Growers of farm commodities have a lot of things to evaluate as they come out of the latest "Super Cycle," as Dr. David Kohl likes to call it. The former Virginia Tech professor and world-renowned economist told producers at the 2015 PDPW Business Conference that many of them have made more money on their corn and soybean crops in the past seven years than their counterparts did during last four decades.
"In the past century, we have witnessed four super-cycles in the crop production industry, including the one we just experienced between 2007 and 2012," Kohl said. "But there are still plenty of reasons to be cautiously optimistic in the foreseeable future if you manage your risk and keep an eye on several strategic areas."
Kohl pointed out that many of the emerging markets overseas are starting to see a slowdown in their economies, including countries that have been top export destinations for American-grown crops. Uncertainty with biofuel mandates and unpredictable weather patterns are also key areas to watch when making long-term decisions on the farm.
He spent a lot of time talking about Europe, which he claims is heading toward a recession, and China for its massive influence in the marketplace.
"I know that many find this comment to be controversial, but I tell people 'don't bet the farm on China,'" he warned. "They are the type of customer that can giveth in the market, but they can also taketh away.
"If they do something we don't like and the United States imposes sanctions on them, the first thing they do to retaliate is cancel their American imports. [Vladimir] Putin of Russia does it, too."
Back here at home, Kohl said things are looking up in our economy as interest rates are expected to start rising later this year and the gross domestic product is seeing improvements.
Kohl says the best advice he can give producers of any size is to make sure you have a sound business plan.
"I meet so many farmers and business owners who do not have a sound road map for their enterprise that they can follow going into the future," Kohl said. "It's hard to expect success if you don't have written plan for success."
He also encouraged producers to "work on production efficiencies before you expand; you should always try to get better before you get bigger."
The 2015 PDPW Business Conference is sponsored by Professional Dairy Producers of Wisconsin. Dairy producers from around the world gathered to engage in professional development and network, with each other and other industry professionals. More highlights from the conference are available at www.pdpw.org.
Professional Dairy Producers of Wisconsin is a dairy-producer founded organization that provides educational programs and services to fellow dairy producers. PDPW's mission is "to share ideas, solutions, resources, and experiences that help dairy producers succeed." 3.19.2015