How Jain USA Has Quietly Built a High-Tech Irrigation Platform Through Acquisitions

Editor’s Note: The US business of Jain Irrigation has been slowly building up its technology stack through acquisitions in recent years. The India-headquartered, multinational manufacturer and distributor of drip irrigation, sprinklers, water pumps and more, came to the US in 1995 but only started to really make its mark in the early aughts. Aric Olsen, president of Jain USA, puts it down to the subsidiary’s acquisition strategy.

I caught up with Olson on the back of his most recent acquisition of ETWater, a weather data analytics and sprinkler control company using machine learning to measure the evapotranspiration rate of grass. Olsen walked me through the acquisitions Jain USA has made to date, the technologies he’s interested in, and where some agtech startups might be struggling. 

Louisa Burwood-Taylor: How long have you worked at Jain and what’s the background behind Jain in the US?

Aric Olson: I’ve been with the company for 12 years. I’ve been president for 11 of those years. I came to the company through one of the acquisitions called Aquarius Brands that the Jain Company acquired in 2007. Jain came to the USA to start an irrigation business in 1995 and they struggled for about 10 years getting market traction. They figured out if they were going to be successful in the USA, they needed to acquire companies that had management teams that were located in the USA and they started a series of acquisitions beginning in 2006.

The first one was called Chapin Watermatics. They were really the inventor of drip tape or drip irrigation, if you will. There is some debate about where drip irrigation was developed and we like to say that, for sure, the drip tape was developed with the Jain company called Chapin Watermatics way back in around the 1960’s.

LBT: What kind of irrigation technology did Jain have before then back in India?

AO: This is a really awesome story. I think it was 1984 or 1985 when the chairman and founder of our company, Bhavarlal Jain, B.H. Jain, came to the USA for an irrigation conference called the Irrigation Association. It was a water conference where all the people in the irrigation business got together and the conference was held in Fresno, California. During this time, mostly they were talking about sprinklers, but there was new technology that was coming onto the scene and it was drip irrigation. He saw that technology at the conference in Fresno, California and he literally brought that technology back to India.

We really credit our founder for him being the father of drip irrigation in India. He really started a revolution in terms of what could be done for irrigation in India, because traditionally in India small plots and everything were flood irrigated. From 1985 until today, we’ve been the leader in micro-irrigation in India by a long shot. It’s interesting that he saw that technology in Fresno at the very beginning and then he acquired several Fresno, California companies after that. It’s a neat full circle story.

LBT: So, what’s been happening more recently? Two years ago Jain USA acquired the Australian agtech startup Observant, which we reported on, but there have been quite a few more acquisitions. Can you fill us in?

AO: There was an acquisition out of Israel in around 2011 called Gavish Control Systems. They were a controller technology company for greenhouses and this was the first technology acquisition that was made and that was acquired by the company. Then in February 2015, we acquired what was really the soil moisture monitoring pioneer called PureSense Environmental. They were the soil moisture monitoring leader in the USA and they had number one market share and most of their market was for permanent crops like all the nut crops and the wine grapes, and in California.

PureSense was about a 12-year old company and had spent quite a bit of money building the technology, software, data, and a market for this soil moisture monitoring. It was an amazing asset that we were able to acquire and now today we’re sitting on 15 years of soil moisture data for the highest value crops in the industry. We have the best data set for soil moisture monitoring of anyone in permanent crops; it’s not even close.

After the PureSense success, we acquired Observant. You might say, “Well why did you buy Observant if you bought Puresense?” The unique thing about Observant is that it did not only monitoring in the field, but it also had control capabilities such as turning an irrigation system on from the cloud and to something about any issues detected.

Whereas PureSense was simply monitoring only. I thought I could take the best of both these companies, marrying the hardware from Observant with the software and the big dataset from Puresense. Overall this created a global footprint because we have Israel’s Gavish for control, Australia’s control and monitoring company Observant, and we have a significant footprint in the USA creating a very compelling story and offering. We’ve really integrated this into a global technology offering now. It’s pretty much the best in the industry.

LBT: What was the size of these acquisitions?

AO: We don’t disclose the size because both Observant and PureSense were burning a lot of cash. They were startups that put a lot of money in; between $30 million and $50 million they put into these companies. They were burning a significant amount of cash and they were funded from a variety of sources; people that really believed in doing something good for the environment and helping people save water.

At some point, they just ran out of the willingness to put out $5 million to $7 million dollars a year of their own cash and money. This scared some people but I saw some really awesome crown jewels here and thought that if I take these startup companies and I build on them or integrate them into Jain Irrigation, with a few changes I could get these companies that were losing say $5 million dollars a year into a break-even entity and really enhance the value of Jain Irrigation. That’s exactly what we did.

