In the past, assessing agricultural risk was a complex process filled with time-consuming, manual research — if the necessary farm records could be obtained at all.

Today, banks both large and small can access new analysis tools that have revolutionized the agricultural loan process.

Jim O’Brien, CEO of Agrograph, a global agrifinance company based in Wisconsin, highlighted this technological transformation in a recent article for the ABA Banking Journal.

Empowering banks and loan seekers

O’Brien lauds the new agricultural data tools’ ability to provide a “more nuanced view of a farm’s risk” than was possible in more traditional risk assessment strategies.

By using historical-level field data models, data on risk-based pricing and production volatility, and other in-depth analysis models, banks are now better equipped to provide accurate, in-depth appraisals for each farm seeking a loan.

Using these new tools, banks can “create a clear farm risk score that is scientifically validated and easy to compare between farms,” O’Brien writes.

Further, the soundness of the data could potentially allow even risk-averse banks to feel more secure in providing ag loans to small farmers.

In this way, banks are “in a better position to serve their customers than they were 40 years ago,” O’Brien says.