Staying in business is the name of the game in 2017
Sep 26, 2016
How do we define success in 2017?
In the blink of an eye, the summer of 2016 has passed. State Fairs have come and gone. Football is plastered on millions of televisions. Now, families have begun school and are swamped with the activities that come with it. Preparations for fall harvest are in full swing and before we know it harvest will pass and we’ll be surrounded by our families during Thanksgiving and Christmas. For many in production agriculture, some or all of these activities will consume our lives for the next 3 months. Rinse and repeat, it’ll all happen again in 2017. As things come and go with the change in seasons, the great American dream of production agriculture will go on … but not for everybody.
It’s no secret the last 10 years has provided extraordinary opportunities in the Ag space. From life styles to productions practices, the American producer has been riding a volatile roller coaster that hundreds of millions of people will never experience. Often it makes me question, how do we define success in this type of environment? Is the definition of success from 5 years ago, 2 years ago or even last month different than the coming months and years? No doubt, not everybody is in the same boat, so measurements will all be different. Staying in business is definitely a common goal and is the simplest measure of success one could have at this time.
Going into the 2016 calendar year, times were tough and certainly didn’t appear that they were going to get much better. For many, much of the hard-earned equity built over the last decade has been burned at an exponentially higher rate than it was built. There were plenty of stories. Coffee shop talk of who was and wasn’t getting financed from the Ag lenders was everywhere. Purchases of inputs such as fertilizer were dragging. Acreage decisions that seem to always be about rotation were rumored to have major swing ability based upon the capital required to plant a certain crop. All these pieces created a dark cloud of uncertainty. How would one define success in 2016? We decided to view success in 2016 as whether or not a farmer is in business in 2017.
You’re probably thinking, “Hold on. Just to be farming in 2017 is your definition of success for 2016? That’s it? That will be easy!” Think back over the last 9 months and consider my roller coaster analogy. How did you feel from January-March of this year? New crop corn and soybean futures were significantly below cost of production and dangerously low prices for Revenue Crop Insurance were established. The financing crunch was on. What about April-June? We were in the midst of a major price move higher in grains. For an extended period, the world was right. The fears from January-March were distant memories and once again that American dream was darn good. But, after prices have returned to multi-year lows and costs have not dropped, the great American dream has already ended for some.
Now let’s get back to the original question—how will we define success in 2017? Unfortunately, it doesn’t appear to be much different than last year’s definition, except shifting the focus to who will be farming or not in 2018. Year on year, costs do not appear to be making much of a setback and grain prices are not offering much help for either old or new production. Couple all of that with the monster cushion in world grain supplies, the volatility that has helped create enormous grain pricing opportunities in the past may be short lived or worse yet, non-existent over the next 12 months.
Anything can happen. Mother Nature can bring a surprise that makes this whole post seem silly. It’s alarming how many can view that “what if” as part of a plan when, in all reality, it’s nothing more than hope. Hope is not part of a marketing plan. Being my first post on AgWeb, I thought I should share how we see successful production agriculture for 2017. As I mentioned, it doesn’t appear things will get easier anytime soon. Let the experiences of 2016 help shape actions of 2017. Opportunities will need to be aggressively pursued and executed. Going into the 2017 crop year, regardless of situation, I believe these steps should be considered for all involved in production agriculture. I’m looking forward to addressing each of these in more detail in future posts.
- Understand your exposure
- Create a written plan
- Execute the written plan
Have a safe and bountiful harvest!