October 16, 2025 • 22 mins
With equipment repair costs up 40% over the past few years, how farmers deploy expensive agricultural machinery is of top concern for ag bankers. With equipment increasingly complex and often software driven, many equipment manufacturers have limited the ability of operators to repair their equipment without voiding warranties — leading to delays and lost harvests as farmers wait for service amid a shortage.
While this trend has led to a “right to repair” movement in many states, the issue of equipment costs and lost revenue during breakdowns remains a factor in lending decisions, says Pat Kussman, president and CEO of Regional Missouri Bank and chairman of the Missouri Bankers Association. “There are many things that are eroding at our cash flow for our farmers,” he notes, “not just input costs, but land rent costs and equipment repair costs.”
Kussman also discusses the state of the used equipment market, how farmers are using drones to manage crops less invasively and the growing role of artificial intelligence tools in functions like disease identification
This episode is presented by Agri-Access.
- Register for the ABA Agricultural Bankers Conference, Nov. 12-14 in St. Louis
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Pat Kussman (00:01):
trying to figure out the cash flow is probably one of our biggest
challenges today because there's,there's many things that are eroding
at our cash flow for our farmers.
Which include not only justinput costs, but land, rent
costs and equipment repair costs.
Everybody's trying to get a piece ofthe pie, and it seems like a lot of the
(00:23):
risk is on the farmer's shoulders today.
Evan Sparks (00:27):
From the American Bankers Association, this is the
A BA Banking Journal podcast.
Welcome back.
I'm Evan Sparks, and today'sepisode is presented by Agri Access
and i'm here with Pat Kussman.
Pat is president and CEO of RegionalMissouri Bank in North Central Missouri.
And he is also involved with ABAsagricultural bankers conference board.
(00:49):
And and so we're delighted to havehim on to talk about all things
ag banking and the ag economy.
So Pat, welcome to the show.
Pat Kussman (00:56):
Thank you.
I appreciate it, Evan.
Evan Sparks (00:58):
So I'd love it if you know, there's a lot of things, interesting
things going on in the ag market now.
Can you give me a sense of what is,what the ag economy and the ag lending
market is like in your part of inyour part of Missouri right now?
Pat Kussman (01:12):
Well I mean there are a lot of eyes on agriculture right now, and,
and of course the biggest thing is, is.
You know, what are, what isthe existing liquidity position
of these these farmers today?
You know, a lot of the balance sheetsover the years especially in the past
five to 10 years, have, have really beenbolstered up and have you know, the asset
(01:33):
levels have not only increased in value,but we've also had some good crop years.
To kind of aid those balancesheets to get strong.
The problem is, is that over thelast two years where we've had some
low commodity prices, when we hadstill inflated input prices we,
we've lost some of our cash position.
(01:53):
And some of that cash positionover the last couple years has been
either thrown back into some longeror immediate term type assets to
amortize some of that debt out.
So at some point youhave to quit doing that.
And, you know trying to figure outthe cash flow is probably one of our
biggest challenges today because there's,there's many things that are eroding
(02:16):
at our cash flow for our farmers.
Which include not only justinput costs, but land, rent
costs and equipment repair costs.
And, and so there's, everybody'strying to get a piece of the pie,
and it seems like a lot of the riskis on the farmer's shoulders today.
Evan Sparks (02:33):
Yeah.
And that bleeds throughback to their banks.
So, absolutely.
You brought up equipment repair costs,and this is something that I have found
very fascinating as farming has becomeincreasingly driven by advanced and
expensive technology, this issue that hasbubbled up in farm country of the right
(02:54):
of farmers to work on their own equipment.
And can you talk a littlebit about that issue
?Pat Kussman: Absolutely.
Yeah.
I mean, and somebody says, well, whyin the world how does a banker know
about the right to work on equipment?
Good lord, number one, I'm a farmeras well, so at nighttime I go
and we, we have a a farm that wehave about a hundred mama cows.
And then we also raisesome row crop for feed.
(03:16):
But doing these cash flows, youare a partner with a farmer, as a
banker, you need to know every bitand every part of that cash flow.
And because there are times when youare just looking for nickels and dimes
and, you know, it's no different thanthe banker was several years ago.
(03:38):
In low interest rate times, wewere looking for basis points
to find margin and it's the samecash flow for our farmers today.
We're looking for nickels anddimes to bolster their margins.
And part of that marginis equipment costs.
You know, over the past 45 years,we've noticed that equipment costs and
(04:01):
repairs have increased by 40 to 42%.
And which has impacted their,their cash flow greatly.
And yeah, we can talkall day about cash rent.
We can talk all day about input costs,but also, you know, the, the cost to
repair our equipment has grown immensely.
(04:21):
And that gets very concerning, especiallywith the amount of money that we're
paying for this equipment today.
This equipment is very expensiveand when you buy this equipment
it comes with a few added tangentsthat you have to pay attention to.
