The value of sharing data from your Farm Management System
By ATB Financial 15 September 2021 4 min read
Farmers have always thrived on data. How much did the field yield in bushels per acre? What’s the average rainfall on the farm compared to this year? Will we have enough cash flow for this year’s payments?
Many of the basic questions are the same today as decades ago. What’s different now is the sheer volume of data which can be collected, and the deep diving which can be done into the information. Fields are mapped, inputs are calibrated precisely, weather data is collected and yields can be measured for specific areas of a field.
There are also many more ways to use the numbers… which sets up opportunities to get extra value from the data collected. The farm facts and figures can become helpful not only for production decisions, but also for management of the business.
Farm data’s role in credit assessment
At the AgSmart event at Olds College, which focused on growing profits with data, ATB and TELUS Agriculture teamed up to discuss the value of sharing some farm management data with your financial institution.
Numbers are key when it comes to financial statements and credit needs assessment. But you can help your lender make decisions if the data paints a more robust picture of what’s actually happening on the farm.
ATB Financial Vice-President for Agriculture, Jon Neutens, says especially as you get into larger operations, the credit process can be lengthy but having more access to data can help simplify this.
“There's a lot of data, and there's a lot of really trying to dig in and understand the financial statements. We will work with (a client’s) accounting firm to get the statements and understand projections and cash flows. But some of that could potentially come directly from a farm accounting platform and or from a farm management system,” says Neutens.
It’s about providing some extra context, according to Neutens.
“If that information can come in and we can understand, just even one layer down, what's under this revenue number on the profit and loss statement, that's the kind of questioning we get into in the application for credit process. Well, some of that is available in the farm management system.”
Leveraging a farm management system to define the data you have
Farm management systems, like Decisive Farming by TELUS Agriculture, bring together precision agronomy and crop marketing information for analysis. CEO Remi Schmaltz, who also spoke at the AgSmart session, knows entering data into a system is usually one of the ‘least favorite’ jobs around the farm. One appealing reason for some data sharing is streamlining.
“I think there’s a lot of duplication, with really simple things like crop plans or inventory being created by the grower and then put into a different format for the bank,” says Schmaltz. “It’s about how to enable growers to leverage the information they have.”
Schmaltz says farm management information can help define the data. For instance, if a piece of farmland is up for sale, there may be a difference in the number of acres offered and the actual farmable acres, which can make a big difference to the overall value. Knowing the performance of the field can also factor in, as well as comparisons in the area, or even the weather conditions.
Data sharing: demonstrating a more fulsome view of your farm
Neutens points out your banker having such information at the fingertips wouldn’t replace those all-important personal meetings. But the data could help maximize one-on-one times by pre-answering some of the typical questions.
“The time spent for that conversation can turn to something more important, which is ‘But what about the future? What are your goals and objectives for next year? What do you want to happen in the next five years? And how can we help you do that?’ Rather than having all of our time spent trying to dig back into what happened last year.”
While ag lenders understand the long view of agriculture, farm management data which includes averages, comparisons, or past performance can go a long way in providing the solid facts the institution’s credit department needs to know about a client’s risk profile.
Schmaltz points out even the use of a farm management system can go a long way towards increasing a bank’s financial comfort. He shared an example of one of their customers looking to buy some farmland.
“We provided some geospatial information about how many farmable acres were in this quarter section. And how many of those acres are good quality, farmable acres. That was something that they used, and shared with their bank that helped them get financing to buy the property. So it's just really helping build out a bit more data points to have a better story around what your business plan is and justify it.”
Neutens told farmers at the session, data sharing could help a financial institution peel back the layers to understand what’s happening on the farm and make the credit process easier.
Down the road, as data demands become advanced, such sharing could also help with value added things like traceability, carbon credits or sustainability reporting. But it will always be up to farmers to decide how much data they want to share.
“We’re not there to run your operation,” he stressed. “We’re there to provide the right financial advice to help farmers achieve their goals.”