The Four Fields of Agricultural Asset Finance
The Four Fields of Agricultural Asset Finance
The UK farming industry plays a crucial role in our economy, food security, and environmental stewardship.
The NFU’s recent farmer favourability survey highlights the British public’s high regard for farmers and the
agricultural sector:
• 91% believe that farming is important to the UK economy.
• 89% feel it is important that Britain has a productive farming industry.
• 85% support increasing self-sufficiency in UK food production.
• 87% emphasise the importance of maintaining animal welfare standards in trade deals.
To meet these expectations and drive productivity, efficiency, and yield, many farmers are looking to acquire additional vehicles and equipment. Propel, in partnership with Farmers Weekly, conducted a comprehensive survey revealing that three-quarters of farmers plan to invest in new assets. These investments typically fall into four key categories, which we call the Four Fields of Agricultural Asset Finance:
1. Growth
Unlocking cash flow to power growth and investment
Asset Finance provides a strategic approach to acquiring equipment or vehicles without straining your company’s finances. This allows agricultural businesses to spread costs over time through manageable payments, preserving capital and improving cash flow. Asset Finance isn’t limited to new purchases; it’s equally applicable to used assets, making it a versatile option regardless of equipment age. This flexibility is particularly valuable in today’s market, where lead times for new machinery are often protracted. The fixed payment structure acts as a financial buffer, offering predictability amidst rising costs.
In addition, Asset Refinance is rapidly becoming a popular option amongst farmers as it releases hidden reserves of cash tied up in their existing machinery, while they continue to use them in the field.
2. Diversification
Generating new and profitable income streams
With shifts in the way farming in the UK is funded, many of Britain’s progressive and entrepreneurial farmers are exploring diversification to boost their incomes and profitability, in addition to providing opportunities for the next generation.
3. Innovation
Driving productivity through advances in Agri-Tech
The UK’s claim to be a champion of agri-tech investment is well founded. Propel ensures that farmers receive the finance they need to drive innovation, from purchasing robotic milking machines and automated herd management systems to automated crop sorting and monitoring and pesticide management.
4. Sustainability
Gaining efficiencies and moving towards Net Zero
In 2019, the NFU set a target for agriculture in England and Wales to reach net zero greenhouse gas emissions by 2040. In Scotland, the net zero target is 2045. We are seeing strong and increasing demand from farms to finance biomass boilers and other renewable energy assets, including solar PVs and anaerobic digesters.
Specialists in the Field of Agricultural Finance
With a 30-year track record in supporting British farming and with more than 50,000 business customers, Propel has the knowledge, understanding and experience to provide best-in-class asset-finance solutions to meet each farm’s requirements.
Propel’s dedicated agricultural finance team works closely with farmers every day and understands the challenges they face. So whether you are planning to finance a tractor, trailer or a robotic milking machine; or you are looking to diversify into activities such as renewable energy or deploying the latest agri-tech innovations - you can be assured that Propel will tailor the right payment structures to match both your cash flow needs and the seasonal considerations of your business.