And, you know, the farmer, theyadapted so quickly to technology
(04:43):
and to the new software in the earlytwo thousands to, you know, 2010 to
15, they, they dove into technologywhen it came to the ag industry.
We saw it happening everywhere else andall these other manufacturers in industry.
And ag was still kind of doing it theold way, but then all of a sudden in the
(05:03):
early two thousands, it's been aroundfor a long time, but it seemed like it
really got adopted quickly in the earlytwo thousands, and all of a sudden all
these farmers were saying, Hey, I'mtaking this tractor and I'm gonna have
all of this equipment added onto it.
Didn't ask what the costs were,didn't ask what the ramifications
were, if it broke down, didn't askfor any of this other information.
(05:26):
All of a sudden now we have this adoptionrate that is great, and we have all
of our farmers out there with all ofthis new technology on their equipment.
And then when it breaks down what happens?
Yeah, we have to wait on number one.
We have to wait for the manufactureror the dealer to get to us.
(05:48):
Guess what?
There's a line, there's an order.
Take a number.
Or the cost.
You have no idea to gauge thecost of the repair because
you have no idea what it is.
Because your scanner, whenyou plug your scanner into
that system, it won't read it.
It denies it.
So then you're put into a position towhere you have to have somebody come
(06:09):
out to your farm at $225 an hour toplug into your piece of machinery to
tell you what's wrong or not wrong,or even to tell you they don't know.
So all of a sudden youget into another issue.
In the last five years, we've hadsuch a turnover in labor force that
you're hiring a new technician for$225 an hour to come out and tell
(06:32):
you they don't know what's going on.
So that not being able to haveaccess to diagnose your piece
of equipment that you own.
Is a little, a little troubling.
Now I understand the other sideof the ball because you have to
have some informa, you need tohave some information security.
(06:53):
You need to have some software security.
You, you don't want to be susceptibleto hackers and things of that nature
on proprietary software, I get that.
But there's gotta be a happy medium inthe middle because the person is paying.
A, the, the customer, the farmer'spaying a lot of money in outlay
for that piece of equipment.
And then you're not allowingthem to touch it at all.
(07:15):
You're not allowing them tobe able to diagnose it at all.
And you try to go in, go in, you void your warranty.
You know, it's like absolutely hugerisk if you try to go in and, and,
and take care of a problem, even ifyou know how to fix that problem.
Pat Kussman (07:29):
Absolutely.
Yes.
And, and so then you get to the pointis, you know, are these manufacturers,
funneling farmers to, hey, they haveto have their stuff repaired with you.
So, you know I see both sidesof the ball, but there has to
be a happy medium in the middle.
We have to have some competition atthat repair level so that there is.
(07:51):
You know, a true discovery ofwhat the cost of repair is and
not just this inflated amount.
So yeah, it, it is definitelycoming to the mind of farmers today
because now they're asking thosequestions to that manufacturer.
If I'm gonna go buy a new tractor, anew combine, new planter, okay, it has
all of this, it has these options on it,but what happens if I have to repair?
(08:14):
What are the.
What are the ramifications?
If I need to get itrepaired, what's the process?
You know, so they may switchfrom one manufacturer to another.
You know, a lot of our customers in theMidwest have John Deere underwear, and it
was, "if it's not green, I'm not drivingit. I'm not buying it." Now that that mode
(08:35):
of thinking is somewhat changed because.
You know, it stings whenit hurts your wallet book.
It's, it's starting to sting.
So,
Evan Sparks (08:43):
And, and I mean if one of these, if, if, if this equipment
breaks down, you're in the middleof harvest or something like that,
you know, it's like that, that hashuge bearing on your cash flow.
Pat Kussman (08:52):
Absolutely.
That, that time period, that, that'sprobably what's the hardest thing
to put a finger on, is the cost.
That you have in loss of time.
You know, with all of theweather anomalies today that we
are having the erratic weatherpatterns, time is of the essence.
Time is money.
Mm-hmm.
And so if they're not out in that field,harvesting that crop or planting that
(09:17):
crop, they're losing their window.
And it could be marketing period, aserratic as some of these prices have been.
So definitely it's hard to put a fingeron the loss of time that these, these
farmers have in waiting for, waitingin line to get their, their their
product or their equipment to get fixed.
(09:37):
You know, in the softwarebusiness, in banking, we talk about
SLAs, service level agreements.
Evan Sparks (09:45):
Mm-hmm.
Pat Kussman (09:46):
Could we have service level agreements to these equipment providers?
You know, if they don't meet andcome, come respond in a certain
amount of time, could they, could wehave some clawback and some pricing?
You know, could there be if they're,it's not repaired in a certain amount
of time, could there be some clawbackif there's a problem with certain
type of problem with the software?
Could there be some clawback?
(10:06):
So there might be, there might besome meeting in the middle there, but
here's where it all revolves around.
We gotta have balance of risk.
Over the last 10 to 15 to 20years, all of the risk is being
put on the farmer's shoulders.
And that's what my job is as abanker, is to help manage that risk.