LBT: What about the more recent acquisitions in the last year or so?

AO: In May 2017 we acquired two of the largest micro-irrigation dealerships in the country; two of them at the same time (Agri-Valley Irrigation and Irrigation Design and Construction.) We were struggling a little bit to deploy some of our technology as there was a long sales cycle and there are long distances to travel to go and meet farmers, so I had this idea that if we had our own distribution, that we could more easily roll out our technology suite. So those two acquisitions were a massive market-disrupting event that really shook the micro-irrigation industry.

LBT: I would have thought you had good distribution before, but it was always through dealers, was it?

AO: Yes, but there’s so much technology out there and most of the dealers could not figure out how to make money deploying new technology to the farmer. They were making more money on construction so they didn’t really want to touch it. So, it was very difficult to find the dealers that were willing to spend the time and energy training the farmers on how to use and install the technology.

LBT: What do you mean by construction?

AO: We’re in micro-irrigation — it’s like outdoor plumbing systems — so the construction is where we’re putting in big PVC pipelines and drip irrigation lines for almonds, wine grapes, pistachios or vegetables. The idea is that when they do an initial construction design, if we can put this state-of-the-art technology in while the construction guys are in the field, I cut out all that selling. I cut out all the field trips and I save a lot of money so I’m able to deploy the technology in a much more rapid fashion. I get a better system to the grower where they can control and use less water and fertilizer, which is a huge benefit to the farmer.

LBT: And the farmer gets it all bundled into the whole construction kind of price and package?

AO: Correct. And the technology cost is a fraction of the whole deal, right? So, now I can get an amazing install base. I can get an amazing service base because we covered the whole central valley with these acquisitions, from Bakersfield all the way north to say, Durham or Pomp area, Durham, California or north of Sacramento.

LBT: And then your most recent acquisition was ETWater right?

AO: Yes. So, it might sound like I already had everything, right? I have monitoring and I got all this big data; I got control; I can turn the water on; why ETWater? The reason for ETWater is they have an amazing IP set where they’re taking weather data and analytics and measuring the evapotranspiration rate of the grass and then using that information to then send an irrigation schedule from the cloud down to the local controllers to turn water on and off. So, there should be no extra water that’s wasted.

What happens typically, if you look at most commercial landscapes, they end up really over-irrigating in a massive way. There’s water everywhere. There are leaks. And with the cost of water and environmental awareness, the big commercial companies that use ETWater, such as Target or banks, don’t want the public to see them wasting water on their properties.

LBT: What other types of technologies are you looking at?

AO: We might look at some businesses that have flyover technology like satellite, or drones, or fixed wings, flyovers. You probably know Ceres Imaging. Technology like that, where we can get a picture of the fields from above and integrate that with our soil moisture data. In 80 acres we might have two soil moisture probes, so if we can correlate the picture from above with some data points from below the soil and use that to make our proper crop irrigation models and then run it through the JAIN controllers that we’ve acquired.

Maybe some more distribution. We’re really looking for cutting edge technology too. You could probably see we’re not out making big splashes spending $50 million dollars on this technology or that. We’re looking for good technologies at a reasonable value that maybe are undervalued or coming on tough times that we see as really valuable technology.

LBT: Is there any tech out there on the irrigation side that you think is not going to work?

AO: Well, you know I might see one to two companies per month and you can see we’re probably making an average of one to two acquisitions a year, so I see a lot. And it’s not that the technology is crazy or I don’t think it can work, but sometimes it might be the business model.

Farmers are pretty smart and if there’s technology that is not going to work, usually it’s figured out within a couple years. It doesn’t get very far. Farmers are really, “get in the dirt and show me” people. If you get in the dirt and you show them something that works, it’ll live. If there’s too much venture funding in, I also see people having challenges. Because the ag cycle is slower and a little bit longer, it means the adoption’s a little bit slower and longer for new technologies. So, if there’s too much venture money coming in too quickly, and there’s too much pressure for growth, sometimes I see this can be a little bit of a problem and a challenge.

LBT: How are you coming across these companies that you’re acquiring?

AO: I’m really active in the space. I’m a former president of the Irrigation Association, which has 300 member companies and a lot come to the Irrigation Association shows. So I usually see the technologies there first. I also am a former chairperson of this organization called BlueTechValley that’s a startup incubation group on the Fresno State campus at the Center for Irrigation Technology where we host and incubate leading ag irrigation technologies and I actually saw PureSense there early on.