Unlock Profitability and Scale Fast with Farm Infrastructure Leasing 

What is farm infrastructure leasing? 

Just like equipment leasing, infrastructure leasing allows farmers to lease facilities such as barns, silos, storage sheds, greenhouses, and other structures used in the farming process. Infrastructure leasing increases the profitability and resilience of an operation through things like vertical integration. 

For many farmers, leasing gives them opportunities they would not be able to achieve (or achieve as quickly) with long-term ownership. It provides alternative paths and greater flexibility without the long-term commitment. When leasing infrastructure, farmers can decide between buying, trading, renewing, or returning when the lease comes to term. 

Benefits of Leasing Farm Infrastructure 

Scalability 

Most importantly, leasing infrastructure gives farmers access to resources that would be both difficult and risky to achieve through long-term ownership. By leasing infrastructure, farmers get immediate access to storage facilities, irrigation systems, and more where they might otherwise have to wait years to accumulate enough capital to purchase them. 

Depreciation Tolerance 

The value of farm infrastructure depreciates over time. When you drive a new car off of the lot for the first time, it immediately loses value. If you’re the owner, you cannot recuperate that value—it now can only be sold as a “used car.”  

As a lessee, you have some immunity to that depreciation. At the end of your lease, you can choose to renew or even upgrade. You don’t have to worry about the infrastructure losing value over time.  

Asset Flexibility 

Since you have the option to upgrade your infrastructure at the end of the lease term, you have greater flexibility in deciding if an infrastructure investment fully meets your operation’s needs. For example, if you originally lease a small storage area, but find yourself lacking space, you can upgrade to a larger one.   

Improved Financial Ratios 

During the underwriting process, lenders use different financial ratios (like the current ratio or debt-to-asset ratio) to assess the financial health of your operation. By lowering upfront costs and preserving working capital, leasing gives farmers access to the infrastructure they need without overtaking their balance sheet.  

Factors to Evaluate Before Upgrading Farm Infrastructure 

Farm infrastructure leasing isn’t right for every operation. When you’re determining what is best for your farm, ask yourself the following questions: 

• What infrastructure do I already have access to? 
• What infrastructure do I need in order to grow my operation?  
• What are my options for getting new infrastructure? 
• Which option is most cost-effective with the greatest return potential? 

For many farmers, the decision to lease is multifaceted. You should consider your entire financial situation, your long-term and short-term goals, and how rapidly you need to scale. If you need help finding out what option is best, you can contact an expert at AgAmerica, who can help you review your farm’s financial position and understand what avenue will give your operation the most room to grow.  

Mitigating Risks in Infrastructure Leasing 

Before you sign a new lease agreement, be sure you understand all the terms and conditions. This includes: 

• Interest Rate – Is the interest rate competitive and fair? Is it locked in or will it fluctuate depending on the market? 
• Fees – Are there any additional fees associated with leasing this infrastructure? 
• Duration – What is the length of the term?  
• Maintenance and Responsibilities – Who is responsible for the repair and upkeep of the infrastructure? 
• Renewal – Is there an opportunity to renew the lease or upgrade infrastructure at the end of the term?  
• Reliability – Is your lessor trustworthy, with a good track record of helping other customers?  

Once all these questions are answered, you will have a strong understanding of what to expect during your leasing agreement.  

Explore Your Leasing Options for Farm Infrastructure Today 

AgAmerica’s farm equipment and facilities leasing program was designed to pave a path for you to explore new ways to level up your operation without a long-term capital commitment. We work with farmers every day to help them build successful, long-lasting operations. Speak with one of our experts today to learn how we can help you do the same.