Sometimes, you just have to connect the dots between the economy and your business decisions.
In agriculture, that means settling in for another year of low commodity prices, according to ag economists. We ended 2016 on the third year in a row of below the 10-year average for net farm income. Dollar strength has created a significant headwind for ag producers, making our products more expensive for other countries to purchase. It feels like we are running uphill.
The good news about 2017 is finally market prices and costs are coming close to equilibrium. Input prices are falling for grain producers; fertilizer, in particular is trending lower in cost. The futures market looks positive. Hey, hey…we’ll take what we can get.
So that leaves all of us agriculture with a significant new “to-do” list for the new year. Here are some starter ideas.
Business to-do list for 2017:
- Double-check inventory. If you carry inventories, review your target levels and actual levels and make sure that you are not bloated in one area.
- Re-evaluate labor needs. Labor in rural America is going to continue to be a struggle. Focus on developing your current labor’s skill sets in different areas, and look into technology where available to offset labor reductions.
- Seek opportunities. Keep your eyes peeled for niche and alternative market ideas. Necessity is the mother of invention, and in tough times some of the most amazing businesses have been born.
- Look into sustainability. Increasingly, consumers are buying food and agriculture products based on how they are grown or raised. To complicate matters, there is little trust and transparency in the food and agriculture system. Food and agribusiness companies want to know that your businesswill continue to operate, remain resilient, and potentially expand. The reality is, these forces are affecting the health and growth of your business today. If you are not focused on sustainability, then you are missing key strategies and solutions that mitigate these forces already affecting your business. Check out @KCoeResourceMAX for some ideas on this topic.
Folks, I’ve seen my share of ag market cycles. We’ll come out of this one just like we have the others. And we will likely come out sharper and stronger because of what we learned.
So buckle up, paste on that smile and focus in on your business to-do list. Let’s roar into 2017 with a new spirit and commitment to doing the best we can every day. Get it done!!