Blooming Deserts Turn Israeli Water Industry Into Money Magnet
SECRET is DRIP IRRIGATION!
By Tal Barak (Bloomberg)
At
the end of a road winding through Israel's Negev desert, the entrance to
Kibbutz Hatzerim is flanked by jojoba shrubs
jutting from the arid earth. The grove is the result of drip
irrigation developed by Israeli engineer Simcha Blass
in the 1960s that enabled the kibbutzniks to farm the desert. The company
they started, Netafim
Ltd., has sold the product in 110 countries from
Germany to Peru. THE US DIVISION is ABOVE ^ ``The
founders were living in the middle of the desert and saw one agricultural
failure after the other,'' Naty Barak, 64, a director at Netafim, said
at the kibbutz visitors center. ``Back then it was their problem, but now
it's a global necessity.'' It's the best skin
lubricant out there, ditto machine lubricator. See: JOJOBA
MARKET STUDY
Today, some 300 Israeli companies make equipment to deliver water or purify it with lasers or diffusion, putting them in a position to profit as climate change, population growth and food shortages strain supplies. With agriculture accounting for about two-thirds of global water use, the Israeli government predicts overseas sales of the technology will top $10 billion by 2017.
As a result, the businesses are attracting investors. Amiad Filtration Systems Ltd., which will help manage sewage treatment at the Beijing Olympics, is up 49 percent in the past year in London, giving it a market value of about $75 million.
Deere & Co., the world's largest maker of tractors and combines, on June 5 agreed to buy Israel's Plastro Irrigation Systems Ltd., Netafim's main competitor in agricultural irrigation, for an undisclosed sum.
`Track Record'
More than 1.1 billion people, mostly in Africa and Asia, don't have clean drinking water, according to the World Health Organization. Global food prices, meanwhile, surged 57 percent in March from a year earlier, United Nations data show.
``There is a growing lack of water in the world, and people are realizing now that it's an issue that's gaining momentum,'' said Nir Belzer, managing partner of Tel Aviv-based Gaon Agro Industries Ltd.'s $65 million clean-technology fund. ``In Israel, there's already a track record for water companies.''
Belzer's fund invested in closely held Desalitech Ltd., a Tel Aviv-based company that invented a way to take salt out of water using 20 percent less energy than standard reverse osmosis.
Amiad, founded 45 years ago on a kibbutz, developed what it calls ``suction scanning,'' a new way of filtering pollutants from water. It has a contract to remove iron from drinking water in Ramenskoye, a town near Moscow.
Atlantium Technologies Ltd. uses ultraviolet light to zap deadly organisms, a method employed by Coca-Cola Co.
`Conservative Market'
Two-thirds of Israel is desert. In the Arava region, south of Hatzerim, the average annual rainfall is less than 50 millimeters (2 inches). Wastewater there is cleaned for drip irrigation to grow fruit and vegetables, 80 percent of which are exported to Europe, Barak said.
Israel's Water Authority started a countrywide campaign in July to conserve resources as the Sea of Galilee, the main source of drinking water, dries up.
Israeli companies still face challenges finding investors and developing sales. While demand for water is high, few customers are willing to commit to new products, said Oded Distel, director at the Ministry of Industry, Trade & Labor.
``Israeli water-technology companies are dealing with a very conservative market that isn't always tempted to try the most innovative solutions,'' Distel said. ``Municipalities around the world are hesitant to try a new technology.''
With Netafim's system, farmers bury pipelines underground, allowing them to drip water and fertilizers directly onto the roots of their crops through devices that control the pressure and quality of the liquid.
Going Global
The company expects to double sales within a few years, according to Chief Executive Officer Ofer Bloch. Sales increased 25 percent to $500 million in 2007.
``An amazing agronomic knowledge has developed in Israel in the past 40 years, which we are now selling to the world,'' Bloch, 48, said at his Tel Aviv office.
One Netafim customer, Sociedad Agricola Drokasa SA in Peru, uses 10,000 miles of drip irrigation hoses. The company, known as Agrokasa, picked Netafim 12 years ago when starting production of avocados, asparagus and grapes.
``We contacted Netafim because we weren't just looking for hose, plastic or dripper suppliers, we were looking for a partner in technology,'' Jose Chlimper, Agrokasa's chief, said by telephone from the company's base in Lima.
The global water industry, which includes waste treatment, valves, pumps, filtration and desalination equipment, is worth about $400 billion, according to Francesca McCann, an analyst at Stanford Group Co., a Washington-based research company.
``There was little incentive to conserve water, but now with rising commodity prices and the climate change, that will boost demand for more efficient technologies,'' McCann said.
The market will reach $537 billion by 2010, according to Israel's Ministry of Industry, Trade & Labor.
At Kibbutz Hatzerim, surrounded by grass and trees, Barak displayed the first adapted hose used on the site.
``About 60 years ago, there was nothing here, only a dry wasteland,'' said Barak, a kibbutznik for four decades. ``This was the start of the development of a serious industry.''
To contact the reporter on this story: Tal Barak in Tel Aviv at tbarak@bloomberg.net
SEE: http://www.jewishvirtuallibrary.org/jsource/agriculture/aggrowth.html
http://www.jewishvirtuallibrary.org/jsource/Economy/eco3.html
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