The Next Decade: Your Business, Your Life
By: Dr. David M. Kohl
The first decade of the 21st Century is almost in the books. There have been many surprises around every corner over the past ten years. While many in the crop sector enjoyed favorable economic times, particularly in the mid- to late-decade, the protein and livestock sectors were challenged at the economic margins. Prices received and cost volatility were at the extremes, bringing a high degree of uncertainty to business decisions. Some producers in contractual agreements that were not fulfilled found counterparty risk a new term in risk management. Those serving sectors of the consumer and general economy have fought a marketplace that is mired in the worst recession since the Great Depression.
These challenges can present opportunities for those who are proactive in managing business paradigms with sound business and financial principles. Let’s explore some of the changes coming to the agriculture industry and rural America in the next decade. It is also important to discuss the principles and philosophies it will take to be successful in business and life in general.
First, technology applied to agriculture will continue to accelerate yields, particularly in the mid and late portion of the decade. A view out of my Hertz rental car window as I travel America finds better, more uniform yields, regardless of weather and land resource quality. Higher production per plant and animal unit will present opportunities for agriculturalists with a coordinated system of management.
Consumers will continue to drive the business models of agriculture. Local, natural, and organic operations with stealthy niche marketing strategies will prosper if aligned properly with the customer segment. At the other end of the spectrum, large agriculture operations with large farm family or non-family member units with integrated systems will continue to prosper. However, there will still be room for those traditional producers who strive for low cost efficiency and sustainable resource utilization within the context of modest lifestyles.
The five dimensions of agriculture will be engines of growth in the United States economy, producing food, fiber, fuel, products for the life sciences, and the much needed life experiences. As the public has less direct connection to farm and ranch businesses, providing life experiences will become increasingly important. Also, women will become more prominent decision makers at all levels of the agricultural industry along with a resurgence of younger people who desire balance in business and lifestyle.
Regulation and policy will intensify, ranging from animal welfare to water issues and resource management. Special interest groups will challenge the industry on where and how the industry conducts business. Collaboration will be a key word in working out win-win situations. Do not be surprised if social media and other technologies not yet discovered, along with human interaction, are tools to bridge the gap and provide needed interconnectivity between groups.
The Asian region, particularly China, will challenge the supremacy of the U.S., both from a military and economic standpoint. The Asian region will provide capital and align politically with nations of the southern hemisphere as another source of food, fiber and fuel. The BRIC nations of Brazil, Russia, India and China, will flex their economic muscles, but will be challenged both economically and socially with “black swan” events that the U.S. has had resolve to overcome in the past.
Finally, with all the uncertainty and volatility comes even more opportunity than existed in previous generations. Each major decision must be tested to your business, family, and personal goals to maintain business and life balance. There will be a widening gap of business profitability as those who rise to the top rely on time-tested principles. These include moderation in debt levels, developing a plan for your profits in good years, and building your financial shock absorber in working capital to manage through down cycles and capitalize on opportunities. Being a lifelong learner will also be a key to success for a balanced business and life.
About Dr. Kohl ...