D. Van Rooy, estate manager for Transvaal Sugar Ltd in South Africa, irrigates about 5,000 acres of sugar cane with 25 center pivots. Photo courtesy: Valmont.

Most large American irrigation manufacturers have a healthy presence in international markets -- both in the turf and agricultural markets. They have a clear picture about competitive market shares and the trends in different world markets. However, it's a much different story for smaller U.S. manufacturers. The international picture can get rather cloudy. If you are considering an entrance into international sales, this general overview of world markets might be just the thing to get you started and bring things into focus.

The first step in selling irrigation products in foreign markets is to get in touch with an international agent or distributor who can assess your market potential. Examples of international agents include Prodelco USA and Underhill International Corporation. Irridelco International Corporation is an international distributor that also does some manufacturing.

Another strategy is to forge an alliance with another manufacturer that has a strong presence in international markets. Foreign manufacturers often use this strategy for the U.S. market. Your international agent or distributor can definitely advise you whether or not this would be a good strategy for your company.

What are some of the components that lead to success in foreign markets?

"A strong relationship between manufacturers and distributors is vital," says Adam Skolnik, international manager for Senninger Irrigation Inc. "Another is technical competency. This is one of the things that gives American manufacturers an edge over their global competitors."

Another component to international success is a mission to remain committed to specific markets. "Companies can't be popping in and out of the market just because of the exchange rate. You've got to show you're in there for the long haul. Investments in local manufacturing are a key way to show commitment to a market," adds Tom Spears, president of Valmont Irrigation.

"Local representation in foreign countries is very important, with local people who understand the business in that country. You'll never be successful selling from a desk in the United States. The more of a presence you have in the market, the more of a market share you will have. It comes down to trust," observes Stefan Lagmark, director of marketing & sales for T-Systems International, Inc.

Gary Underhill, with Underhill International Corporation, believes communication is the key to international success. "You must answer questions promptly and accurately. Other than that, international sales are very similar to the U.S. principles -- much more than people might think."

Underhill says there are at least 75 to 100 countries where markets are very difficult to continuously monitor. "That's what international agents are good at doing. We can take a new product line and very quickly penetrate all world markets if the manufacturer has a mar- ketable product," says Underhill. "Once you leave the tier of very large companies, it is difficult for the small to medium manufacturers to market their products overseas on their own. It's virtually impossible for them to continuously monitor all available international markets. The full cost of international trips, with follow-up, is at least $10,000. That's why small and medium-size companies need to work through international agents."

Should smaller companies spend the large sums of money required to translate literature into other languages? Underhill says no. "By the time you get the literature done, you're ready for a new catalog. Literature geared for international markets is too expensive and frustrating for small and medium sized companies."

Barry Pedler, inter- national marketing manager for Hunter Industries. Photo courtesy: Robert E. Reaves.

What countries are the best targets for the turf market? Barry Pedler, international marketing manager for Hunter Industries, notes there are common themes that equal strong markets around the world. "There are three major features in strong turf irrigation markets: a high standard of living, dry climate and a strong distributor network."

Irrigation Stalls in Developing Countries

Although there are many bright spots around the world, modernization of irrigation appears to have slowed down markedly in developing countries. You might wonder what comes under the heading of modern irrigation technology. Modern irrigation technology includes three primary areas: surge irrigation, drip irrigation and sprinkler irrigation. All three are a huge step up from basic flood and furrow irrigation, which have been around since the days of the Old Testament.

Michael Schaff (left), Abu Dabi irrigation sales representative, discusses drip system with the property owner and the farm manager. Photo courtesy: Prodelco.

"It seems that things run backward in the world of irrigation," notes Tom Kimmell, executive director of The Irrigation Association. "The developing parts of the world have lost their interest in new irrigation projects, particularly major infrastructure changes. The governments and funding organizations in these developing countries are encouraging other kinds of programs. Yet, while this is going on, the developed world continues to expand irrigation conversion at an increasing rate." ( see chart)

"The main problem under consideration is the lack of interest in irrigation development, drainage improvement and flood control in many parts of the world -- especially in the developing countries," said Aly Shady, president of the International Commission on Irrigation and Drainage (ICID) at a recent world conference in Rabat, Morocco.

"There are a lot of areas of the world where the key problem is the availability of money," adds Tom Spears. "In these areas, we must look to leading organizations like the World Bank to help make investments and make funding available."

South Africa Leads African Market

In agricultural irrigation, much of Africa still relies on ancient forms of surface irrigation. South Africa, Zambia and Egypt represent 40 percent of the agricultural-irrigated land in Africa. About 70 percent of this land area is still under border, contour and furrow surface gravity methods. Only 30 percent of agricultural areas in these countries employ modern irrigation methods.

