Agriculture finance the way to boost the economy and food demand.
Do you know that there is an increasing need to invest in agriculture because of the extreme increase in the global population? Nonetheless, changing dietary preferences are growing among the middle-class market. The climate change and risks to impacts have brought to the demand to increase investment in agriculture. Indeed, the World Bank report stated that there is an estimated increase in food demand by 70% by 2050 and at least $80 billion annual investments to meet the needs. Moreover, the big message is that the private sector will play a considerable part in responding to this demand.
In the UK, the horizon of Brexit impacts to the increase of demand for UK goods and products. The opportunity is opening a market for farming and agriculture businesses. Hence, the market will need for farms to scale-up, such as upgrade of equipment, develop farm property and settle the bills to sustain the supply chain. But, the challenges among farm business owners is access to financing. Most of the banks do not appreciate and provide loan programs for farming businesses because of the high risks on the cycle of nature and potential disasters.
Consequently, farming could be tough vis-à-vis global competition. There are farm loans and agriculture financing that can help the farm business push the plans. Indeed, the farm business leader will need to know and tap the right agriculture finance program that fits your need. The loans could buy machinery, acquire building or land or working capital.
Dynamics of Agriculture sector and agriculture finance
Agriculture finance is attractive to farmers and farm business owners. The type of loan could be complicated. Accordingly, the UK government give the recognition that the farm sector needs a high level of investments. So, ignoring the need to provide sufficient policies, regulations, and access to credit funding will be a significant threat to the farm sector, food supply, and the economy at the macro level.
Since the financing requires a specialists knowledge-based lender, then the lender has to be willing to dig-dip and understand the dynamic agricultural activities and factors that affect production and profit. Although loan programs will have to consider even environmental factors that can affect productivity and profit.
There is a need to have to understand the rural property and rural business. Thus agriculture loans are not a “one-size-fits-all” program. Therefore a lender prides on working with agriculture experts to fit-in loans and system to agricultural valuation, security and restructuring to ensure an informed and fair decision.
Conventional agricultural finance and how business owners maximize the funds
- I am acquiring agricultural property and land for grain and feed storage, grain sheds, grain dryers, Bulk sheds, crop storage, silos, chicken sheds, cattle housing.
- Farm owners will use capital to diversify the increase of revenue and reduce risk
- Development, renovation or repair of property to appreciate wealth and generate additional profit
- Establishment of renewable energy projects on the farm. Some innovative example of this is the implementation of anaerobic digesters. Turning wastes into revenue is an excellent source of additional profit and added value to farmland. Farm-based renewable energy is attractive to lenders. The funds are easy to access and provide technical support
- Enhance cash flow by boosting the strength of the working capital to address issues of late payments.
- Livestock financing is also accessible among lenders, especially when linked to renewable energy. Depending on the market demand, the banks will provide affordable and flexibilities to farm owners.
- Fund the business recovery and restructuring
- Hence, some lenders provide loans to tenant farmers to be able to buy the land they till over the years. The basis of the loan the open market value of the property.