10,000 acres of farmland within the San Joaquin Valley. Pitigliano stated the lower cost of key row crops has led to some used equipment costs to say no by as a lot as 20 %.
Pitigliano, who grows wheat, corn and wine grapes, additionally blames the drought for the softer used farm gear market. "Farmers usually are not going to purchase gear if they will get by with what they’ve now," he stated.
Growth for some corporations
However the drought additionally has been a growth for corporations promoting know-how tied to water effectivity and moisture-monitoring methods.
Canadian-based mostly Hortau, which focuses on wi-fi, Net-based mostly irrigation administration methods, began ramping up its U.S. operations 1½ years in the past—and already, the California market now represents roughly seventy five % of gross sales. Hortau sells a so-referred to as tensiometer probe system, which it claims can save farmers as much as 50 % of water and enhance fertilizer effectivity to root zones.
"A yr in the past, issues have been tough as a result of farmers have been targeted on discovering the water, punching extra wells, and doing water offers with neighbors and issues," stated Joe Wiegand, a Hortau gross sales consultant. "Now everybody’s telling me, ‘I am prepared to take a look at the know-how and be water environment friendly and preserve that funding that I spent all that cash on.’"
Netafim USA, a provider of sensible drip and micro-irrigation gear to the agriculture market, is on the present and introducing a brand new versatile pipeline positioning system that helps growers spend much less on infrastructure. "The know-how is reasonably priced, and the return on funding is nearly speedy," stated Ze’ev Barylka, director of ag gross sales for Netafim.
The newest in ag drone know-how is also displayed. The drones permit farmers to create aerial maps to find soil stress and plot irrigation techniques and create extra environment friendly use of water, fertilizer and pesticides.
"We create new information you did not have earlier than," stated Mark Hull, proprietor of All Drone Options, a begin-up in Exeter, California. "The drone prices a small quantity in comparison with what it can save you."
The drone area is likely one of the hottest areas of funding right now for ag tech buyers, in accordance with Rob Leclerc, co-founder and CEO of AgFunder, an internet platform for buyers trying to get into the meals and agriculture know-how sector. He stated the ag drone area noticed $eighty two million of funding final yr, led by $25 million in funding going to Airware.
Leclerc stated ag tech funding is coming from enterprise capital based mostly within the Silicon Valley, in addition to the VC arms of massive ag corporations, plus personal fairness funds and sovereign wealth funds from Europe and Asia.
"We nonetheless have what you’d name a variety of sensible cash within the area," stated Leclerc. "Globally, everybody understands the significance of meals and meals safety and the position that know-how will play to take that ahead."
Jeff Daniels is a coordinating producer for CNBC, based mostly on the community’s Los Angeles Bureau. He joined the community in 1999.
Previous to becoming a member of CNBC, Daniels was leisure editor of monetary wire service Bridge Information and enterprise editor of The Hollywood Reporter. He was a information author for Monetary Community Community, a predecessor to CNBC. Earlier in his profession, he was a reporter and market columnist for Investor’s Every day (since renamed Investor’s Enterprise Day by day).
Daniels holds a bachelor’s diploma in journalism from California State College-Northridge. He graduated from the College of La Verne in La Verne, California, with an MBA in finance.