Government instability and poverty continue to be important reasons for the slow growth of agricultural irrigation in Africa, although water availability is probably the chief reason. "Most developed countries today enjoy a degree of abundance in renewable fresh water resources, while most developing countries -- especially those in Africa -- suffer from a lack of such resources," notes Mahmoud Abu-Zeid, president of the World Water Council and Minister of Public Works and Water Resources of Egypt

"Markets are booming in Tunisia and look very promising in Algeria, mainly because of privatization and new agricultural areas," says Hichem Dhane, with Dhane International/Capagri. "As for Tunisia, manufacturers from the United States, Israel, Spain, Italy, France and Greece have a market presence here."

Dhane says the Tunisian government is "gung ho" when it comes to irrigation. "They will subsidize 40 percent of drip irrigation and center pivot purchases. As for the landscape market, Tunisia has a great deal of landscaping at hotels, boulevards and resorts. The golf market is also strong, with ten new courses in the country. The commercial landscape/turf market is prompting growth in the residential sector."

South Africa is the standout in Africa, for both the agricultural and turf irrigation markets. "South Africa is a very good market for landscape irrigation; however, it's still a luxury, not a commodity. Freight, duties and exchange rate with the U.S. p>dollar continue to dampen growth here," says Pedler.

"Africa is a promising market, with the agricultural conditions very similar to South America. The limiting factors to growth are political stability and financial capacity to make investments in large scale operations. The bright spot is South Africa, where there are larger farms and a well developed market. The balance of Africa is project-driven, similar to Argentina in South America," comments Spears.

According to John Jordan, with Irridelco International Corporation, Zambia, Mozambique, Kenya and South Africa are important markets in Africa. "Import duties are fairly flexible in Africa; however, political and economic situations can change things rapidly," he says. "Although there is manufacturing base for drip and center pivot systems in South Africa, American companies can still compete based on quality."

"South Africa is technically sophisticated, subject only to long-term political circumstances. The area between Central Africa and North Africa is very spotty and often in less need of irrigation. In North Africa and Mediterranean countries, you see lot of intense irrigation greatly influenced by European manufacturers," advises Underhill.

Middle East -- Oil, Water, Politics

"The Arab Middle East is a reasonably mature market in terms of knowledge and penetration, with good local capabilities of handling modern technology. Ups and downs in this market have their origin in oil prices and the political environment," remarks Underhill. He says that Iraq and Iran, for example, were focal points more than 15 years ago and are classic examples of where political changes remove marketing opportunities.

The Middle East, particularly Saudi Arabia, has been a good market for Lindsay International, a division of Lindsay Manufacturing. "Over a 12 year period we've sold more than 18,000 pivots in Saudi Arabia alone," says Ed Enriquez, vice president of Lindsay International.

Water availability in the Middle East can be a problem. Pedler says Saudi Arabia, Kuwait and other Gulf countries have constructed several new recycled water and desalination facilities. "This improves water availability for the region, improves water availability for the region, creating new opportunities for turf irrigation sales," he says. "With oil prices down around $11 or $12 per barrel, countries in the Middle East are making substantial cuts on their investments," adds Jack Buzzard, vice president of Rain Bird International, Inc.

Egypt is the bright spot in the Middle East. Look for large growth in agricultural irrigation in Egypt during the next 30 years. With increasing population and overcrowding in the Old Valley and delta areas of Egypt, the country has embarked on a project known as the Southern Valley Development Project.

This project will involve the irrigation and colonization of an area to the northwest of Lake Nasser over a period of 30 years. The area will be supplied with water via a new canal known as the South Valley Canal. According to information from a recent international conference in Rabat, Morocco, a growth of nine percent per year is projected here.

"The Middle East is a limited and difficult market," observes Jordan. "Drip and center pivot irrigation equipment is now manufactured in Saudi Arabia, which equals local competition. The strong push into agricultural irrigation in the Middle East 10 years ago has died down." Jordan agrees that Egypt is the largest agricultural market in the Middle East.

"The Middle East really goes in several directions at the same time. Some countries are very dependent on oil prices, which really makes it really difficult to do anything today. However, countries like Turkey are looking to the future to manage their water resources," says Spears.

Australian Market Holds Bright Future

The potential for modern irrigation in Australia is enormous. American center pivot and drip irrigation manufacturers have established strong market presence here, proof of its importance. Even with the growth of modern technology, surface flooding methods are still very much in vogue to irrigate Australian farms.

"The Australian turf market has caught a cold from the Asian market," comments Pedler. "However, Western Australia probably has a higher percentage of homes with irrigation systems than the mature markets in the USA, such as California."

