Hoosier Banker 33 just begun. A recent study by McKinsey & Company ranked 22 industries in terms of how well each industry uses data and technology. Agriculture was ranked dead last: 22 out of 22. This shows the gains from investing in these processes may be substantial given the transformation seen in other sectors of the economy. The Farmer of Tomorrow In this rapidly changing environment, farmers are not sitting idly by. Attitudes toward technology along with adoption of certain practices have increased. Farmers use data to increase efficiencies of their farms and protect profits in competitive markets. A recent study from Purdue University found that some farmers are using as many as eight data platforms to help manage their farms. They are hiring outside consultants, using recommendations from their input suppliers, as well as educating themselves to make these decisions. Farmers are increasingly focused on the bottom line. It used to be said that agriculture was built on relationships. While relationships are still important, however, they are not the priority for a lot of farmers. In Purdue’s most recent Large Commercial Producer Survey, only 15% of farmers indicated the relationship was the deciding factor on where they conducted their business. Fifty-five percent of farmers said product performance, or the value they got, was the most important attribute when they decided who to do business with. This group of farmers that have high business acumen and are willing to adopt new practices is a growing segment of the U.S. agriculture industry, and one that is expected to grow in the future. As an example, this past November, I spoke with a dairy farmer who wanted to install video cameras. When the farmer mentioned this, I at first thought this was for security purposes, and while that was a secondary benefit of this initiative, I was ultimately incorrect in my assumption. The farmer wanted consumers in the grocery store to be able to have a live feed of the dairy. This is similar to the scannable code on the turkeys, but provides much more transparency. This farmer, not the consumer, was pushing for transparency to provide more value to the product – incredible. What does this all mean for the banks who lend to agriculture? First, there is going to be increased uncertainty in the future. Adoption and change always means risk. There are going to be farmers who fail to achieve increased value from this change, and there will also be farmers that may not be able to adapt at all. There will also be home runs. Does this mean we need to change how we score risk for farmers? Possibly, but it does mean that a forward view of the supply chain is needed for a comprehensive risk assessment. Secondly, farmers are less focused on the relationship and instead want to know how their business partners bring value to their farming operations. As mentioned earlier, this does not mean that relationships are not important, but they are not the deciding factor for a farmer choosing to use your bank. Lastly, farmers are increasingly tech savvy. As stated earlier, some farmers are using up to eight different technology platforms to manage their farm. I believe that banks can tap into these data platforms in the future. I know of at least one bank that has partnered with a data platform. The bank helps support the fees for the farmer to use the application to better manage the farm. In return the bank gets a better assessment of the risk the farm is undertaking with its production practices. It’s a win for both the farmer and the bank. Farmers are going to need financial products to meet and adapt to the changing agricultural economy as they purchase new technologies and adapt to consumer demand. It is my belief that even with the increased uncertainty, there is a great deal of opportunity to service and help farmers achieve their goals. HB Some Cybersecurity Superheroes get to sleep at night. infotex ISO siem.infotex.com movies.infotex.com ISO z z z z z z z z
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