CropLife Retail Week: Special Netafim Edition

In this special edition of CropLife Retail Week, we talk with Mike Hemman, President of Netafim North America, about the future of precision agriculture. From AI-powered irrigation to scalable smart tech, Mike dives deep into how growers and retailers can make better decisions and boost ROI.

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*Below is a partial and edited transcript:

Eric Sfiligoj: Hello, I’m Eric Sfiligoj, editor of CropLife here today with a special edition of CropLife Retail Week with a special guest and Miss Lara Sowinski, who is my usual co-host on this program. This is your guest. So I will give the floor to you to introduce who we’re going to be talking to and what we’re going to be talking about.

Lara Sowinski: Thanks, Eric. We’re super happy to have, Mike Hemman, President of Netafim North America, and we’re super excited to have Mike because, what Mike is doing with Netafim, is similar to what we’re looking at content wise here at CropLife more and more. As many of you know, especially with the July issue of CropLife in your hands, we’re looking at smart tech and the way we’re looking at smart tech, which is how we define it, is kind of where Agtech is going next.

We’ve been talking about how AI is powering a lot of these things and all the great things that are happening. However, we still are not quite there. I think where we want to be when it comes to devices, connecting to each other, the interoperability, the connectivity. We’ve talked about IoT for a while, but so it finally feels like we’re moving into that space.

And so we’re looking at, what that means for software and equipment both. So, super excited to have, Mike on the program today and, maybe, Mike, before we get underway, just give us a quick overview of who Netafim is and what you guys do.

Mike Hemman: So Netafim is the precision agriculture business of a larger company called Orbia. And the primary thing that we do is drip irrigation. But we’re focused across a lot of precision agriculture within the drip irrigation. So we can think about the emission device being the drip line. But the really important part that we’ll talk a lot about today is how do you make the decision on how much water to deliver through that drip line?

When does that water go? What’s the duration of the irrigation cycle? And with precision agriculture and IoT technology and rural broadband, we now have the opportunity to get a lot more granular and our decision making process to be able to make better decisions that lead to, obviously, a reduction in input cost, but also yield and quality benefits as well.

LS: So yeah when I started up you know, you know talking kind of how we see it as the move from precision ag to what we are calling smart tech. But give us a little more context of how you guys are viewing it and what you’re seeing. And what does that mean to you?

MH: So to me, it’s just the ability to farm more smartly. I think we’re seeing really now a real transformation in how farming can be done. So we all know that we plant a seed. And the minute that that seed comes out of the bag, all we are doing is degrading the genetic potential of that crop. With every single decision that we’re making, whether there’s a weather issue, whether it’s an irrigation issue, whether it’s a crop input issue, whether it’s a pest disease outbreak, etc.

So it’s all about being able to manage information and make good decisions on that information. One of the things specific to irrigation is for years, we have been able to remotely turn a valve on and off, or we’ve been able to monitor what’s happening in the field. So we might be able to say the soil moisture is X, the weather is Y.

Then you take the predictive analysis part and say, okay, the weather is predicted to look like this in the future. What can I do differently? I think what’s really happening now, especially as we have more opportunity for broadband, is now we can take all of this information that we’re collecting, that site specific. We can overlay that in the cloud, and we can run that back against a crop model and use machine learning to say, based on the information I’m collecting in the field, the valve needs to turn on for this duration, and this will result in X amount of water being applied in the field, which has this impact on the plant.

So just the ability to be much more granular in decision making.

LS: I mean obviously we’re seeing and hearing the same things. I think somebody recently referred to it as precision ag on steroids, which is not a great description of it, but, nonetheless, there still are some gaps and some things we’re still working to address.

In your opinion, like where do those gaps still lie? What else do we need to kind of attack and address?

MH: I think the big thing is it’s got to be simple. And one of the biggest challenges we’ve experienced with any type of precision agriculture data is farmers are getting thrown so much information, and it’s not about the information, it’s about what do I do with it?

And the other challenge that often happens is everybody has their own platform and everybody has their own idea about how that information should be utilized or their own equipment. So you got a farmer that five years ago, let’s say, bought the latest and greatest new thing and just like us, we want to upgrade our smartphones and get the newest thing. Well, now when the upgrade comes, is the equipment that they bought previously, is it obsolete or can it be integrated in with the new system? So for us this is one of the things that is core to our strategy. What we put together anytime we approach automation is we are going to look for something that is sensor agnostic, something that we can launch, that will work with the existing hardware and the existing systems that farmers may have invested in.

Also, things that are expandable over time so they don’t have to buy the Cadillac on day one. They can dip their toe in the water, and they can do something that literally just does monitoring for right now in a very inexpensive way. And once they gain experience with that, if they want to upgrade hardware and they want to expand on their farm, they can move into something that now, instead of just monitoring, may actually give them a full crop model that allows autonomous irrigation.

So we’re not trying to push one thing on everybody. It’s a process where they can build as they go and where it also will work with existing products on their farm.