Jordan agrees that Australia is a good market; however, a strong local manufacturing base and high freight costs make it difficult for many U.S. irrigation companies to compete here. "The greatest amount of competition is probably in drip irrigation, with local manufacturers here. Local competition isn't a factor for center pivot, side roll or traveler products," says Jordan.

"There are several manufacturers here for agricultural irrigation and turf irrigation products, including Israel-based Netafim and American companies such as T-Systems International and Irritrol," says Underhill. "There are also Australian manufacturers of golf sprinklers, residential valves, controllers and valve boxes."

"Australia is very pro-USA. Import duties aren't too bad, either. However, import regulations are very tough here," comments Enriquez. "Australian farmers are installing a lot of computer control panels and weather stations to use with center pivots and lateral move systems".

On the down side, the exchange rate in Australia has caused price fluctuations of more than 20 percent. This gives local manufacturers like Irritrol an edge. "The Toro Company has an Irritrol manufacturing facility in the Adelaide area," says Rex Hansen, Toro's international irrigation marketing manager.

"Australia probably has the second highest GNP growth in the region, second only to China," comments Hansen. "Australia has sophisticated distribution channels and they're even seeing the effects of mass market retail from stores similar to Home Depot or Lowe's Home Improvement Warehouse."

South American Market Growth Impressive

"It looks like the trends will continue in South America to open up trade barriers. However, the biggest negative in this market is the economic roller-coaster that you see. Government intervention or government-stimulated programs in the irrigation industry have a major affect from year to year on how a company will do in certain countries in South America," explains Skolnik.

Trade barrier removal has greatly improved the situation in Brazil. "Prior to the removal of trade barriers, local manufacturers would copy foreign-produced products and manufacture facsimiles with inferior quality at high prices. When the import trade barriers were dropped, it forced the local manufacturers to produce higher quality products at more competitive prices," adds Skolnik.

Chile is an outstanding market for American manufacturers. Marcelo Quezada, with Agro Riego in Santiago, Chile, distributes products mainly from U.S. manufacturers. "The economy in Chile is stable, with an inflation rate of five percent that has remained the same for the last 10 years. Chile has an open and free market with Canada, Brazil and Mexico -- but not the United States.

The big story in Chile is the conversion from surface to drip irrigation, with more than 37,000 acres of new drip irrigation per year. Center pivot's growth hinges on the price of sugar beets, alfalfa and corn; however there are no more than 130 pivots in the entire country of Chile," Quezada says.

Argentina and Brazil are strong markets for Lindsay. "All the farms in Argentina are privately owned and the country has a very strong dealer network," states Enriquez. "Lindsay products have been manufactured in Brazil for more than 15 years under a licensing agreement. And without local manufacturing, growers would not be able to access the special financing program provided by the government, known as Finame. This program offers a long-term payment with low finance rates -- crucial to our sales success in Brazil," Enriquez explains.

The turf irrigation market in South America is growing. "Uruguay, Argentina and Chile are very strong turf markets in South America," says Pedler. "And as standards of living increase, sales will grow. These three countries have open import policies. Brazil is not as open on import policies, where interest rates were recently increased by 50 percent.

"The big question mark in South America is Brazil," reveals Hansen. "If Brazil's economy takes a downward turn, it could mean problems throughout the entire region, affecting Chile and Argentina." As for the golf market, Hansen says Argentina probably has two-thirds of all the golf courses in the Southern Cone of South America.

Although not technically a part of South America, the Caribbean turf market is up significantly because of the hurricane devastation. "Even with all the horrible destruction in the Caribbean, there is an up side to this tragedy. The hotels and resorts have used their insurance money to rebuild and upgrade their turf irrigation systems," says Hansen.

Mexican Market Reflects USA

In North America, Mexico is the new frontier for agricultural irrigation. "At the present time, about 92 percent of the irrigated land here still uses surface irrigation, which have an average of 55 percent efficiency," notes Jorge Kondo-Lopez et. al in their technical report entitled, "Irrigation Development in Mexico."

"Many of the larger growers in Mexico have already converted from surface irrigation to drip, with the second wave of growers in the beginning stages. Mexico is a very exciting market, growing at double digit rates," says Stefen Lagmark, director of marketing and sales for T-Systems International.

"Mexico is a market with a great deal of potential for center pivot technology. The major limiting factor continues to be financing. Many farmers simply can't obtain the credit needed to make the necessary financial investments," says Spears.

"Mexico has begun to shift from small parcel farms (known as Ejidos) to larger agricultural farming operations -- brought about by changes in the Mexican government. This will encourage market growth," comments Enriquez.

