For the second year in a row, Bushel’s State of the Farm survey asked about payment trends. For the second year in a row, paper checks remain supreme.
Anecdotally, we know this to be true since the post-Civil War era. Yet, recent data suggests a shift in both payment methods and farmers’ business preferences.
- Paper check usage continues to decrease
This year’s report indicates a notable shift away from traditional payment methods, with a 12% decrease in paper check payments to farmers, signaling a gradual but steady adoption of modern payment technologies. Specifically, the use of paper checks for crop inputs has fallen by 17%, though it still accounts for 65% of such transactions. Despite this persistence, the trend clearly favors electronic alternatives, such as ACH transfers and digital wallets, which are gaining ground in the agricultural sector. This evolution reflects a broader move towards digitalization, with over 70% of grain settlements still being executed via paper checks, highlighting the sector’s mixed pace toward embracing new technologies.
- Challenges with Traditional Mail Services
The U.S. Postal Service has advised customers to increase diligence when mailing checks due to security concerns. Others are advocating for secure digital methods instead. For agribusinesses, this shift toward digital payment methods is not just a matter of convenience but also a crucial step toward enhancing transaction security and efficiency. Recently, the U.S. Treasury Department announced check fraud has increased 385% since the pandemic.
Compounded with that are the mailing delays, specifically in rural areas. With the potential slowdown of mail delivery in these regions, the reliance on mailing paper checks could lead to delayed payments, which can disrupt cash flow for farmers. The increasing risks associated with mail delivery delays are pushing more farmers to adopt digital payment systems that ensure timely and secure transactions.
- Personal usage of digital payment platforms continues to rise
The report shows a steady rise in the use of digital payment platforms over the last year; last year 61% of respondents selected ‘none of the above’ when asked if they use various popular digital payment platforms. This year’s showed 24%.
Surprisingly, the increase is driven not by farmers aged 18-30 but by 90% of farmers aged 30-50 embracing at least one digital payment platform. As they continue to get familiar with the ease and transparency of this kind of technology, the higher the expectation to do business in similar ways.
- Faster payment is a grain buyer differentiator for farmers
We all know cash bid prices and hauling distance are the main drivers for getting farmers to your location. But when those two are equal? For farmers under 40, faster payments and marketing programs are the top two reasons a farmer said they would sell to one grain company over another. For farmers 31-40, 27% chose “faster payment” as the reason for selecting their local grain facility.
- Farmers can access lines of credit more easily
Compeer Financial’s recent announcement about easier access to credit lines and repayments via Bushel Wallet marks a significant improvement in convenience and transparency for farmers and agribusinesses. With this addition, it will be easy for farmers to draw on their line of credit to pay invoices, improving convenience and transparency for farmers, agribusinesses, and their financial institutions.
- ACH adoption is still a stumbling block
While ACH payments remain popular, many agribusinesses have seen lackluster adoption. Additionally, the frequency of ACH fraud cases has increased, raising questions about whether the benefits of ACH still outweigh the risks. Agribusinesses are now re-evaluating their payment methods, with some considering the adoption of more secure digital alternatives that offer better protection against fraud.
Learn more about the convenience, security, and transparency of digital payments for agriculture.
