Apple Packers Embracing Technology To Remain Competitive
August 23, 2024 The more apples, the better, right? Maybe not. The apple industry is experiencing an overproduction issue, and the excess supply has a negative impact on bin pricing. Faced with increasing competition, packers must remain at the top of their game to secure stronger prices.
Today’s apple market is weathering several issues: inflation, high interest rates, tight margins, energy-intensive equipment and increasing pressure from regulators and consumers. To address these issues, packers are reassessing their business models and adopting innovation to expand, increase profits and also remain competitive.
Equipment and technology advancements that create efficient, reliable and ample storage facilities are making a positive impact on the stretched bottom lines of packers. So, how do packers prioritize innovation while managing the chronic challenges of rising costs, fluctuating labor resources and increasing demands?
Fortunately, there are financing options that allow packers to reserve capital budgets and bank lines of credit while still investing in innovation – such as storage options and green solutions – to improve operations.
Storage
Thanks to wildly successful crops, storage solutions are more important than ever in the apple industry. The longer packers can preserve apple quality, the better chance of outlasting the competition and having to sell at a lower price because the packer is out of storage. Controlled atmosphere (CA) room storage options slow respiration and reduce the apple stress, preserving apples for up to a year, depending on the apple variety.
Most packers are well-aware that CA solutions from five, 10, or more years ago are no match for the high-tech options on the market today.
Efficiency and Eco-Friendly Measures
Packers have a variety of options to reduce operating costs and environmental impact while enhancing customer service and vendor fulfillment.
Energy-intensive processes, equipment and facilities represent the greatest opportunities to maximize efficiency and minimize waste. From high-yield lighting upgrades to renewable energy systems, these projects provide considerable return on investment (ROI) for manufacturers.
For example, a solar-powered redundancy (or resiliency) system keeps your business running during planned — and unplanned — power outages, enabling packers to maintain operations, production schedules and cold storage for perishable products.
Examples include HVAC systems, LED lighting, solar systems, smart controls, refrigeration, energy management systems, power resiliency systems, power consumption and conservation analysis and human-centric lighting (HCL) technologies.
Automation is another energy-saving option for packers. Increased efficiency, profitability and apple quality aren’t the only reasons automation is becoming increasingly popular in packing plants. Automated processing and distribution tasks also enhance safety and working environments and increase quality control accuracy.
Financing Can Help
With global food demand expected to increase by 35% to 56% between 2010 and 2050, according to this study by the International Institute for Applied Systems Analysis (IIASA), we need modern packing technology now more than ever.
Many apple producers need CA and other technology solutions but lack the capital resources to make the investment. Equipment financing makes innovation and equipment upgrades possible, simple and cost-effective, thanks to specialized lease or loan products available from lenders.
Consider these financing options to help acquire the technology needed for today’s successful agribusiness:
- 100% financing. Bundle equipment, sales tax, labor, electrical, ventilation, concrete and any other project-related costs into one convenient plan.
- Competitive pricing. Lenders can work with producers and packers to formulate term, cadence of payment and finance structures (tax and non-tax) to find the best pricing.
- Flexible payment options. Choose options to align with seasonal revenues and cash-flow requirements.
- Reasonable amortization. Lenders can match schedules to clients’ budget needs.
- Operating or capital lease and loan options. Optimize potential income tax advantages and balance sheet management.
- Cost savings. Look for options to conserve cash with no down payment requirements and minimal financing fees.
Exercise thought and care into choosing the right financial provider to help grow your business and remain competitive. Look for providers that have a clear understanding of and experience in working with similar businesses. Be sure the provider has solid experience in lease structuring. And, always work with someone you trust.
Of additional note, the Rural Energy for America Program Renewable Energy Systems & Energy Efficiency Improvement Guaranteed Loans & Grants program provides guaranteed loan financing and grant funding to agricultural producers for renewable energy systems or to make energy efficiency improvements. Agricultural producers may also apply for new energy efficient equipment and new system loans for agricultural production and food processing. Funds can be used for a variety of needs. Grants vary from $2,500 to $1 million.
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