(10:27):
We've got to somehow spreadthat risk out a little bit.
Everybody's gotta share that risk.
The manufacturer's gotta share thatrisk 'cause he's selling that farmer
a very high dollar piece of equipment.
So therefore, they've gotta sharethe risk of the software and of the
repairability of that piece of equipment.
It can't all be on the farmer'sshoulders as far as that cost.
(10:49):
So absolutely.
It's just like you know, cash rent.
We've gotta be able to, the landlord'sgotta be able to share some of that
risk about what that land is producing.
There's gotta be a win-win for both.
Evan Sparks (11:00):
I'm gonna take a quick moment here and thank our sponsor
for this episode, agri Access.
This episode is presented by Agri Access,a proud sponsor of the A BA Agricultural
Bankers Conference in St. Louis.
Next month, agri Access works alongsideag lenders to deliver flexible capital
light lending solutions that reduce riskand drive growth from real estate to
lease and loan participations agri access.
(11:22):
Can help banks compete,scale, and stay ahead.
If you're attending the Ag BankersConference, visit Agri Access at
Booth 1 0 3 to explore what lendingas a service can look like for your
institution and learn more@agriaccess.com.
Again, that's a GRI access.com.
And thanks again to Agri Accessfor sponsoring this episode.
(11:43):
So back to the conversation with Pat.
Here we are.
We've gotta figure out how tobalance these, these risks.
One thing that I'm curious about isyou've got these machines that are
growing and growing in price and thelong-term costs of operating them.
If you have to use, you know,approved suppliers to service
them should anything go wrong?
(12:04):
What's the market for used machinerylike, and how does that, and how
does depreciation on some of these onsome of this equipment affect the the
lending landscape for these producers?
Pat Kussman (12:18):
So
the market on, on olderequipment right now is very high.
And the reason for that is becausethere's more competition, because
those farmers have more optionsto repair that piece of equipment.
Mm-hmm.
You know, when it comes down to the,you know, the old 44 forties or, you
(12:40):
know a great tractor and icon from,from many years ago, you know, from
the late seventies and early eighties.
What a great piece of equipment.
But equipment like that has increased invalue greatly because of the competition
of individuals Going backwards a littlebit in years to get past that repair issue
(13:01):
you know, they can still put some of theequipment in there, the GPS equipment
and guidance equipment, but ultimately.
They can run that tractor, theycan repair that tractor, they can
get it done, you know, when theyneed it done at that time period.
So we have seen a, a great increasein the older equipment recently,
especially in the last two to three yearssince these issues have, have arisen.
(13:24):
So you know, the, the thingabout this this new equipment.
And it's gotten to beso high in, in price.
You know, when you start talking aboutnew combines cost a million dollars or
more, and you go out and you use thosefor two years, and then you see the amount
of depreciation when they try to eithergo resell this today or trade it in.
(13:52):
It's incredible how acceleratedthe depreciation is on a
piece of equipment like that.
Of course, don't get me wrong, it'sreally amplified in the last two years
because of the decline of the commoditymarkets, there's probably less individuals
chasing those high dollar pieces ofequipment with lower commodity prices.
But the depreciation ontrading those every two years
(14:13):
has has increased immensely.
Evan Sparks (14:17):
All right.
Another, another equipmentquestion for you, drones.
How are you seeing producersin your area using that?
Pat Kussman (14:24):
We have absolutely seen an increase in use of drones in our area by a
very large percent, and including myself.
I've also used drones.
I used the drone in my operation inbasically seeding down cover crop.
So, you know, whether you've got astanding corn crop out there that
you can seed that that cover cropearlier and just oversea it into
(14:47):
that crop makes a big differencewithout damaging any of the crop.
You don't have the compaction, you don'thave any of the hurting any of the plants.
So, and you get it done a littlebit earlier, in a more timely basis.
'cause you don't have to worryabout if it's muddy out or not.
That's, that's really some benefits there.
There's some great benefitsto utilizing the drones.
We see a lot of the dronesin spot spraying chemicals.
(15:10):
We see a lot of the dronesbeing used in fungicide.
Hmm.
You know, we, we it hasdefinitely increased.
And I would say, I don't know whatthe adoption rate would be, but
it's definitely there are probably.
As a guesstimate, I would say twooutta five farmers utilizing a
drone in their operation in someshape or form today, and some of
(15:34):
it's even in, in, in crop scouting.
I mean, a lot of 'em are using itto, to scout their crops for disease,
whether they're not for replantingfor those situations like that.
It's definitely becoming abenefit to, to our, to our
farmers here at a reduced price.
'cause there's no doubt that,the price for somebody to go out
and spray fungicide or gross.
(15:56):
Reseed or cover crop is, is a lot cheaper.
Whenever you're able to use a drone andyou don't have the fuel of that large
piece of equipment running over it, youdon't have the compaction running over
your, your ground and you don't have to.
