Straight Talk, Straight Actions - Dr. David Kohl
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Transcript of Straight Talk, Straight Actions - Dr. David Kohl
STRAIGHT TALK, STRAIGHT ACTIONS
Macro Clinic Video Blog: http://agstar.com/edge/
Road Warrior of Agriculture: www.cornandsoybeandigest.com
Ag Globe Trotter: www.northwestfcs.com
Dave’s GPS & Dashboard Indicators: www.farmermac.com
Dr. David M. KohlProfessor Emeritus, Agricultural and Applied Economics
Virginia Tech, Blacksburg, VA
(540) 961-2094 (Alicia Morris) | (540) 719-0752 (Angela Meadows) | [email protected]
February 9, 2017
State of the State of Agricultural
Economics Reset: The Mid Innings
emerging nations, BRICS & KIMT, slow
growth, one half in recession
ethanol & oil’s impact on commodity prices
Central Banks - U.S. & abroad
duration of the strong dollar
weather: supply & demand
2
Game of Economic Reset
Innings 1-3
profit margins decline, cash flow issues
Innings 4-6
relief pitcher, use working capital, refinance
Innings 7-9
core equity, sale of property, multiple refinancing
3
Global Economics: China
TPP: China’s role
water, soil, & air issues
asset bubbles:
stock
real estate
other
military buildup
South China Sea
5
Global Economics: Japan
leader in support of TPP
aging population
Central Bank’s stimulus
military
shrinking economy
6
Global Economics: Russia,
Brazil & Others
Oceania
political disconnect
economic challenges
currency valuation
weather
other
7
New Administration
international trade
banking regulations
health care
immigration
taxation
trillion dollar infrastructure spending
8
Federal Reserve’s
Interest Rate Barometer
Indicator Status
Unemployment 5.0%
GDP Growth 3.0%
Inflation 2.5%
Consumer Sentiment >90%
9
• Three increases in 2017!
• stock market/real estate wealth effect
• copper prices
State of the U.S. Economy
90 months of expansion
106/120 months
coastal vs. fly over states
Republicans/recession
velocity of money
stock market
10
Mega Trends 2017-2025:
Global Economy
moderating economies in emerging nations
agriculture is “point dog” in political, military,
and social actions
geopolitical trade risk - biggest risk to
agriculture
creates tremendous opportunities and
opportunities for failure
“Business planning scenarios,
execution and monitoring”12
Mega Trends 2017-2025:
Consumer Trends
splintered marketplace
local, natural, & organic
GMO vs. non-GMO
food expenses
traits to plate
ethnic group linkage
"20/20 foresight: perceptual acuity”
13
Mega Trends 2017-2025:
Innovation & Technology
convergence of technology
bio
engineering
big data
higher level of talent
employees, suppliers & advisors
systems/replicate
too connected
“Hear the silence.”
14
Mega Trends 2017-2025:
Non-Government Organizations
biosecurity
open pens
antibiotic free
organic/natural
animal welfare
15
Mega Trends 2017-2025:
The Millennials
group exceeds baby boomers in size
will be on forefront on consumer, social, and political
trends, changes & issues
75% of workforce by 2025
40-20-40 Rule
feedback and recognition are important
balance of work and lifestyle
innovation/technology with “old time” work habits
“Financial self worth equates to
network of people.” 16
Mega Trends 2017-2025:
The Disconnect
by 2050- 70% of world population will be urban
85% of Americans are 2 generations away
from farm
political power disappearing
less government support levels
extreme groups
social media
“Connectivity strategy- sixth sense”
17
Bottom 20% of Producers
wishful thinking for revenues
not aware of costs
don’t know cost of living
won the cash rent lottery
never updates the balance sheet
emotional vs. objective
no fall back plan
no active responsibility / not at fault
wants easy out in adversity21
Top 20% of Producers
know cost of production
realistic revenue targets
keep in touch with lender
keep up with finances before December
take responsibility for outcomes
fall back plan
training family members to takeover
better before bigger
22
10 Good Reasons to Start
Farming/Ranching Today
1. machinery & equipment values are down 20%-40%
2. low interest rates
3. 20% of family farms have no next generation
4. one size does not fit all
5. capitalize on local niche markets
6. control vs. ownership of assets
7. collaboration of assets and talent sharing
8. 60% of land turnover by 2030
9. 50-70-70 rule
10. raising a family/children
23