AgViews Live 2023: Top 10 Takeaways from Dynamic Event

8/4/2023 4:25:16 PM

Hot topics in ag this year echo other seasons: timetables for growing and harvest, commodity price volatility, Mother Nature’s unpredictable cooperation. In 2023, though, producers are also dealing with higher (although not historically high) interest rates, making money more expensive. While the overall ag economy is very healthy with huge tailwinds in the current farm economy, production costs are high, and conditions for some – for example, cow/calf producers – have been challenging.

AgViews Live, Bell Bank’s annual ag conference, again drew record numbers of attendees in Fargo, Sioux Falls and Wisconsin Dells. At the energetic and well-received events, producers and others in agriculture and agribusiness gathered to learn from Dr. David Kohl, an author and national speaker on agriculture and the economy, and Lynn Paulson, Bell’s director of agribusiness development.

Both presenters spoke on gauging – and managing – your risk today, and what to expect in agriculture and the economy moving forward.

Here’s a list of the top 10 takeaways from this year’s conference:

Manage the controllables, and manage around the uncontrollables.
Success can sometimes mask management shortfalls. Even if you’re in good financial shape, continue to carefully monitor liquidity, cash flow and profitability. Understand where your debt is concentrated and where your dollars are going in the years you make them.
Globally, countries like China, Russia, India, and the NATO/European bloc have impact.
China has seen a sharp slowdown in economic growth, with household debt-to-GDP similar to that of the U.S. during the2008 financial crisis. India, which has surpassed China in population, will be the world’s third largest economy by 2029. Europe is 20% of the word economy – and both Germany and the European Union are now in a recession. Watch for impacts of weather, interest rates, climate and social changes as well as export policies. /span>
Monitor megatrends and disruptors.
Today’s “hot topics” – cryptocurrency, artificial intelligence (AI), alternative proteins and dairy, green energy, carbon payments, new world digital currencies, ESG (environmental, social, governance) movements – all can become “black swan” issues with major consequences. Manage your operation toward maintaining resiliency, agility and nimbleness to better absorb shocks and proactively position yourself for the opportunities that will also arise.
Watch the dollar in light of developing new global banks and currencies.
The New Development Bank (headquartered in Shanghai) and Asian Infrastructure investment Bank are designed to reduce nations’ dependence on dollar-based funding. Their impacts have yet to be fully realized, and the U.S. needs to avoid “weaponizing” its currency.
Prices continue to be volatile.
Prices are affected by geopolitical agendas, deglobalization, trade policies and more. Interest rates also have doubled in a year, and with still-sticky inflation, now may be time to consider alternative investments such as CDs and Treasury bills. Ukraine, China, Mexico … the list of potential economic disruptors is long.
Commodity prices today are often lower than the cost of production.
With both corn and beans now at $5 and $13 or less a bushel, and continued uncertainty about the possibility of further price drops, farmers need to manage the risk. Commodity markets likely will force out inefficient producers. Global competition and trade policies are also key factors. For example, Brazil is now the world’s #1 soybean producer, and with its climate and potentially 100 million new acres available, coupled with areas that could get three crops in a single year, is a competitor to be reckoned with.
Higher expenses outlast higher incomes.
Margins are becoming tightly compressed in this economy. Even producers who are seeing higher incomes are also seeing higher costs from lenders and vendors. More risk is often taken when more money is being made, so don’t get greedy – or complacent. Be aware of third-party risk.
Farm and ranch land is the ultimate asset.
Farmland is greater than 80% of assets on farm balance sheets, and that allows farmers to leverage opportunities for growth and expansion. Farmland ownership is in pretty tight hands, with active farm producers still the primary buyers of farmland. Record high sales prices may be leveling off, but no price bubble is expected. Longtime landowners should make sure they’ve planned for transitions to the next generation to avoid unintended consequences of unearned wealth – as well as family disagreements over long-held property.
Rated red, yellow or green.
Looking at 10 leading economic factors, half are still warning of a recession or at least a downward trend, with housing starts, unemployment, factor utilization and federal debt all “green.” Producers and others should look at their own “green/yellow/orange/red” assessment to see where they fall in being a little better in many to a few components of operation.
Handle “hard” better … 5% better.
Whether you’re a producer or engaged in another aspect of agriculture, it’s good to look at how your operation has fared in good times and bad, and what conditions you need to navigate in order to handle “hard” better. Opportunities for prosperity are about being just 5% better in components such as production, operations, marketing, risk management and finance. Start with three areas where you can set measurable goals to do a little better, then work on more.

Watch for more in-depth information in Bell’s upcoming AgViews newsletter here in September, or sign up for our mailing list by emailing khegney@bell.bank.