The time issue of waiting till, hey,the, the ground's ready or dry enough
to, to run that piece of equipment on.
Evan Sparks (16:17):
Yeah.
Well, one, one other area of technologythat, you know, has a lot of promise in
terms of reducing some of these, the coststhat we experience in, in, in our, you
experience as a, in, in ag production.
We all experience ineveryday life, you know.
Is the, the use of AI technologiesin it's affecting farming, just like
it's affecting banking and everybodyel every, every other industry.
(16:39):
What are some of the the ways thatyou're seeing your farm, your, your
producers use AI to improve, toimprove and enhance their operations?
And and what are some of the thecost associated with, with, with
that deployment of AI technology?
Pat Kussman (16:53):
So, you know, there, there's some of the AI technology that's
being used on sprayers and plantersthat are starting to get dabbled into.
I don't think there's a huge adoption tothat yet because of the cost and because
of the low commodity prices at this time.
But there's definitely eyes on that ball.
What we see are our customers andfarmers utilizing AI to identify
(17:18):
certain diseases, do a better job,,when you can take a picture with your
cell phone at a, you know, an ear ofcorn or a leaf of corn to, to identify
some type of disease that and identifyit quickly to get to, to get the right
remedy in there is, is huge in timing.
So we are seeing it in that instance.
(17:39):
You know, the AI just like we talkabout troubleshooting several issues
throughout farming has been beneficial.
Yeah.
Evan Sparks (17:49):
It's fascinating to see this kind of the junction of both the
deployment of this new, of, of, a lotof new technology with the interest,
the high value of some of the very oldtechnology together, coming together.
You know, I can see having, you know.
Like I, when I rent a rent a newcar, you know, you see all of the
(18:10):
amazing things that it has in it.
At the same time, I've got a, you know,2000 2000 Ford F-150 with 150,000 miles on
it, and I'm not getting rid of that thing.
Yeah, right.
Pat Kussman (18:22):
Well, and we have, we have farmers like that as well.
And you know, you havebasically two camps.
You have a camp that says, no,we're not gonna adopt any of that
new technology, new, far and new.
AI because we feel that down the roadthere could be some issues with that.
And you know, there has been a littlebit of a bump on that road and they're
saying basically that the efficienciesthat you gain from some of that are
(18:46):
gonna be outweighed by some of the cost.
It is for repair, for some ofthe cost to implement some of the
cost of the initial equipment.
You know, then you have the other campthat are the innovators that want to
go out and wanna step ahead, wanna be.
To do more acres with lesstime and be more efficient and
at you know, spread it over.
Several acres that makes a littlebit bigger, big of a difference.
(19:07):
So, you know, it's, it's, again, it's,it's finding that happy medium and
it all comes down to, at the end ofthe day, when we talk about dollars
per acre, what is it bringing back toyou in dollars per acre in revenue?
What is it bringing back to you in dollarsper acre in efficiency of expenses?
Evan Sparks (19:27):
So if you had to break it down, are the farmers who are investing
more in the new technology, are theybringing in more in dollars per acre?
Or are there other factors thatgo, that go into that calculation?
Pat Kussman (19:37):
Well, you know, it, it, it has been that yes, we have seen
those, those increases in margins.
Because they've been able tospread those over many acres, those
people that are adopting this.
Are generally spreading it overthousands and thousands of acres.
You know, those that are just doing themom and pops thousand to 1500 acres,
(19:59):
that's a little bit hard to adopt.
And, and put that initial expenseof equipment over that few acres.
You've got to be able tospread it over some acres.
'cause it is a, a greatinitial investment.
But there are some definite margins tobe had in, the efficiencies that you gain
from this, you do have to weigh out yourinitial costs and make sure that you're,
(20:26):
you're getting a benefit and there'salways gotta be a benefit, you know?
Risk versus reward.
There's gotta be a reward at the end ofthe day and that that meter has changed
some because of the price and commodities.
You know, it's much easier to measurethat when we were talking about the
same input prices at $5 corn than it iswhen we're talking about three 50 corn.
(20:47):
And so you know that that's when isprobably going to back off a little
bit, it's gonna give some people somepause, is to say, you know, how much
more initial investment can I make whenwe're, we're, we're growing three 50
corn, but the proof's in the pudding.
(21:08):
Is that the difference of mehaving 175 bushel-an-acre corn
or 220 bushel-an-acre corn?
So.
Evan Sparks (21:16):
Well, this has been a fascinating conversation and for those
who follow ag banking in greater detail,these kinds of conversations are gonna
be had in in great depth at the ABA Agricultural Bankers Conference,
November 12th through 14th in St. Louis.
You can find out more ataba.com/ag conference.
Go take a look and be sure to register.
(21:38):
And pat, I guess you'll, you'llbe, you'll be there, right?
Absolutely.
All right.
Well look forward to it.
Pat is one of our home state hostsfor the, for the AG Conference.
I want to also thank you for beingon the show today to talk with
me about some of these issues.
Pat Kussman (21:51):
Well, thank you Evan.
