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Making farmer businesses more resilient with smart investments

This year, mainly dominated by the COVID-19 pandemic, agricultural commodity prices have risen substantially. This primarily has been driven by central banks injecting liquidity in developed markets as well as supply shortfalls in South America and strong demand from China.   

More appetite to invest
For many farmers, higher commodity prices lead to higher income and likely more appetite to invest.  On top of it, the macroeconomic climate is very conducive to realize investments in capital goods considering low interest rates and negative interest charges for saving. Low interest rates enable affordable financing and keeping money on the account can be counterproductive considering rising inflation and the negative interest charges banks increasingly started to request on the deposit accounts. So how to use this unique momentum and take smart investment decisions? 

Smart investments can create flexibility, predictability, and peace of mind. But what is a smart investment knowing unprecedented times often bring discomfort, unclarity, volatility and vulnerability and might feel like trying to survive? 

The importance of efficient and effective food production
Smart investments should enable farmers to become more resilient and help them exploring new opportunities to strengthen and grow their business. For the agricultural market, sustainable farming offers lots of potential. Today, customer needs and demands are changing, food production should more than double due to growing world population, and increasingly stringent rules and regulations in support of sustainability are being set (e.g., new EU Common Agriculture Policy, or Biden’s Farm Bill in the US). More food must be produced, while less water, land and resources are available. Efficiency and effectivity are more important than ever. 

Marrying innovation and sustainability with better business results
A very relevant question popping up is: how can agriculture become more eco-friendly whilst continuing feeding the world? Following the Farm of the Future initiative from Wageningen University & Research and the Dutch farmers of the future, the answer lies in innovative production methods and cutting edge technology. Both request heavy investments. 
 
And although farmers are likely more willing to invest nowadays, it might still feel uncomfortable to dedicate resources to innovative techniques knowing developments and legislations change rapidly. 

Financing can take away this obstacle and make innovation accessible through monthly payments. This is allowing payment flexibility to match farmers’ cash flows and business requirements (e.g. only pay after harvest) and at the same time provides peace of mind through after sales- and all-inclusive solutions that overcome concerns about equipment reliability. In that sense technology, sustainability and financing go hand in hand as a sound, future-proof investment decision. 

All-inclusive solutions can be customized and can include, amongst others, extended warranty, service and maintenance and connectivity modules (e.g. on – and off-board management systems, and features like FUSE Machine Control helping to optimize the tractor usage). These bundled packages provide cost predictability with rates that include everything around one’s machine. Financial surprises are history and farmers can focus on their core business: improving the quality of their crops and yields. 

The impact of financing on agricultural business
Once farmers have their equipment running, and they are going into harvest season, they can do a ‘smart check’ including a free check- up of their equipment before season starts. This generally ensures prevention of technical hiccups during harvest season establishing flawless and efficient business continuity.

In fact, the impact of financing on agricultural business can be substantial. These solutions can enable farmers to benefit from innovative techniques improving their crops, harvests, revenues and at the same time diminish their impact on the environment.

Are you interested to learn how you can make your business more resilient for the future and become more efficient, effective, and sustainable today? Feel free to reach out.