April 2016
Farm & Field

A Focus On Efficiency

  Bob Utterback, commodity broker and agricultural economist, was the featured speaker at AFC’s Annual Meeting.

Agricultural economist Bob Utterback urges caution for farmers.

The morning after Alabama Farmers Cooperative’s 79th Annual Meeting on Feb. 24 in Montgomery, attendees gathered to hear commodity broker and agricultural economist Bob Utterback’s outlook on the 2016 market.

Utterback presented a realistic picture of struggling U.S. and world economies and encouraged farmers to be cautious.

"I don’t think he said anything that surprised any of us," said Mike Tate, newly elected chairman of AFC’s board of directors. "We all realize what we’re facing. But I think it was very beneficial. As a grower, it was a good reminder; and I think it was good for our managers to hear that presentation. It helps everybody get prepared."

Utterback’s cautious outlook stems from several factors: unstable world economies, crashing energy values, low interest rates, an increasing dollar value (decreases exports), the upcoming presidential election and stagnant demand. He advised farmers to keep their crop healthy and sell when possible – 2016 is not the year to hold out for a weather event, he said.

"It’s better to sell first and early rather than sell last and be wrong," he advised.

In times like these, Utterback instructed farmers to focus on becoming more efficient rather than adding acreage.

"Bigger is not always better," Utterback stated. "We need to make existing units more efficient rather than just getting bigger to reduce cost per unit."

Utterback encouraged attendees to invest discretionary funds into their operation.

"Buy the best planter possible, invest in irrigation or tillage where needed, and develop storage to hold your entire inventory," he said. "Learn to think like an elevator owner, not a producer."

Sam Givhan, member of AFC’s board of directors and a longtime farmer in Dallas County, said he and many other farmers in the room have been through similar economic cycles – he especially remembers tough years in the 1970s.

"If interest rates go up, it’s going to be a triple shock, especially if you’re carrying a lot of debt," Givhan said. "He had a slide that showed how crude oil and corn relate to each other. I never really paid attention to that, but it’s always been an old adage that cheap corn made cheap cattle. It was really interesting how he tied crude oil prices into corn prices."

Givhan said he agreed with Utterback’s advice to be cautious during this time, but is optimistic farmers will weather the storm.

"If people have an opportunity to lock in and cover their costs, they need to be doing it," he said. "It’s time to really be cautious and careful, in my opinion. On the other hand, we’ve had several good years price wise; so I think most people should be in pretty good shape."

About Bob Utterback

Utterback grew up on a small farm in central Indiana. He earned a bachelor’s degree in Agricultural Business Management with a minor in Agronomy from Purdue University and a master’s degree in Agricultural and Resource Economics with a minor in business management from Oregon State University.

After graduation, Utterback worked for Purdue University Cooperative Extension; and, in 1981, he became the hog analyst for AgriVisor Inc. a division of the Illinois Farm Bureau. In 1990, Utterback became a broker and established his own brokerage firm, Utterback Marketing Services Inc. He has also been chief market analyst for several farming publications in addition to serving as outlook economist for Farm Journal, the leading agriculture magazine in the United States, since 1993.

Jill Clair Gentry is a freelance writer from Montgomery.