I appreciate youradvocacy for agriculture.
Evan Sparks (21:58):
For any of you who are going to be attending the a BA annual
convention next week in Charlotte,I am looking forward to being there,
and please come up and say hello.
I will be all around the, around theconvention for the whole time and I'm
always excited to meet listeners to thepodcast and hear your feedback in person.
So please do say hello.
Before we go, I want to again, thank oursponsor for this episode, agri Access.
(22:22):
Thanks so much for listening.
We'll be back with you very soon.
trying to figure out the cash flow is probably one of our biggest
challenges today because there's,there's many things that are eroding
at our cash flow for our farmers.
Which include not only justinput costs, but land, rent
costs and equipment repair costs.
Everybody's trying to get a piece ofthe pie, and it seems like a lot of the
(00:23):
risk is on the farmer's shoulders today.
Evan Sparks (00:27):
From the American Bankers Association, this is the
A BA Banking Journal podcast.
Welcome back.
I'm Evan Sparks, and today'sepisode is presented by Agri Access
and i'm here with Pat Kussman.
Pat is president and CEO of RegionalMissouri Bank in North Central Missouri.
And he is also involved with ABAsagricultural bankers conference board.
(00:49):
And and so we're delighted to havehim on to talk about all things
ag banking and the ag economy.
So Pat, welcome to the show.
Pat Kussman (00:56):
Thank you.
I appreciate it, Evan.
Evan Sparks (00:58):
So I'd love it if you know, there's a lot of things, interesting
things going on in the ag market now.
Can you give me a sense of what is,what the ag economy and the ag lending
market is like in your part of inyour part of Missouri right now?
Pat Kussman (01:12):
Well I mean there are a lot of eyes on agriculture right now, and,
and of course the biggest thing is, is.
You know, what are, what isthe existing liquidity position
of these these farmers today?
You know, a lot of the balance sheetsover the years especially in the past
five to 10 years, have, have really beenbolstered up and have you know, the asset
(01:33):
levels have not only increased in value,but we've also had some good crop years.
To kind of aid those balancesheets to get strong.
The problem is, is that over thelast two years where we've had some
low commodity prices, when we hadstill inflated input prices we,
we've lost some of our cash position.
(01:53):
And some of that cash positionover the last couple years has been
either thrown back into some longeror immediate term type assets to
amortize some of that debt out.
So at some point youhave to quit doing that.
And, you know trying to figure outthe cash flow is probably one of our
biggest challenges today because there's,there's many things that are eroding
(02:16):
at our cash flow for our farmers.
Which include not only justinput costs, but land, rent
costs and equipment repair costs.
And, and so there's, everybody'strying to get a piece of the pie,
and it seems like a lot of the riskis on the farmer's shoulders today.
Evan Sparks (02:33):
Yeah.
And that bleeds throughback to their banks.
So, absolutely.
You brought up equipment repair costs,and this is something that I have found
very fascinating as farming has becomeincreasingly driven by advanced and
expensive technology, this issue that hasbubbled up in farm country of the right
(02:54):
of farmers to work on their own equipment.
And can you talk a littlebit about that issue
?Pat Kussman: Absolutely.
Yeah.
I mean, and somebody says, well, whyin the world how does a banker know
about the right to work on equipment?
Good lord, number one, I'm a farmeras well, so at nighttime I go
and we, we have a a farm that wehave about a hundred mama cows.
And then we also raisesome row crop for feed.
(03:16):
But doing these cash flows, youare a partner with a farmer, as a
banker, you need to know every bitand every part of that cash flow.
And because there are times when youare just looking for nickels and dimes
and, you know, it's no different thanthe banker was several years ago.
(03:38):
In low interest rate times, wewere looking for basis points
to find margin and it's the samecash flow for our farmers today.
We're looking for nickels anddimes to bolster their margins.
And part of that marginis equipment costs.
You know, over the past 45 years,we've noticed that equipment costs and
(04:01):
repairs have increased by 40 to 42%.
And which has impacted their,their cash flow greatly.
And yeah, we can talkall day about cash rent.
We can talk all day about input costs,but also, you know, the, the cost to
repair our equipment has grown immensely.
(04:21):
And that gets very concerning, especiallywith the amount of money that we're
paying for this equipment today.
This equipment is very expensiveand when you buy this equipment
it comes with a few added tangentsthat you have to pay attention to.
And, you know, the farmer, theyadapted so quickly to technology
(04:43):
and to the new software in the earlytwo thousands to, you know, 2010 to
15, they, they dove into technologywhen it came to the ag industry.
We saw it happening everywhere else andall these other manufacturers in industry.
And ag was still kind of doing it theold way, but then all of a sudden in the
(05:03):
early two thousands, it's been aroundfor a long time, but it seemed like it
really got adopted quickly in the earlytwo thousands, and all of a sudden all
these farmers were saying, Hey, I'mtaking this tractor and I'm gonna have
all of this equipment added onto it.
