Exploring Crop Input Financing

As farming operations grow and input expenses increase, agricultural producers are searching for more alternatives to pay for their inputs. As a result of this growing customer need, there is an increasing trend toward crop input financing being offered by the manufacturer, as well as the agricultural retailer.

And we can expect this customer demand for such input financing options to continue to grow, as customers strive to better manage and align their crop cycles with cash flow. In fact, when structured properly, crop input financing can benefit all the players in the value chain: The manufacturer, the retailer and the customer.

Manufacturers and retailers see some significant benefits from offering input financing. For one, these types of financing offers can help manufacturers and retailers lock in a customer’s business earlier in the season; in effect, moving those purchases forward. Not only does that improve the seller’s cash flow, but it can also mean the competition is locked out from gaining that customer’s business. Cash flow is also enhanced, because the retailer can receive payment promptly, in some cases as soon as two business days from date of purchase. For accounting purposes, these purchases then no longer need to be carried on the books as an accounts receivable.

Jason Ward, BASF brand manager, discusses how and why BASF was attracted to input financing: “About five or six years ago, customers were coming to BASF, inquiring about financing purchases from BASF. It was retailer- and farmer-driven. The ability to buy early helps farmers better manage their input costs and then to pay at the end of the year, once they’ve harvested their crops.

“There’s a great benefit, too, for our retail customers,” he continues. “Our retail customers are able to receive the financing transaction … the payment … within two business days, which aids a retailer’s working capital.”

Tim Boals, Western regional manager for Wilbur-Ellis says: “We were first exposed to this type of financing with some of the brands we were selling. We began to realize it could provide Wilbur-Ellis with another way to customize our offerings to help better match our customer’s cash flow.  “This type of financing helps us further the opportunity to be viewed as a trusted advisor for the farmer,” says Boals. “You are never closer to an individual than when you are talking about money. We find it valuable to have the opportunity to work with the farmer and plan during a time of year when the farmer may not have the money to actually buy the product. So this type of financing has allowed us to sit down earlier with the farmer and work out a production plan, without the farmer worrying about how to pay for all the products his plan will require.”

The Customer View

Customers are experiencing benefits from this concept as well. One is flexible repayment options timed to cash flow. Manufacturer and retailer-sponsored financing programs typically offer flexible repayment options that best match the farmer’s cash flow. A good example of such flexibility is a “no payments, no interest until after harvest” program. Boals notes: “Crop input financing enables better planning, because it opens up the grower’s window of opportunity to obtain the product, helping them better match their cash flow situation.”

Kip Tom, who oversees, along with his family, a farming operation that spans several counties in northern Indiana, has been using John Deere Financial for his crop input financing. “It’s the service around the credit product that really differentiates one offering from another,” says Tom. “The ease of using that credit facility is most important to us. Sometimes, though, we can also get better terms, as well. We really appreciate the convenience and simplicity. The special terms we get are important as well.”

Keeping credit lines open for other business needs is also a valued benefit for producers. By acquiring their crop inputs using the manufacturer or retailer’s finance program, the producer is able to keep those dollars freed up from their operating line of credit for other needs.

Looking To The Future

What’s the future for input financing? Ward says: “I think one of the benefits from our relationship with our credit provider is that we meet quite frequently and discuss different ideas about what we are seeing in the marketplace. By sharing ideas and best practices, we can determine the best way to satisfy the changing needs of our farmers and retailers. I think it’s through those kinds of discussions that we continue to look forward and make improvements.”

Says Boals: “I would expect this type of financing to continue, and likely to trend up. We at Wilbur-Ellis are focused on the quality of the financing, developing financing programs where and when they will create the most value. So we all need to stay in tune with how we can use the financing to provide the most customer value.”

Adds Tom: “When I think about input financing, and I look at the future growth of our business, I see a greater demand for inputs, whether it’s seed or chemistry. That also comes with a greater demand to easily access funds to finance those inputs. We have to make sure we have the inputs here when we need them, and at a good rate.”

In the end, when using crop input financing, producers can benefit by having access to competitive interest rates and special financing opportunities at their ag retailer, saving them time and money, while better matching cash flow. For the ag retailer and manufacturer, input financing programs and supporting tools can help them more effectively market their products and increase sales.

Leave a Reply

Crop Inputs Stories

Soybean field
FungicidesValent Launches New Seed Protection Fungicide For Soybeans
July 16, 2014
The INTEGO SUITE System contains the first new, novel seed protection fungicide chemistry registered in 30 years by the EPA for protection against Pythium and Phytophthora. Read More
InsecticidesEPA Grants Besiege Insecticide Additional Approvals
June 18, 2014
EPA has granted additional registration approvals for the use of Syngenta's Besiege insecticide on sorghum, cereal grains and peanuts. Read More
HerbicidesArysta Touts Burndown Herbicide For Brome Management In Wheat
June 4, 2014
Arysta LifeScience North America recommends PRE-PARE Burndown Herbicide for effective brome management in winter wheat. Read More
HerbicidesFall Herbicide Applications More Effectively Manage Resistant Italian Ryegrass
May 14, 2014
Field studies show that a fall application of certain herbicides before weed emergence, leads to more successful crop planting and weed control in spring. Read More

