Agriculture leaders anticipate the overall economic conditions of the U.S. will improve in the next 12 months despite lingering economic concerns. They are keenly focused on managing profitability by taking command of the business areas they have control over such as increasing efficiencies through automation, adding new products and services with higher profit margins, and leveraging artificial intelligence to analyze data and support decision-making.
These insights are drawn from a nationwide survey of small and middle market companies across the U.S. conducted by Umpqua Bank as part of its annual 2023 Business Barometer report.
Based on the study’s results, more than half of respondents from the agricultural sector are optimistic about future economic conditions, and 59% expect revenues to increase. In terms of profitability, 68% expect an increase in the next 12 months, compared to 62% of healthcare businesses that responded to the survey, 56% of manufacturing, and 53% and 52% of business service and wholesale companies, respectively.
“The agriculture sector is an important part of our livelihood and our economy, and business leaders in this industry are confident in their prospects and planning investments to fuel growth,” said Bill Barclay, Umpqua’s Head of Community and Business Banking. “To tackle factors under their control over the next 12 months, agribusiness plan to invest in marketing, artificial intelligence, and automation, which could further improve their operational efficiency, expand market reach, and bolster bottom lines.”
Priorities in the Next 12 Months
As senior leaders begin to meet and update their business plans for 2024, it is clear agriculture businesses have specific ideas where they will use their investment dollars. Survey respondents noted they are very likely to prioritize the following:
- 61% Tools to protect payments systems
- 52% Significant changes to products and services
- 38% Digitizing new areas to improve efficiency
- 35% Expanded real estate footprint
- 29% Onshoring supply chains
Agriculture Sector Taking-On Critical Business Areas
While business leaders are currently focused on growing their business (34%) through marketing, addressing increased costs (26%), and launching technology improvements (14%), they are also looking ahead into 2024. These executives are strategically focused on four key areas they believe most critical for future business success: (52%) improving operational efficiency, (46%) financial management, products and services (29%) and hiring and retention (29%).
While climate change is among the concerns the agriculture sector has identified, it is also facing other immediate challenges. The top worries that are currently keeping some of the agriculture executives surveyed up at night include (by order of importance):
- Rising interest rates
- Access to financing
- Disruptions due to technology innovation
On behalf of Umpqua Bank, DHM Research conducted an online survey of 1,250 owners, executives, and financial decision-makers of American small and middle market companies during July 27 to August 8, 2023. 22% of middle market respondents are minority-owned while 23% of small respondents are certified woman-owned and 17% minority-owned. The margin of error is: ±2.8%.