April 1026
Farm & Field

Farming for the Future

  Dr. David Kohl described today’s agricultural situation as “an economic reset” as opposed to a crash.

Virginia Tech’s Dr. David Kohl encourages farmers to plan for change.

The ability of farmers and ranchers to survive and thrive in today’s economy depends on their willingness and success in changing their game plans to take advantage of quickly changing environments. In short, those in agriculture must be able to exploit the volatility that now prevails.

That’s the advice from Dr. David Kohl, professor emeritus of Agricultural Economics at Virginia Tech University, whose rapid-fire, no-nonsense presentations have made him a popular speaker at producer meetings from coast to coast. Kohl recently addressed some 300 farm operators and others from the agricultural industry attending the 10th anniversary Farm Futures Summit held in St. Louis.

Described by Farm Futures organizers as one of the conference’s founders and a true "agricultural road warrior" due to his frequent appearances at industry meetings, Kohl said the commodity super cycle that brought record profits and asset appreciations to many is now in the rear-view mirror.

Predicting the 2007-12 period of general prosperity for agriculture will be viewed in the future as "an aberration" caused when a number of favorable conditions came together, Kohl also described today’s situation as "an economic reset" as opposed to a crash. The factors that created the good times have shifted, however, and now are akin to headwinds. Among other things:

The agricultural good times created an asset bubble because ag assets were seen as one of the best options for investment, Kohl observed. Now, the decline in land values "is burning into the muscle" of the farm economy’s strength, making working capital even more important in today’s volatile economy.

Kohl summarized what he viewed as troublesome results from a survey of 800 producers. In that study, 66 percent said they did not have a written business plan, a situation Kohl believes is the result of complacency.

Whether producers can position for the economic reset requires that they be able to respond "yes" to a number of key historical questions about their operation.

The greater the number of "yes" answers, the greater an operation’s chance for long-term survival. If fewer than half the responses are positive, there’s cause for alarm.

Kohl frequently uses a dry sense of humor and clever turns of phrase to reinforce his points. His presentation at the Farm Futures Summit was no exception. Here’s a sampling:

"Good times don’t last forever; neither do the bad times."

"Worst mistakes occur in the best times."

"The best opportunities come along in challenging times."

"The deeper the hole you dig, the more opportunity to bury yourself alive."

"It’s difficult to take a cat drinking cream and switch to skim milk."

"The best crop you will ever raise will be your children, grandchildren and other young people."