"The turf market in Mexico is still greatly undeveloped," observes Hansen. "Mexico's connection to the US market is actually stronger than Canada." Hansen says the Mexican golf market is still in the early developmental stages.

Europe Still Holds Opportunities

Although many experts consider Europe a mature market, the truth is that there are many new opportunities for growth in both the agriculture and turf markets. As an example, of the total irrigated area in France, 47 percent of this land area uses modern irrigation methods. France aims to raise its irrigated area from 5.8 million acres to 9.8 million acres by the year 2015 -- an increase of nearly 67 percent.

"The market in Western Europe has been fairly steady over the years. We see center pivots and linears going into smaller and smaller fields throughout this region. When you move to Central and Eastern Europe, future growth will be project-driven, requiring a large industrial partner or government assistance to get projects going," says Spears.

"Our traditional markets in Spain, France, Germany, Portugal and Italy will continue to grow, due to conversions from surface and hose reel systems. In countries like France, we compete with local manufacturers. And when the dollar is strong, this it makes it more difficult to sell. Fortunately, American companies are known for quality," comments Enriquez.

Romania looks to be the new frontier for Eastern Europe. "Prior to World War II, Romania was a large exporter of corn and other grains," notes Rodrigo Brenes, Eastern Europe regional director for Lindsay International. "They hope to regain that position. And because Romania is a country receptive to change with a good water source from the Danube, I think they can. The basic infrastructure for pumping is in place, built between 1972 and 1986."

Brenes says this is not the case in other countries in Eastern Europe, where the cost to build the irrigation infrastructure would be enormous. "One of the limiting factors throughout Eastern Europe is a lack of people with strong management skills."

"Hungary went through the same changes that Romania now faces. In terms of production, Romania's crop production potential can surpass Hungary ten-fold," he adds. "As you travel through Romania, there is still a great deal of land that sits idle. But things are changing, since the government has put a top priority on agriculture." Brenes says that land ownership in Romania continues to be slowly transferred from the government to private ownership.

What is the status of the European turf irrigation market? "Much of Europe is a sophisticated and mature market, especially Southern Europe. There are landscape associations in eight to ten countries in Europe," says Pedler. "However, landscape irrigation sales here depend a great deal on the weather. If Europe experiences a dry summer, sales are up."

Has Asia Bottomed Out?

With all the talk about the depressed economy in Asia, many wonder when this region will begin its climb out of the hole. "Asia still holds tremendous potential, even though it has slowed down from the recent economic upheaval," comments Jordan.

China still seems to be the star in Asia, with a great deal of investment by many different countries in the irrigation market. As for the rest of Asia, it is questionable when they will come out of the recession. Japan and South Korea show no significant signs of improvement. "China offers huge potential. We've been in China for more than 15 years. The Chinese are moving toward a need for higher quality American technology," says Enriquez.

Jordan says American companies are still learning how to sell in China, while at the same time China is learning how to buy from American companies. "China is a risky market, requiring a great deal of development work. And because it is such a huge market, it's almost certain to push the local market into manufacturing," comments Jordan.

"Right now, we still don't see huge growth in the golf market. We are still learning how to tap the residential and commercial markets in China. As the hotels and other commercial properties become more sophisticated, there will be a lots of opportunity in landscape irrigation for everyone," says Hansen.

"Business throughout Asia was driven by the golf market until the economic downturn in this region of the world -- particularly the Japanese golf market. When golf development slowed down it had a negative affect on landscape irrigation sales," says Pedler.

"Japan's golf market continues to be very conservative, although they have a very large base of sophisticated golf courses. With 2,206 golf courses in the country, the renovation market should be strong in Japan for years to come."

Hansen says Japan is now only building about 20 new golf courses. "Before the economic downturn, it was 100 new courses per year," he says. Hansen notes that the downturn in the Japanese economy has also impacted the golf market in British Columbia, Canada.

"There is a similarity between India and the Brazilian market. India is very protective of its local drip and sprinkler irrigation manufacturing base, imposing tariffs and duties on foreign imports. Another wrinkle in India's market is that most of the agricultural irrigation development is in the hands of small growers -- not the large estates," says Jordan. "Center pivot technology is making some headway in India, but they still have a very fragmented land ownership system with many small plots," notes Enriquez. "India's economy is opening up."

Irrigation Is a Two-Way Market

Not all the action in irrigation is U.S. exports. Companies in other countries have found it beneficial to establish U.S. subsidiaries. In the April issue of Irrigation Business & Technology, we will explore the phenomenon of Indian, Israeli, Italian, and Greek companies doing business in North America.