Didn't ask what the costs were,didn't ask what the ramifications
were, if it broke down, didn't askfor any of this other information.
(05:26):
All of a sudden now we have this adoptionrate that is great, and we have all
of our farmers out there with all ofthis new technology on their equipment.
And then when it breaks down what happens?
Yeah, we have to wait on number one.
We have to wait for the manufactureror the dealer to get to us.
(05:48):
Guess what?
There's a line, there's an order.
Take a number.
Or the cost.
You have no idea to gauge thecost of the repair because
you have no idea what it is.
Because your scanner, whenyou plug your scanner into
that system, it won't read it.
It denies it.
So then you're put into a position towhere you have to have somebody come
(06:09):
out to your farm at $225 an hour toplug into your piece of machinery to
tell you what's wrong or not wrong,or even to tell you they don't know.
So all of a sudden youget into another issue.
In the last five years, we've hadsuch a turnover in labor force that
you're hiring a new technician for$225 an hour to come out and tell
(06:32):
you they don't know what's going on.
So that not being able to haveaccess to diagnose your piece
of equipment that you own.
Is a little, a little troubling.
Now I understand the other sideof the ball because you have to
have some informa, you need tohave some information security.
(06:53):
You need to have some software security.
You, you don't want to be susceptibleto hackers and things of that nature
on proprietary software, I get that.
But there's gotta be a happy medium inthe middle because the person is paying.
A, the, the customer, the farmer'spaying a lot of money in outlay
for that piece of equipment.
And then you're not allowingthem to touch it at all.
(07:15):
You're not allowing them tobe able to diagnose it at all.
And you try to go in, go in, you void your warranty.
You know, it's like absolutely hugerisk if you try to go in and, and,
and take care of a problem, even ifyou know how to fix that problem.
Pat Kussman (07:29):
Absolutely.
Yes.
And, and so then you get to the pointis, you know, are these manufacturers,
funneling farmers to, hey, they haveto have their stuff repaired with you.
So, you know I see both sidesof the ball, but there has to
be a happy medium in the middle.
We have to have some competition atthat repair level so that there is.
(07:51):
You know, a true discovery ofwhat the cost of repair is and
not just this inflated amount.
So yeah, it, it is definitelycoming to the mind of farmers today
because now they're asking thosequestions to that manufacturer.
If I'm gonna go buy a new tractor, anew combine, new planter, okay, it has
all of this, it has these options on it,but what happens if I have to repair?
(08:14):
What are the.
What are the ramifications?
If I need to get itrepaired, what's the process?
You know, so they may switchfrom one manufacturer to another.
You know, a lot of our customers in theMidwest have John Deere underwear, and it
was, "if it's not green, I'm not drivingit. I'm not buying it." Now that that mode
(08:35):
of thinking is somewhat changed because.
You know, it stings whenit hurts your wallet book.
It's, it's starting to sting.
So,
Evan Sparks (08:43):
And, and I mean if one of these, if, if, if this equipment
breaks down, you're in the middleof harvest or something like that,
you know, it's like that, that hashuge bearing on your cash flow.
Pat Kussman (08:52):
Absolutely.
That, that time period, that, that'sprobably what's the hardest thing
to put a finger on, is the cost.
That you have in loss of time.
You know, with all of theweather anomalies today that we
are having the erratic weatherpatterns, time is of the essence.
Time is money.
Mm-hmm.
And so if they're not out in that field,harvesting that crop or planting that
(09:17):
crop, they're losing their window.
And it could be marketing period, aserratic as some of these prices have been.
So definitely it's hard to put a fingeron the loss of time that these, these
farmers have in waiting for, waitingin line to get their, their their
product or their equipment to get fixed.
(09:37):
You know, in the softwarebusiness, in banking, we talk about
SLAs, service level agreements.
Evan Sparks (09:45):
Mm-hmm.
Pat Kussman (09:46):
Could we have service level agreements to these equipment providers?
You know, if they don't meet andcome, come respond in a certain
amount of time, could they, could wehave some clawback and some pricing?
You know, could there be if they're,it's not repaired in a certain amount
of time, could there be some clawbackif there's a problem with certain
type of problem with the software?
Could there be some clawback?
(10:06):
So there might be, there might besome meeting in the middle there, but
here's where it all revolves around.
We gotta have balance of risk.
Over the last 10 to 15 to 20years, all of the risk is being
put on the farmer's shoulders.
And that's what my job is as abanker, is to help manage that risk.
(10:27):
We've got to somehow spreadthat risk out a little bit.
Everybody's gotta share that risk.
The manufacturer's gotta share thatrisk 'cause he's selling that farmer
a very high dollar piece of equipment.
So therefore, they've gotta sharethe risk of the software and of the
repairability of that piece of equipment.
It can't all be on the farmer'sshoulders as far as that cost.
(10:49):
So absolutely.
It's just like you know, cash rent.
We've gotta be able to, the landlord'sgotta be able to share some of that
risk about what that land is producing.