Trending Articles

EquipmentSummer Show Preview 2014: Superior Sprayers Take The Field
July 3, 2014
In this final installment of our coverage of the major categories of Big IRON that retailers can expect to test-drive at this summer’s events, here is a look at 19 sprayers. Read More
Scouting a soybean patch at Green Valley Ag.
EmployeesCropLife Compensation Survey: Battling Talent Drain
July 2, 2014
Retailers too often lose employees to companies outside of agriculture, while recruiting efforts are most often limited to competitors and other ag-focused organizations. Read More
HerbicidesDow AgroSciences Introduces SureStart II Herbicide
June 16, 2014
The enhanced formulation has improved viscosity and increased stability under heat and controls more than 60 high-anxiety grasses and broadleaf weeds found in corn fields. Read More
HerbicidesBASF Investing $270 Million To Expand U.S. Herbicide Production
June 11, 2014
BASF has invested more than $270 million to expand herbicide production capacities in the U.S., including more than 20 new products to be launched over next two years. Read More
EquipmentGPS: 25 Years And Still Growing
June 2, 2014
The evolution of global positioning systems applications in agriculture remains ongoing as the technology hits a notable milestone. Read More
CropLife 10013 Key Acquisitions Pinnacle Has Made In The First Half Of 2014
May 29, 2014
The only thing that has reached a more frenzied pace than #plant14 might be the multiple acquisitions that Pinnacle Agriculture Holdings has made in the first half of the year. Read More

Latest News

Soybean Field
InsecticidesTranform WG, Closer SC Insecticides Receive R&D 100…
July 23, 2014
Dow AgroSciences has received the award from R&D Magazine for Transform WG insecticide and Closer SC insecticide with Isoclast active. Read More
EquipmentKinze, Raven Team Up On 4900 Planter Monitor
July 23, 2014
Kinze Manufacturing announces a partnership with Raven Industries to develop a standalone monitor solution for the Kinze 4900 series planter. With this new Read More
LegislationNew Farm Bill Continues To Confuse As Growers Await USD…
July 23, 2014
The new five-year Farm Bill eliminates many of the direct payments previously payed to growers and could benefit from USDA clarification, reports a Toledo Blade columnist. Read More
EquipmentPrecisionAg.com Relaunches With Responsive Design For M…
July 22, 2014
PrecisionAg, the worldwide leader in precision agriculture information and analysis, announces the launch of its completely redesigned website, PrecisionAg.com. Read More
FungicidesEPA OKs Two Willowood Fungicides
July 21, 2014
The EPA has approved Willowood Azoxy 2SC and Willowood AzoxyProp Xtra. two widely used broad spectrum, preventative fungicides with systemic and curative properties. Read More
Precision AgFarmers Learning Fast As UAVs Take Off
July 17, 2014
Farmers and others interested in how UAVs can be used in agricultural applications were able to learn more about the technology during the recent Precision Aerial Ag Show. Read More
CropLife 100Bobby Knight, Richard Petty To Highlight Ag PhD Field D…
July 17, 2014
Attendees at the July 24 Ag PhD Field Day at Hefty Farms will learn about the latest agricultural technologies, and get a chance to meet legendary sports figures Bobby Knight and Richard Petty. Read More
WebinarsUpcoming Webinars
July 17, 2014
Register for one of our upcoming Webinars or access our archive of past Webinars to view recordings of presentations that may be of interest to you. Read More
A finished Willmar 16-ton side-shooting tender.
TendersNew Production Facility Helps Willmar
July 17, 2014
In 1963, a group of businessmen started Willmar. Today, a half-century later, the company is one of the ag industry’s longest-running brands. Read More
FertilizerCF Industries Sells Carbon Credits To Chevrolet, Donate…
July 17, 2014
CF Industries has completed the sale of a large block of carbon reduction credits to Chevrolet, and will donate the net proceeds of $600,000 to the National FFA Foundation. Read More
CropLife 100Grainland Cooperative, Minier Cooperative Grain To Merg…
July 17, 2014
The shareholders of Grainland Cooperative and Minier Cooperative Grain Co. approved a merger of company operations effective August 1, 2014. Read More
ManagementStudy: Drought Costing California Billions
July 17, 2014
A new study has found the drought has cost the state $2.2 billion, primarily in lost farm revenue and wages. Read More
FertilizerCF Industries Resumes Production At Oklahoma Nitrogen C…
July 17, 2014
The company had shut down production at the Woodward, OK, facility in April to address an issue in one of the site’s boilers. Read More
CropLife 100Wilbur-Ellis To Relocate Agribusiness Division To Denve…
July 16, 2014
The move Eastward will allow Wilbur-Ellis’ Agribusiness Division to be more accessible to relevant geographies and is expected to enhance communication and collaboration among the division’s nearly 3,000 employees. Read More
Soybean field
FungicidesValent Launches New Seed Protection Fungicide For Soybe…
July 16, 2014
The INTEGO SUITE System contains the first new, novel seed protection fungicide chemistry registered in 30 years by the EPA for protection against Pythium and Phytophthora. Read More
Crop InputsSyngenta Drive To Thrive 10 Finalists Announced
July 15, 2014
Finalists are chosen based on the quality of their essays and photos depicting what makes them thrive. Read More
FertilizerHow To Minimize Phosphorus Losses In Runoff
July 15, 2014
Phosphorus losses from agricultural fields can be divided into three categories: flash losses of soluble phosphorus, slow leak losses and erosion events. Here's how to minimize losses in each instance. Read More
ManagementCalifornia Drought Threatens To Dry Up Farm Wells
July 15, 2014
Farmers hit hardest by California's drought could begin to see wells run dry next year, according to a new study by The Center for Watershed Sciences at the University of California, Davis. Read More