Home » Is Smart Irrigation a Smart Investment? The Financial Prospects

Is Smart Irrigation a Smart Investment? The Financial Prospects

by Victor Adeyemi
financial-prospects-of-smart-irrigation-systems

Water is big business, and it has been the lifeblood of agriculture for centuries. However, the traditional irrigation systems we’re familiar with are not efficient or sustainable. 

As we look towards 2025, the demand for food will double due to population growth. To address this challenge, the agricultural industry is turning to innovative solutions. One promising development is smart irrigation.

In case you missed it, smart irrigation systems use advanced technology like sensors and data analysis to manage water usage on farms precisely. 

So, what’s the financial prospect for smart irrigation systems? Let’s dig in! 

Global Smart Irrigation Systems: Market Overview  

How big is the global market for smart irrigation? Let’s take a look. 

Smart-irrigation-market
Source: SNS Insider 

Market Value  

The smart irrigation systems market has seen consistent growth over the years. This trend is expected to continue, with a projected Compound Annual Growth Rate (CAGR) of 14.2% between 2023 and 2030.

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The market was valued at USD 1.6 billion in 2022 and is expected to reach USD 4.0 billion in 2030. 

Within the smart irrigation market, agriculture is the dominant player in terms of end-use. This sector held over 35% of the total market value in 2022.  In other words, farmers are currently the primary adopters of smart irrigation technology.

Market Dynamics

Some factors are responsible for this growth. Here are the key drivers: 

  • Growing demand for water conservation and the need for sustainable water management practices.
  • The development of new sensors, data analysis tools, and automation technologies is making smart irrigation systems more powerful and accessible.

Market Segmentation by Region 

market-segmentation-by-region-for-smart-irrigation

Here’s a simplified breakdown of how different regions are playing key roles in its growth: 

  • North America: As of 2022, North America holds the lion’s share of the market. It makes up over one-third (36%) of the total demand for smart irrigation systems.
  • Asia Pacific and Europe: Combined, these regions account for nearly half (just under 50%) of the global market in 2022. Europe itself contributes a significant portion (over 24%) to the demand.
  • Rest of the World: Latin America, the Middle East, and Africa collectively make up the remaining portion (14%) of the smart irrigation systems market.

Key Players in the Smart Irrigation Industry 

As seen, the global market for smart irrigation is booming. Now, let’s check out some of the players in the sector:

1. Netafim (Israel) – World Leading Irrigation Company

Netafim
  • Smart Irrigation Solutions: As a pioneer, Netafim transformed the irrigation industry by introducing drip irrigation technology in 1965. Also, the company specialises in precision irrigation solutions. This makes Netafim the world’s leading irrigation company.  
  • Year Founded: 1965, in the Negev desert, Israel.
  • Financial Success: Netafim has a billion-dollar revenue-generating status. In 2016 alone, their sales reached $855 million. 

2. The Toro Company (US) 

The Toro company
  • Smart Irrigation Solutions: Toro® EVOLUTION Series Controller. This controller uses real-time temperature and solar readings, along with historical ET data, to automatically adjust irrigation schedules for efficient watering. 
  • Year Founded: 1914 (Bloomington, Minnesota)
  • Financial Success: The Toro Company thrives in the U.S. market by offering various products beyond smart irrigation systems. 

This includes equipment and services for turf maintenance, landscaping, and even snow and ice management. The company’s sales reached $4.55 billion in 2023. 

3. Rain Bird Corporation (US)

Rain Bird Corporation
  • Smart Irrigation Solutions: Rain Bird provides various irrigation products like smart controllers, rotors, valves, and central control systems to save water efficiently. 
  • Year Founded: 1933 (Glendora, California) 
  • Financial Success: Rain Bird has received over 450 patents globally. This includes the first in 1935 for the original horizontal impact sprinkler.

4. Hunter Industries (US)

Hunter Industries
  • Smart Irrigation Solutions: Hunter offers smart irrigation products such as controllers, sensors, and software for efficient water management. 
  • Year Founded: 1981 (San Marcos, California)
  • Financial Success: In 2016, Hunter Industries acquired Senninger Irrigation. This move strengthened its presence in the agricultural irrigation market.

Financial Prospects and Opportunities for Investors

The financial prospect of smart irrigation systems is promising. These create compelling investment opportunities for investors looking to enter the irrigation space. 

Here are some specific areas of opportunity:

  • Market Boom: The market is expected to reach USD 1.6 billion by 2033. It’s predicted to grow at an average annual rate of 14.8%. The rapid growth means big investment opportunities.  
  • Africa: Africa has tons of farmland but lacks irrigation tech. Investors can help by providing or financing smart irrigation solutions for African farmers.
  • Technology Innovation: There is a need to create more efficient cutting-edge sensors, data analysis tools, and automation for smart irrigation. This alone is a big investment for start-ups. 
  • Service Providers: As more farmers use smart irrigation, businesses offering installation, maintenance, and data analysis services will be in high demand. This is a massive opportunity for investment.

How Farmers Can Benefit from Smart Irrigation Systems 

benefits-of-smart-irrigation-systems-to-farmers
Source: Depositphotos

As we shift focus to the primary beneficiaries of smart irrigation systems, what do farmers stand to gain? 

  1. Smart irrigation systems target water efficiency by delivering the exact amount of water a crop needs. This not only reduces water waste but also improves crop yields.
  1. Precise water delivery leads to healthier crops and higher yields.
  1. Also, the system can automate watering schedules. It frees up valuable time for farmers to focus on other tasks.
  1. In addition, sensors and software provide valuable data on soil conditions, weather patterns, and water usage.

Current Challenges Faced by Smart Irrigation Systems

Smart irrigation systems require an initial investment in technology and infrastructure. This can be a barrier for smaller farms with limited financial resources.

Moreover, the system often relies on reliable internet connectivity to function optimally. In rural areas, this can be a challenge.

However, these challenges are not insurmountable.  As the technology matures, costs are expected to decrease.  

Government initiatives and training programs can help farmers bridge the knowledge gap. Additionally, advancements in low-power communication technologies are improving connectivity options for remote locations.

Final Thoughts 

The global push towards sustainable agriculture has positioned smart irrigation systems as a win-win for farmers, the environment, and Investors.  

While some challenges exist, technological advancements and increasing awareness are paving the way for wider adoption. So, is smart irrigation a smart investment? Absolutely!

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