Kate Brooks, Extension Livestock Economist at UNL will provide outlook and analysis for beef and other livestock producers.
Cory Walters, Extension Crop Economist at UNL will discuss the crop outlook and implications for producers.
Brad Lubben, Extension Policy Specialist at UNL will discuss the ag policy outlook. Beyond the current policy environment in Washington, Lubben will focus on the role of the farm income safety net and the projected support from farm programs and crop insurance for cash flow planning and risk management decision-making.
Tina Barrett, Director of Nebraska Farm Business, Inc. will discuss the farm financial outlook and financial management decisions ahead for producers. Building on data from hundreds of farm cooperators in NFBI, Tina will focus on the current financial position and trends for Nebraska agriculture and the financial management challenges and decisions facing producers, with a focus on budgeting and cost control for the year ahead.
Jay Parsons, Extension Economist at UNL will discuss farm and ranch risk management issues and decisions. Jay will draw on his expertise in risk management to incorporate the marketing, production, policy, and financial discussion into risk management decisions and strategies for producers for 2016.
The agenda is packaged into a 3-hour format to provide producers the best available information and send them home to ready to make 2016 management and marketing decisions. Although there is no cost to participants, pre-registration is encouraged to plan for facilities, refreshments, and materials. The York session will be held Tuesday, November 17, 1:00 – 4:00 p.m. at the Holthus Convention Center, 3130 Holen Avenue, York, NE 68467.
To register for the York session, call our office at (402) 759-3712 or email Brandy VanDeWalle at email@example.com.
You can also contact Brad Lubben at 402-472-2235 or firstname.lastname@example.org for more information. It should be a great workshop, so I hope we’ll have a large turnout for this meeting.
Engaging young producers in agriculture is increasingly more important. At a recent program by the Farmers & Ranchers College which hosted Dr. David Kohl, Professor Emeritus from Virginia Tech he provided some great strategies for millennials wanting to return to the farm which I’ve decided to summarize in this week’s column. For a young couple, each person should first sit down and write down their personal, business, health and other pertinent goals. Goals should be written for short term (one year) and mid to long term goals (5-10 year). Then the couple should examine to ensure they have somewhat similar goals or understand where each person is coming from.
Then, as should any couple they should get their financials together, see how they compare with others and set benchmarks how to improve. Involve lenders and a team to function as an advisory board. Secondly, a couple should make critical decisions based on their financials and areas to cut costs. An advisory team made up of lenders, suppliers, consultants, etc. should challenge producers to improve efficiency, think outside the box and remain resilient in the future. Young producers should also have a conversation with the older generation(s) about their goals and where the younger couple will fit in the operation. Young producers also benefit greatly by leaving the farm for a few years to see different things and gain insight on new practices, etc.
Kohl also said, “Social media can make or break you.” Social media can provide a lot of misinformation so it is important to be on those social media platforms to know what misinformation is being communicated to the general public, provide the correct information and always be proactive with educating people about agriculture.
In conclusion, Kohl had some rules of thumb for all producers that will thrive even when commodity prices are low. Those characteristics of successful producers include:
Having a strong, productive asset base
Have records that talk to the business
Maintain a modest living expense (even in good times)
Maintain modest non-farm capital expenses.
Have a working capital (33% of revenue)
Have a burn rate of working capital above 3.5 years
Know cost of production via enterprise.
Have a clear strategy and alternatives when needed.
Work with those who have a history of handling adversity.
Other points to note when working through turbulent times are to focus on efficiency first, growth second. Know personality styles of those in your operation and respect those differences. Align yourself with a positive set of people. Document costs and keep records.
Those of us in agriculture are no stranger to risks involved with agriculture that are taken every day, whether it is financial, production, legal, price/market or human resource risks. While we can’t control everything, there are measures that can be taken to protect one’s operation and reduce risk. Each year the Farmers & Ranchers Collegehosts Dr. David Kohl, Professor Emeritus from Virginia Tech who does an excellent job describing global risks which affect us locally and how those risks will affect the agricultural industry.
