Welcome to the weekly edition of The Ag Globe Trotter by Dr. Dave Kohl.
In my tenure of presenting over 7,000 speeches and seminars, a first occurred in Great Falls, Montana a few weeks ago. It was cold and snowy the day before and the morning of the event, which brought concerns from the Northwest Farm Credit Services team coordinating the event. However, the classic rugged spirit of Montanans meant the room was full despite bad roads and wintry conditions.
Eric Snodgrass, also known as “Eric the Weather Guy,” had just finished his presentation and was into the question-and-answer session when the room was engulfed with sudden darkness. After a 10-minute break, we were unable to find any lights except for some cell phones and light from the doorways. Eric said, “Good luck,” as he departed for an earlier flight. This particular presentation was very appropriate to the sudden changes occurring in the agriculture industry. Like Peyton Manning’s call, “Omaha, Omaha,” I called an audible and proceeded with the presentation in the dark with the silhouette of individuals and without any technology or a microphone. The participants rallied with me, and I was able to present an hour-long presentation organized off the top of my head with no notes. Sometimes you have to take a lemon and turn it into lemonade.
Another lesson, which is very appropriate for these economic times, is that you must manage the controllable variables, maintain focus and manage around the uncontrollable variables, such as this blackout. This ended our tour of the Northwest Farm Credit Services Ag Outlook meetings. The group enjoyed a candlelit lunch and could be heard engaging with each other, the Farm Credit staff and me. The following are some of the highlights from the four locations of the conference.
In these economic times with uncertainty in prices, input costs and interest rates, focus on the financials. Pay particular attention to both actual and projected cash flows, know your cost production, and be aware of your breakeven point. Backup your production, marketing and risk management program with risk management tools as both an offensive and defensive strategy.
The discussion at all four conferences stressed the importance of working capital and, to some degree, quickness to cash as strategies for resilience and agility. Working side-by-side with your lender and advisory team will be critical to navigating the choppy waters of 2023 and beyond.
For every size and type of operation, there are many opportunities in the agriculture industry. Agriculture is not one-size-fits-all, and there is no special enterprise that will get you the “magic” home run profit. Planning, strategizing, executing and monitoring with a sound business plan will be the difference makers.
The 5% rule was emphasized at all of the conferences. This principle shows that outstanding agribusinesses are 5% better in many areas of business in relation to their peers such as production, operations, marketing, risk management or financial management. Following the 5% rule will help place the odds in your favor for 2023 and beyond.
Eric brought some good news to the group as it appears that weather systems over the Himalayan Mountains and Japan will bring moisture to the Pacific Northwest over the next few months.
We started out the conferences in the light and ended in the dark. However, the participants in all four groups were a shining light to all of the presenters and the Northwest Farm Credit Services team as they are truly lifelong learners.
Dr. Kohl is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Polytechnic Institute and State University. Dr. Kohl has traveled over 8
million miles throughout his professional career and has conducted more than 6,000 workshops and seminars for agricultural groups such as bankers, Farm Credit, FSA and regulators, as well as producer and agribusiness groups. He has published four
books and over 1,300 articles on financial and business-related topics in journals, extension and other popular publications.
© Northwest Farm Credit Services 2022