By Andrea Mowers, ARA, and Danielle Schinke, KeyBank
Today, the demand for smart automation spans nearly every business sector. Organizations are challenged to make the most of every resource—capital, material and human—during every minute of operation. Many ag business owners find equipment financing not only enables them to expand, pivot and innovate their business models but also achieve increased profitability, speed to market and stakeholder satisfaction.
Global food demand is expected to increase by 35% to 56% between 2010 and 2050, according to a study conducted by the International Institute for Applied Systems Analysis. To help meet the growing demand, equipment financing and automation enhance productivity and reliability, increase performance and reduce operating costs.
Moving to automation and robotics has proven to be a good investment for ag-based businesses. By automating equipment from field to export with the help of a trusted farm adviser, a potato grower with multiple U.S. locations may achieve better nutrient distribution, higher water efficiency and the ability to process a higher yield of superior quality more quickly. Automation also may improve work-life balance and job satisfaction for employees.
Creative, lucrative ideas are abundant among business owners in all industries. Finding the capital and resources to implement them, however, is often a roadblock, and agribusinesses may shy away from automation because of the cost. Fear not, though! Plenty of options exist to acquire the automation technology needed to allow businesses to grow, increase their profits and maximize their competitiveness.
Financing Benefits
Financing does not require large cash outlays up front. Fixed monthly payments spread over time free up cash and working capital for other expenses or business needs. In addition to enhancing cash flow, financing improves budgeting and forecasting.
Leasing automation assets offers flexibility for ag businesses, allowing them to use the “try before you buy” option. It also keeps business operations nimble as owners determine the best strategy for their particular goals and opportunities.
Other flexible financing advantages include the following:
- Terms that are tailored to align with budget and seasonal revenue requirements
- Add-on features to support scalability and expansion
- Mid-term upgrades to optimize new technologies and protect against owning obsolete equipment
Financing also offers the ability to bundle all related costs—equipment, software, installation, training and even consulting fees—into one payment plan. This enables business owners to acquire the total solution they need now rather than try to form a piecemeal strategy based on a constrained budget.
Why Invest Now
The continued adoption of automation in the U.S. has helped companies position themselves for growth and improve their resilience against economic disruption. Research from consulting firm McKinsey & Company reports successful implementation of connectivity in agriculture has the potential to add $500 billion in value to the global gross domestic product by 2030. That’s a nearly 10% increase from the industry’s expected total by the end of this decade.
What New Normal?
Since 2020, the trajectory of business growth has been anything but a straight line. Following the pandemic shutdown, automating processes became tantamount to survival for many businesses. Despite the loss and confusion COVID-19 imposed on our world, it also presented new opportunities. For some ag industry businesses, this meant automating services or creating 100% virtual systems; for others, it required pivoting to a new model altogether.
As we learn to adapt to and adopt new technologies, infrastructure and even work-life balance, new challenges continue to emerge in an unprecedented, unpredictable pattern. U.S. businesses and consumers have been on a roller coaster of cyclical, complex activity for 30 months with no sign of certainty ahead.
But despite these historically tumultuous conditions, businesses have proven to be remarkably resilient and resolute. Amidst this unprecedented disruption, however, one factor is equally tenacious and undeniably consistent: the rapid rate of technological advancement.
Interested In Hearing More?
Members of the Agricultural Retailers Association can take advantage of a white glove needs assessment with KeyBank that helps you better understand daily financial operations and identify opportunities to grow your business more efficiently.
This document is designed to provide general information only and is not comprehensive nor is it legal, accounting or tax advice. KeyBank does not make any warranties regarding the results obtained from the use of this information. Credit products are subject to credit approval, terms, conditions and availability and subject to change.
