Wednesday, June 8, 2016

Positioning for Success in the Economic Reset

“During the great commodity super cycle, ‘high prices cured high prices,’ as the saying goes. Record level commodity prices automatically increased fixed and variable costs for farm businesses. The price/cost lag effect finds that prices will decline at a much more rapid rate than costs. This creates negative margins where expenses and debt obligations can become problematic if sufficient working capital is not available. Now, the traditional price/cost lag is in effect not only in grain sector but for livestock businesses as well.”

This is according to Dr. David Kohl (as he shared in a recent Corn and Soybean Digest article) and few cattlemen would disagree. Input costs increased with the markets, but now markets have declined, but inputs have not.

Add that to the fact that many producers are facing huge losses of equity and liquidity and the situation becomes dire.

Dr. Kohl recognizes that the agriculture industry is in a major economic transition. “The great commodity super cycle that fueled much of the income statement and balance sheet growth in agriculture is in the rear view mirror,” he says.

At this year’s Southwest and Southeast Regional BeefMeets, Kohl will address producers’ concerns and answer some of the fundamental questions many have. What will be the emerging trends impacting agriculture and rural America’s bottom line in the short and long run? What are the latest trends and views in agriculture? What are some of the best management practices that could help you to position during this economic reset?

If you have other questions, be sure to bring them along to Dr. Kohl’s session, which will kickoff the events in Atlantic on June 28 and Riverside on June 29.

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