There's gotta be a win-win for both.
Evan Sparks (11:00):
I'm gonna take a quick moment here and thank our sponsor
for this episode, agri Access.
This episode is presented by Agri Access,a proud sponsor of the A BA Agricultural
Bankers Conference in St. Louis.
Next month, agri Access works alongsideag lenders to deliver flexible capital
light lending solutions that reduce riskand drive growth from real estate to
lease and loan participations agri access.
(11:22):
Can help banks compete,scale, and stay ahead.
If you're attending the Ag BankersConference, visit Agri Access at
Booth 1 0 3 to explore what lendingas a service can look like for your
institution and learn more@agriaccess.com.
Again, that's a GRI access.com.
And thanks again to Agri Accessfor sponsoring this episode.
(11:43):
So back to the conversation with Pat.
Here we are.
We've gotta figure out how tobalance these, these risks.
One thing that I'm curious about isyou've got these machines that are
growing and growing in price and thelong-term costs of operating them.
If you have to use, you know,approved suppliers to service
them should anything go wrong?
(12:04):
What's the market for used machinerylike, and how does that, and how
does depreciation on some of these onsome of this equipment affect the the
lending landscape for these producers?
Pat Kussman (12:18):
So
the market on, on olderequipment right now is very high.
And the reason for that is becausethere's more competition, because
those farmers have more optionsto repair that piece of equipment.
Mm-hmm.
You know, when it comes down to the,you know, the old 44 forties or, you
(12:40):
know a great tractor and icon from,from many years ago, you know, from
the late seventies and early eighties.
What a great piece of equipment.
But equipment like that has increased invalue greatly because of the competition
of individuals Going backwards a littlebit in years to get past that repair issue
(13:01):
you know, they can still put some of theequipment in there, the GPS equipment
and guidance equipment, but ultimately.
They can run that tractor, theycan repair that tractor, they can
get it done, you know, when theyneed it done at that time period.
So we have seen a, a great increasein the older equipment recently,
especially in the last two to three yearssince these issues have, have arisen.
(13:24):
So you know, the, the thingabout this this new equipment.
And it's gotten to beso high in, in price.
You know, when you start talking aboutnew combines cost a million dollars or
more, and you go out and you use thosefor two years, and then you see the amount
of depreciation when they try to eithergo resell this today or trade it in.
(13:52):
It's incredible how acceleratedthe depreciation is on a
piece of equipment like that.
Of course, don't get me wrong, it'sreally amplified in the last two years
because of the decline of the commoditymarkets, there's probably less individuals
chasing those high dollar pieces ofequipment with lower commodity prices.
But the depreciation ontrading those every two years
(14:13):
has has increased immensely.
Evan Sparks (14:17):
All right.
Another, another equipmentquestion for you, drones.
How are you seeing producersin your area using that?
Pat Kussman (14:24):
We have absolutely seen an increase in use of drones in our area by a
very large percent, and including myself.
I've also used drones.
I used the drone in my operation inbasically seeding down cover crop.
So, you know, whether you've got astanding corn crop out there that
you can seed that that cover cropearlier and just oversea it into
(14:47):
that crop makes a big differencewithout damaging any of the crop.
You don't have the compaction, you don'thave any of the hurting any of the plants.
So, and you get it done a littlebit earlier, in a more timely basis.
'cause you don't have to worryabout if it's muddy out or not.
That's, that's really some benefits there.
There's some great benefitsto utilizing the drones.
We see a lot of the dronesin spot spraying chemicals.
(15:10):
We see a lot of the dronesbeing used in fungicide.
Hmm.
You know, we, we it hasdefinitely increased.
And I would say, I don't know whatthe adoption rate would be, but
it's definitely there are probably.
As a guesstimate, I would say twooutta five farmers utilizing a
drone in their operation in someshape or form today, and some of
(15:34):
it's even in, in, in crop scouting.
I mean, a lot of 'em are using itto, to scout their crops for disease,
whether they're not for replantingfor those situations like that.
It's definitely becoming abenefit to, to our, to our
farmers here at a reduced price.
'cause there's no doubt that,the price for somebody to go out
and spray fungicide or gross.
(15:56):
Reseed or cover crop is, is a lot cheaper.
Whenever you're able to use a drone andyou don't have the fuel of that large
piece of equipment running over it, youdon't have the compaction running over
your, your ground and you don't have to.
The time issue of waiting till, hey,the, the ground's ready or dry enough
to, to run that piece of equipment on.
Evan Sparks (16:17):
Yeah.
Well, one, one other area of technologythat, you know, has a lot of promise in
terms of reducing some of these, the coststhat we experience in, in, in our, you
experience as a, in, in ag production.
We all experience ineveryday life, you know.
Is the, the use of AI technologiesin it's affecting farming, just like
it's affecting banking and everybodyel every, every other industry.
(16:39):
What are some of the the ways thatyou're seeing your farm, your, your
producers use AI to improve, toimprove and enhance their operations?
