National Farmer’s Day is October 12. As problems such as inflation and supply shortages persist across the country, Americans should take this day to recognize the farmers we rely on for our personal and national well-being.
Inflation continues to touch every industry and facet of life in America, but one industry is particularly affected because of its business cycle and the need to finance operations: agriculture.
A scholar at the American Enterprise Institute recently stated that prices of a wide array of farm equipment are rising more than the average inflation rate. Indeed, agriculture industry experts say that used equipment prices are up around 30 percent and that farmers have to wait months for their equipment to get to them because of persistent global supply chain issues. Buying equipment seems out of the question for many farmers, and alternatives are needed to support these business operators who are essential to our nation.
Technology on the farm has progressed to include GPS, cloud-based data storage, electronic sensors and robotic equipment. Up-to-date equipment with this technology is essential to modern farming, but many operators cannot afford it without financing.
Moreover, many farmers are reluctant to invest in new infrastructure because there is a lot of uncertainty around costs such as fertilizer, seed and water. Production costs are up 14 percent over the previous two years. Fertilizer alone is up 12 percent over the last year, after a whopping 17 percent increase from 2020 to 2021.
Input costs are just one side of the coin; on the other is the revenue from production, which can go down dramatically when a farmer cuts back on input expenses. For example, I recently heard from one farmer who said that without the optimal amount of fertilizer for his corn, he could expect a 40 percent reduction in yield. Imagine similar effects spread across all food and feed crops and the corresponding effects on food supplies and prices.
It’s worth noting that financial challenges for American farmers can quickly translate into global humanitarian crises. While the United States is far more food secure than other nations and American farmers produce a surplus to help feed the entire world, it is worth noting that after falling steadily for a decade, acute food insecurity has increased in just the last two years from afflicting 135 million people in 53 countries, pre-pandemic, to 345 million in 82 countries today.
Thus, alternative financing options help farmers sustain their businesses and, in turn, the rest of the country and the world.
Farmers who cannot get money from a bank or those who simply do not want to deal with the rigidity of a bank seek other options for their equipment and input needs. When large banks don’t provide loans for farmers to cover input costs or equipment, farmers are restricted unreasonably from getting the resources needed to do their jobs.
Alternatives to traditional bank financing and outright purchase, such as pay-per-use, tailored payment options and flexible leasing options provide farmers a way to obtain the equipment and inputs they need to run their businesses.
These alternatives give farmers the power to access the newest and best equipment at reasonable prices and get the inputs such as seed and fertilizer they need to navigate these challenging economic times and continue feeding the world.
National Farmer’s Day provides an opportunity to recognize the importance of what farmers do and also think innovatively about how farmers can be supported as modern businesses.
