The more apples the better, right? Probably not. The apple industry is experiencing an overproduction problem, and the oversupply has a negative impact on box prices. With increased competition, packers must constantly do their best to secure higher prices.
Today's apple market is challenged by several challenges including inflation, high interest rates, tight profit margins, energy-intensive facilities, increasing pressure from regulators and consumers, etc. To address these issues, packers are rethinking their business models and embracing innovation to expand, increase profits, and stay competitive.
Advances in equipment and technology that enable efficient, reliable and adequate storage facilities are positively impacting packer bottom lines. So how do packers prioritize innovation while addressing chronic challenges of rising costs, fluctuating labor and increasing demand?
Fortunately, there are financing options that allow packers to secure capital budgets and bank lines of credit while investing in innovations like storage options and green solutions to improve their operations.
Storage
With a hugely successful harvest, storage solutions are more important than ever in the apple industry. The longer packers can maintain the quality of their apples, the greater the chance they have of beating out their competitors and forcing them to sell at lower prices as packers run out of storage. Controlled atmosphere (CA) room storage options slow respiration and reduce stress on the apples, allowing apples to be stored for up to a year, depending on the apple variety.
Most packaging businesses are well aware that CA solutions from five, ten or even more years ago are no match for the high-tech options available on the market today.
What is being done to make carrot crops more resilient?
Efficiency and environmental friendliness
Packers have a variety of options to reduce operational costs and environmental impact while enhancing customer service and vendor fulfillment.
Energy-intensive processes, equipment and facilities represent the greatest opportunity to maximize efficiency and minimize waste. From high-yield lighting upgrades to renewable energy systems, these projects can provide manufacturers with a significant return on investment (ROI).
For example, solar power redundancy (or resilience) systems can help businesses continue operating during planned and unplanned power outages, allowing packers to maintain operations, production schedules, and refrigerated storage of fresh produce.
Examples include HVAC systems, LED lighting, solar power systems, smart controls, refrigeration, energy management systems, power resiliency systems, power consumption and savings analysis, Human Centric Lighting (HCL) technology, and more.
Automation is another energy-saving option for packers. Increased efficiency, profitability and apple quality aren't the only reasons why automation is becoming increasingly popular in packing plants. Automated handling and distribution tasks also enhance safety and the working environment, and improve accuracy of quality control.
Funding helps
According to the study by the International Institute for Applied Systems Analysis (IIASA), global food demand is expected to increase by 35% to 56% between 2010 and 2050, making modern packaging technology more necessary than ever before.
Many apple growers need CA and other technology solutions but lack the capital resources to invest in. Equipment financing makes innovation and equipment upgrades simple and cost-effective, thanks to specialized lease and loan products offered by lenders.
To acquire the technology needed for today’s agricultural business to succeed, consider the following financing options:
100% financing. Combine equipment, sales tax, labor, electricity, ventilation, concrete and other project-related costs into one convenient plan. Competitive pricing. Lenders can work with producers and packers to develop terms, payment frequency and financing structures (taxable and non-taxable) to find the best price. Flexible payment options. Select options to align with seasonal revenue and cash flow requirements. Reasonable amortization. Allows lenders to align schedules with customer budget needs. Operating or capital lease and loan options. Optimize potential income tax benefits and balance sheet management. Cost savings. Look for options with no down payment required and minimal financing fees to conserve cash.
Choosing the right finance provider to help your business grow and stay competitive requires thought and careful consideration. Look for a provider who has a clear understanding of and experience working with similar businesses. Make sure the provider has solid experience in lease construction. And always work with someone you can trust.
More notably, the Rural Energy for America program's Renewable Energy Systems and Energy Efficiency Improvements Guaranteed Loans and Grants program provides guaranteed loan funds and grants to agricultural producers for renewable energy systems or energy efficiency improvements. Agricultural producers can also apply for new energy-efficient equipment and new systems loans for agricultural production and food processing. Funds can be used for a variety of needs. Grants range from $2,500 to $1 million.
0 1 5 Apple's packagers turn to technology to stay competitive
Justin Woodward is Senior Vice President of Equipment Finance for Key Equipment Finance/Bank Channel. Based in Boise, Idaho, he has 25 years of experience in equipment finance. He can be reached at (email protected). All of the author's stories can be found here.
