Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Precision Agriculture and Access to Agri-Finance: How precision technology can make farmers better applicants
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
2018 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

The World Bank has estimated that an additional $80 billion in financing are needed annually to achieve the 70 % increase in food supply required to feed the world in 2050. One of the cornerstones in achieving this increase in production is expected to be improved agricultural technology, where one of the latest additions is precision agriculture. It is believed that the money for investing in this technology must come from the private sector, but financial institutions are hesitant in lending money to farmers.

This, in part, comes down to a high perceived riskiness in agricultural lending stemming from the risk composition in agriculture compared to other industries as well as from weak collaterals provided by farmers. This thesis aims to find what factors are most prominent in banks´ risk assessment of agricultural firms during the lending process and look at how precision agriculture could help mitigate these risks. We have gathered aggregated quantitative data from FAOSTAT and the Swedish Board of Agriculture on farm income and hectare yield (productivity) at Swedish farms. These variables were found to be two of the most important factors in agricultural lending based on previous research. In addition to this data, information on e.g. weather, ecological farming and expenditure related to pesticides, fertilizer, and machinery were collected to further the analysis.

Precision agriculture is made up from a myriad of different technologies. We have opted to not separate the technologies in this study as the adoption of each technology included in the term is currently not sufficiently well understood. This aggregation of technologies allowed for us to use the dynamic AAGE-model to estimate the adoption based on the minimum hectare size where precision agriculture should be profitable at each point in time.

The study finds that precision agriculture does have a positive impact on farm productivity and income volatility. Hence, precision agriculture should reduce the risk of agricultural financing given to adopting farmer which would increase the access to credit and, in continuation, lead to an increase in aggregated food production. In addition, we conclude that financial institutions should gain a better knowledge of precision agriculture technologies and use this information to improve the credit evaluation process in agricultural lending. Lastly, banks should understand how the risks related to information asymmetry and moral hazard could be reduced by utilizing the data available through farmers use of precision agriculture technology.

Place, publisher, year, edition, pages
2018. , p. 96
Keywords [en]
Agri-finance, Agricultural finance, Precision agriculture, Agricultural lending, Agricultural banking, Dynamic AAGE-model
Keywords [sv]
Precisionsjordbruk, Jordbruksfinansiering
National Category
Business Administration
Identifiers
URN: urn:nbn:se:umu:diva-149677OAI: oai:DiVA.org:umu-149677DiVA, id: diva2:1223690
Educational program
Master's Programme in Finance
Supervisors
Examiners
Available from: 2018-06-26 Created: 2018-06-25 Last updated: 2018-06-26Bibliographically approved

Open Access in DiVA

fulltext(2414 kB)15 downloads
File information
File name FULLTEXT01.pdfFile size 2414 kBChecksum SHA-512
85e05949e34398edf3c6f5d095d6f751eea7e793f96d8ef2a4254281180e239c54eb22f01091974997fa662ff1cdf4d6dca3cdca390ad8b8b2e0ec48aa27444c
Type fulltextMimetype application/pdf

Search in DiVA

By author/editor
Lundblad, Lowe
By organisation
Business Administration
Business Administration

Search outside of DiVA

GoogleGoogle Scholar
Total: 15 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

urn-nbn

Altmetric score

urn-nbn
Total: 13 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf