Ag Automation: benefits beyond the obvious

Today, the demand for smart automation spans nearly every business sector, and agriculture is no exception. Organizations are challenged to make the most of every resource—capital, material and human—every minute of operation. Many ag business owners find that equipment financing not only enables them to expand, pivot and innovate their business models, but to do so with 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 by the International Institute for Applied Systems Analysis (IIASA). Equipment financing and automation enhance productivity and reliability, increase performance and reduce operating costs. Moving to automation and robotics have proven to be a good return on investment for ag-based businesses.

By automating equipment from field to export, a potato grower with multiple U.S. locations achieved better nutrient distribution, higher water efficiency and the ability to process a better yield of superior quality more quickly. Through automation, this company is also able to offer improved work/life balance and job satisfaction for its 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 ag-based business owners tend to shy away from automation because of the cost. Fear not, though! There are plenty of options to acquire the automation technology needed to allow businesses to grow, increase profits and remain competitive.

 

Financing benefits ag businesses

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 the “try before you buy,” option, keeping business operations nimble as owners determine the best strategy for their particular goals and opportunities. Other flexible financing advantages include:

  • Terms 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 piece-meal a strategy based on a constrained budget.

 

Why Invest Now

The continued adoption of automation across the U.S. has helped companies position themselves for growth, while improving resilience against economic disruption. According to research from consulting firm McKinsey & Company, successful implementation of connectivity in agriculture has the potential to add $500 billion in additional value to the global gross domestic product by 2030. That equates to 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. Immediately following the pandemic shutdown, automating processes became tantamount to survival for many businesses. Despite the tremendous loss and confusion COVID-19 imposed on our world, it also presented new opportunities. For some ag-industry businesses, this meant automating services and/ or creating 100% virtual systems; for others, it required pivoting to a new model altogether.

As we learn to adapt and adopt, however — to 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.

Despite these historically tumultuous conditions, businesses have proven remarkably resilient and resolute. Amidst this unprecedented disruption, however, there’s one factor that is equally tenacious and undeniably consistent: the rapid rate of technological advance.

 

Mark Thomas is SVP, West Region Director of Sales for Key Equipment Finance and can be reached at mark.h.thomas@key.com.

 

 

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. Key3 KeyCorp. All rights reserved.

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