LS: And this like what is opens up opportunities for the ag retail folks who don’t have to me an opportunity to not just sell the products and provide the, you know, the services that go behind that.

But, you know, as you said, to kind of fill these gaps and to kind of expand their role and their value, quite frankly, to the growers. Are you seeing the same thing?

MH: Yeah, absolutely. I think I think this is all about partnerships and this is about long term partnerships. I’ve often used the word trusted advisor. Who is the farmers trusted advisor?

And if the retailer is basically just the place where people go to buy fertilizer or buy crop inputs, there’s not that much of an advisory role in that. They’re a storefront. If they can get to a position where they’re providing actionable data and information and helping a farmer make better decisions, now they’re a strategic partner. The other thing that can happen is now that you’ve got real time, on farm data, it opens up a tremendous opportunity for cross-selling opportunities so somebody can come to the farmer proactively and say, I noticed you’re low on. And I noticed this is what the soil sensor says. I’m suggesting that we make a fertilization application through the drip irrigation system next week. So instead of being a reactive situation, I want x amount of urea. What’s your cost? Now we can be very proactive in helping that farmer manage their crop and ultimately if we’re all doing this together, it’s going to again end up with higher yields and higher quality.

LS: And kind of part two to that question and I should mention too, we recently returned from our Tech Hub Live event, this is our annual expo and conference that we do, which as the name suggests is all about ag tech, particularly the technology that’s available today that people can learn about, go back to their operations, put it into play, and, you know, see, see the results.

But to me, ag tech is moving so quickly and again kind of the opportunities and when particularly when like you said, it’s you know there are ways to continue to acquire and invest in things that you don’t have to worry that are not going to be working. I mean, right now, I think we could make more prudent decisions about where we’re going to spend the money.

Do we get that ROI quickly? You know, it’s a tough farm economy. It could, you know, environment out there right now, obviously. Still, I think with lending and interest rates and so on. We heard a lot about that. You know, when we were at Tech Hub Live, compounded with ongoing labor shortages, climate change, the whole kit and caboodle.

How do, retailers and of course, the growers as well positioned themselves if they’re looking down the road, you know, whether it’s the short to medium term, 12, 18 months out or the 5 to 10, ten, ten year?

MH: I think there’s this is about return on investment. And I’m going to say I’ll break this into to two points.

I think the first point is the fundamentals I think are very easy. There is a return on investment when you’re making better decisions. So if you use data and you could potentially use fertilizer in a more efficient manner, there’s cost savings there. It, if it’s somebody that has to pay for water for irrigation, let’s say there’s cost savings.

If you use that water more efficiently so you can look and just do a mathematical equation and say, I save money by making better decisions using precision ag. Now the problem often comes. How long will it take for that return on the investment? Because the farmer is going to have to put out capital upfront to realize those savings long term.

And to your point, in a tough ag economy where we have high input costs, we have high interest rates and we have low commodity prices, people are looking to cut capital investments, not find new ones.

So the second part of what I would say is I think it’s really important, and I think it’s important for retailers to understand this as well, is to understand what cost share opportunities are out there, whether those are state funding, whether that’s federal funding.

There’s a lot of new funding that’s come in with the with the, great big beautiful bill. We’ll see more, I think, with the skinny farm bill, depending upon where this all goes, there’s always been this focus on equip. But there’s also a big interest in state governments as well. A great example I’ll share is in Utah. We are doing a lot of work with alfalfa farmers, moving them from flood irrigated alfalfa to drip irrigated alfalfa.

There is a 75% cost share in the state of Utah for precision agriculture. To utilize with drip irrigation to make these decisions. So if you understand where that cost share funding comes from, it can dramatically reduce the upfront investment. The other thing, specifically to irrigated acres where there’s opportunities as well, is there are big corporations like Google and Microsoft that are actually paying growers, providing cost share funding.

If that grower will upgrade their irrigation system to a more efficient irrigation system because that cuts down on the water footprint over a specific aquifer or region where these specific corporate partners are working. And we’ve had a lot of success with that. There’s a lot of information on our website about how we’ve utilized that program as well to get money to farmers.

LS: That’s awesome. I’m glad you brought that up. We’ll look into that as well, I guess. Just last thing, and you kind of alluded to a bit, what is net Netafim doing, like right now to help out retailers and growers?

MH: I think a lot of what we’re doing is around the training, with working with these automation tools and precision agriculture.

And there’s two parts of it. There’s the training around the system and there’s the training around how does it work. But there’s a business shift that needs to happen here as well, because traditionally, the way that these retailers have operated is they’re making their living based on a margin, which is essentially a markup on an input that they are providing to the farmer.

And as the input costs go down, and as the farmers are using less inputs, it’s tougher and tougher and tougher to make a living. The opportunity here is recurring revenue, and the opportunity here is a service-based model instead of a markup-based model. So we do a lot of work with our dealers as well in helping them with business development and understand how do we run our business a little bit differently when we’re selling a service instead of selling an input?

LS: That’s awesome. That’s great. So the website is Netafimusa.com.