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The Next Decade: Your Business, Your Life The first decade of the 21st Century is almost in the books. There have been many surprises around every corner over the past ten years. While many in the crop sector enjoyed favorable economic times, particularly in the mid- to late-decade, the protein and livestock sectors were challenged at the economic margins. Prices received and cost volatility were at the extremes, bringing a high degree of uncertainty to business decisions. Some producers in contractual agreements that were not fulfilled found counterparty risk a new term in risk management. Those serving sectors of the consumer and general economy have fought a marketplace that is mired in the worst recession since the Great Depression. These challenges can present opportunities for those who are proactive in managing business paradigms with sound business and financial principles. Let’s explore some of the changes coming to the agriculture industry and rural America in the next decade. It is also important to discuss the principles and philosophies it will take to be successful in business and life in general. First, technology applied to agriculture will continue to accelerate yields, particularly in the mid and late portion of the decade. A view out of my Hertz rental car window as I travel America finds better, more uniform yields, regardless of weather and land resource quality. Higher production per plant and animal unit will present opportunities for agriculturalists with a coordinated system of management. Consumers will continue to drive the business models of agriculture. Local, natural, and organic operations with stealthy niche marketing strategies will prosper if aligned properly with the customer segment. At the other end of the spectrum, large agriculture operations with large farm family or non-family member units with integrated systems will continue to prosper. However, there will still be room for those traditional producers who strive for low cost efficiency and sustainable resource utilization within the context of modest lifestyles. The five dimensions of agriculture will be engines of growth in the United States economy, producing food, fiber, fuel, products for the life sciences, and the much needed life experiences. As the public has less direct connection to farm and ranch businesses, providing life experiences will become increasingly important. Also, women will become more prominent decision makers at all levels of the agricultural industry along with a resurgence of younger people who desire balance in business and lifestyle. Regulation and policy will intensify, ranging from animal welfare to water issues and resource management. Special interest groups will challenge the industry on where and how the industry conducts business. Collaboration will be a key word in working out win-win situations. Do not be surprised if social media and other technologies not yet discovered, along with human interaction, are tools to bridge the gap and provide needed interconnectivity between groups. The Asian region, particularly China, will challenge the supremacy of the U.S., both from a military and economic standpoint. The Asian region will provide capital and align politically with nations of the southern hemisphere as another source of food, fiber and fuel. The BRIC nations of Brazil, Russia, India and China, will flex their economic muscles, but will be challenged both economically and socially with “black swan” events that the U.S. has had resolve to overcome in the past. Finally, with all the uncertainty and volatility comes even more opportunity than existed in previous generations. Each major decision must be tested to your business, family, and personal goals to maintain business and life balance. There will be a widening gap of business profitability as those who rise to the top rely on time-tested principles. These include moderation in debt levels, developing a plan for your profits in good years, and building your financial shock absorber in working capital to manage through down cycles and capitalize on opportunities. Being a lifelong learner will also be a key to success for a balanced business and life. |
Author David Kohl received his M.S. and Ph.D. degrees in Agricultural Economics from Cornell University. For 25 years, Kohl was Professor of Agricultural Finance and Small Business Management and Entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Tech, Blacksburg, Virginia. He was on special leave with the Royal Bank of Canada working on advanced initiatives for two years, and also assisted in the launch of the successful entrepreneurship program at Cornell University. Kohl is Professor Emeritus in the AAEC Department at Virginia Tech. Kohl has traveled over 7 million miles throughout his professional career! He has conducted more than 5,000 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 1,000 articles on financial and business-related topics in journals, extension, and other popular publications. Kohl regularly writes for Ag Lender and Corn and Soybean Digest. He has received 11 major teaching awards while teaching over 10,000 students, and 17 major Extension and Public Service awards from Virginia Tech, Cornell University, and state and national organizations. Kohl is a two-time recipient of the prestigious American Agricultural Economics Association's Outstanding Teaching Award. Kohl is only one of five professors in the nearly 100-year history of the Association to receive the award twice. He received the Governor's award for his distinguished service to Virginia agriculture, the youngest recipient to receive this award. Kohl has addressed the American Bankers Agricultural Conference for over 30 consecutive years, and has appeared before numerous state bankers’ schools and conferences throughout the U.S., Canada, Mexico, and the world. He has also been one of the top rated instructors at the LSU and Colorado Graduate Schools of Banking, and is Chancellor of Farm Credit University, which has trained over 700 lenders using an online and face-to-face educational approach. As facilitator of the United States Farm Financial Standards Task Force and member of the Canadian Agricultural Financial Standards Task Force, Dr. Kohl was one of the leaders in establishing guidelines for the standardized reporting and analysis of agricultural producers' financial information on a national and international basis. The Kohl Agribusiness Centre has been established in the College of Agriculture and Life Sciences at Virginia Tech in honor of his long-term commitment to practical teaching, research, and extension. Kohl is currently President of AgriVisions, LLC, a knowledge-based consulting business providing cutting-edge programs to leading agricultural organizations worldwide. He is also business coach and part owner of Homestead Creamery, a value added dairy business in the Blue Ridge Mountains. On a more personal note, Dave enjoys playing basketball and likes most sports, farms, dogs, and covered bridges; he dislikes lazy students, administrative bureaucracies, and paperwork! If you would like to keep up with Kohl’s information and perspectives, you can find his weekly columns on the following websites:
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