Finance Your Farm with the Power of AI

As an agricultural producer, one of the biggest hurdles you’ll face is getting the right financing for your farm paired with a trustworthy lender. Fortunately, with the financial technology (fintech) revolution blazing its way through the industry, there are more options than ever. One of these options in the fintech space is digital lending. Digital lending uses AI, or artificial intelligence, to help make loan decisions. AI has gotten much attention recently, and agricultural lending is no exception. Digital lending is the next step in the agricultural data revolution. 

Understanding AI 

Before you can understand how AI is used to make loan decisions, it’s helpful to understand what AI is – and no, it’s not as space-age as you might think. AI is a branch of computer science that builds intelligent machines that can perform tasks that typically require human intelligence, such as visual perception, speech recognition, decision-making, and natural language processing. You probably use AI every day and might not even realize it. Talk-to-text, Face ID, “Alexa, what time is it?” and even spell check on your word processor are examples of AI. You are probably even using AI on the farm. Farm practices as complicated as robotic milkers and mundane as checking the weather report are examples of artificial intelligence at work. 

AI on the Farm 

In farming, AI can analyze large data sets to provide insights into crop yields, land management, machinery maintenance, and livestock health. This data is collected with various tools, including livestock behavior monitoring collars, GPS guidance, control systems, sensors, robotics, drones, autonomous vehicles, variable rate technology, GPS-based soil sampling, automated hardware, telematics, and software – to name a few. 

 If you are a current farmer, this probably isn’t news to you. A survey completed in 2021 found that 87% of farmers in the US are using some sort of AI on the farm. Modern farmers are a far cry from the unsophisticated rural folks of yesteryear. And this adoption of technology is only expected to increase. By 2030 experts expect AI in the agricultural industry to be a $7.34 billion market. 

 All that data collected on the farm is helping farmers make better management decisions. 

• AI helps crop farmers optimize yields. By analyzing on-farm data from soil and weather sensors, AI helps determine the best time to plant and harvest crops and the optimal amount of water and fertilizer needed. 

• AI helps dairy farmers be more efficient. Using behavior monitoring collars, robotic milkers, and feed sensors, AI helps determine the best time to breed or treat a cow and even how much milkfat is in a specific cow’s milk.  

• AI helps farmers better manage their equipment. By collecting on-farm data on machinery usage and performance, AI can identify potential maintenance issues.  

• AI helps you reduce costs on your farm. By analyzing soil and crop growth data, you adjust your irrigation and fertilizer use, reducing waste and saving on expenses. It also can help you identify the best routes for your tractors when working fields, reducing fuel consumption and maintenance costs.

Using AI to Finance Your Farm 

We are truly living in the agricultural data revolution. The amount, quality, and functionality of on-farm data, supply chain data, macro data,  personal data, and financial data are getting exponentially better by the day. And each year, more and more farms are adopting practices involving AI. The data generated per farm is projected to exceed two million data points per day by 2030. This on-farm data is helping farmers make better management decisions, take calculated risks, monitor the health and productivity of livestock, verify environmental performance, and proscribe adjustments where needed. It is just starting to be used as a tool in digital lending to finance your farm. 

At the simplest level, AI provides on-farm data on your crop yields, fuel usage, cull rates, soil quality, and production levels to build a more robust case to present to lenders – proving the worth and sustainability of your farm with more than just historical financial information. Data like this can give lenders a view into your operation's future, not just what you’ve done in the past. 

On a more complex level, AI-generated data can be used to make the loan decision.  An AI-powered credit risk model relies on data points collected on and off the farm to quickly and accurately measure borrower risk based on analytics. It determines – with more than just financial data— if a borrower is likely to repay the loan.

A traditional lender may analyze 20 financial data points to determine risk; AI models look to the “total farm”- financials, farm performance data, macro data, personal data – anything the models determine helpful in understanding the farmer’s total business performance. 

AI has the potential to revolutionize the way farmers finance their operations. 

Still interested? Check out this article to learn more about how Bankbarn is revolutionizing The Future of Ag Finance.