And and what are some of the thecost associated with, with, with
that deployment of AI technology?
Pat Kussman (16:53):
So, you know, there, there's some of the AI technology that's
being used on sprayers and plantersthat are starting to get dabbled into.
I don't think there's a huge adoption tothat yet because of the cost and because
of the low commodity prices at this time.
But there's definitely eyes on that ball.
What we see are our customers andfarmers utilizing AI to identify
(17:18):
certain diseases, do a better job,,when you can take a picture with your
cell phone at a, you know, an ear ofcorn or a leaf of corn to, to identify
some type of disease that and identifyit quickly to get to, to get the right
remedy in there is, is huge in timing.
So we are seeing it in that instance.
(17:39):
You know, the AI just like we talkabout troubleshooting several issues
throughout farming has been beneficial.
Yeah.
Evan Sparks (17:49):
It's fascinating to see this kind of the junction of both the
deployment of this new, of, of, a lotof new technology with the interest,
the high value of some of the very oldtechnology together, coming together.
You know, I can see having, you know.
Like I, when I rent a rent a newcar, you know, you see all of the
(18:10):
amazing things that it has in it.
At the same time, I've got a, you know,2000 2000 Ford F-150 with 150,000 miles on
it, and I'm not getting rid of that thing.
Yeah, right.
Pat Kussman (18:22):
Well, and we have, we have farmers like that as well.
And you know, you havebasically two camps.
You have a camp that says, no,we're not gonna adopt any of that
new technology, new, far and new.
AI because we feel that down the roadthere could be some issues with that.
And you know, there has been a littlebit of a bump on that road and they're
saying basically that the efficienciesthat you gain from some of that are
(18:46):
gonna be outweighed by some of the cost.
It is for repair, for some ofthe cost to implement some of the
cost of the initial equipment.
You know, then you have the other campthat are the innovators that want to
go out and wanna step ahead, wanna be.
To do more acres with lesstime and be more efficient and
at you know, spread it over.
Several acres that makes a littlebit bigger, big of a difference.
(19:07):
So, you know, it's, it's, again, it's,it's finding that happy medium and
it all comes down to, at the end ofthe day, when we talk about dollars
per acre, what is it bringing back toyou in dollars per acre in revenue?
What is it bringing back to you in dollarsper acre in efficiency of expenses?
Evan Sparks (19:27):
So if you had to break it down, are the farmers who are investing
more in the new technology, are theybringing in more in dollars per acre?
Or are there other factors thatgo, that go into that calculation?
Pat Kussman (19:37):
Well, you know, it, it, it has been that yes, we have seen
those, those increases in margins.
Because they've been able tospread those over many acres, those
people that are adopting this.
Are generally spreading it overthousands and thousands of acres.
You know, those that are just doing themom and pops thousand to 1500 acres,
(19:59):
that's a little bit hard to adopt.
And, and put that initial expenseof equipment over that few acres.
You've got to be able tospread it over some acres.
'cause it is a, a greatinitial investment.
But there are some definite margins tobe had in, the efficiencies that you gain
from this, you do have to weigh out yourinitial costs and make sure that you're,
(20:26):
you're getting a benefit and there'salways gotta be a benefit, you know?
Risk versus reward.
There's gotta be a reward at the end ofthe day and that that meter has changed
some because of the price and commodities.
You know, it's much easier to measurethat when we were talking about the
same input prices at $5 corn than it iswhen we're talking about three 50 corn.
(20:47):
And so you know that that's when isprobably going to back off a little
bit, it's gonna give some people somepause, is to say, you know, how much
more initial investment can I make whenwe're, we're, we're growing three 50
corn, but the proof's in the pudding.
(21:08):
Is that the difference of mehaving 175 bushel-an-acre corn
or 220 bushel-an-acre corn?
So.
Evan Sparks (21:16):
Well, this has been a fascinating conversation and for those
who follow ag banking in greater detail,these kinds of conversations are gonna
be had in in great depth at the ABA Agricultural Bankers Conference,
November 12th through 14th in St. Louis.
You can find out more ataba.com/ag conference.
Go take a look and be sure to register.
(21:38):
And pat, I guess you'll, you'llbe, you'll be there, right?
Absolutely.
All right.
Well look forward to it.
Pat is one of our home state hostsfor the, for the AG Conference.
I want to also thank you for beingon the show today to talk with
me about some of these issues.
Pat Kussman (21:51):
Well, thank you Evan.
I appreciate youradvocacy for agriculture.
Evan Sparks (21:58):
For any of you who are going to be attending the a BA annual
convention next week in Charlotte,I am looking forward to being there,
and please come up and say hello.
I will be all around the, around theconvention for the whole time and I'm
always excited to meet listeners to thepodcast and hear your feedback in person.
So please do say hello.
Before we go, I want to again, thank oursponsor for this episode, agri Access.
(22:22):
Thanks so much for listening.
We'll be back with you very soon.
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