Kohl reminded those in attendance that in order for there to be an economically viable crop industry, there must be an economically viable livestock industry. With lower crop commodity prices, producers must find ways to reduce their cost of production. The top farm managers will still earn a profit because they are aware of their costs and are resilient and agile. While prices are “hotter than a pepper sprout” for cattle producers, usually when a cattle cycle changes, it happens abruptly and warns on complacency.
Four factors globally to watch that will affect commodity prices are geopolitical factors, trade tensions, natural resources availability and economic reform. Back home in the U.S. concerns for higher interest rates will have an impact on operations based on the unemployment state, GDP growth and inflation. Kohl predicts that by spring or mid-summer interest rates will rise, so producers should be prepared.
In a survey Kohl conducted, he found that 72% of producers are complacent and either don’t use measurements to improve their farm or decision making or only track records to “get by” for taxes and crop yields. This is troubling, especially with lower commodity prices since cost of production has remained constant or higher. Producers need to have a solid handle on their cost of production and have some grain marketed. Land leases will be important and knowing your landlord beyond the finances can help when communicating with them. Those tenants who were fair to their landlords when prices were high will likely fare better than those who were not.
Those producers who surround themselves with “good people” will be successful. This includes a producer’s lender, supplier, etc. Have an advisory board to coach you along and help you make tough decisions and evaluate your financials. Ensure you have the right person “driving the bus” who helps you go the right direction, even though there might be an occasional detour. A well-organized plan with goals is essential. The increase in cost of living is also a huge concern, as it is very hard to cut the cost of living when a family has grown accustomed to certain things.
Tina Barrett with the Nebraska Farm Business, Inc. recently documented that the average cost of living in 1994 was $34,000 and held pretty steady through 2004. Since then, there has been a persistent increase each year. Not surprising that 2004 was the first of 10 years of a record high net farm income. When farm income went up, family living followed right behind. So as farm income declines, what will happen with family living costs? Also interesting to note that recreation was the largest increase, rising from $1,776 in 2004 to $9,081 in 2013, or a $7,305 increase, followed by a $5,550 increase in personal care and $5,339 increase in household supplies. Barrett says clients often bring up what their neighbors are doing and want to be able to afford that. For example, “The Jones went on a 3 week cruise and the Smiths built a new house and the Andersons bought a lake house and the Johnsons have a new Escalade.” The truth is sometimes we don’t know if those families were saving up for years to do some of those extra things. We can only control our own costs and allocate what we can afford for our own situation. This is very similar to Dr. Kohl mentioning that family living costs nationally have grown well over $100,00 and in some cases to $200,000, while the modest producers have only grown to $50-75,000. There will need to be a lot of belt tightening.
In summary, Kohl reminds us that goal setting, record keeping, an advisory board, having working capital and good relationships with those whom influence your management decisions are important golden rules for producers to follow. My next post will feature great information for millennials wanting to return to the farm or rural communities.
The outlook meetings are scheduled for a concise, fast-paced discussion of crop, livestock, and policy outlook:
Paul Burgener, Market Analyst and writer for Farm Futures Magazine and Farm Progress Companies, will provide the crop outlook for corn, soybean, and wheat producers. Paul writes his marketing columns from Scottsbluff and travels the country to share his marketing expertise. Making crop production and marketing decisions in 2013 will require balancing lingering drought concerns and production risks with market opportunities. Burgener’s insight will help pave the way for making sound production, marketing, and risk management decisions.
Kate Brooks, Extension Livestock Economist will provide outlook and analysis for the beef and pork producers. Kate is a new specialist at UNL with a Central Kansas background and experiences in Oklahoma and Texas before coming to UNL in January. Brooks will digest the emerging livestock market fundamentals of shrinking herds, meat supplies, and meat demand along with grain supplies and feed prices to assess producer profit potential and sound marketing and production decisions in 2013.
Brad Lubben, UNL Extension Policy Specialist will provide perspectives on the policy environment in Washington and the implications for ag policy and the farm bill. With seemingly ever-growing fiscal challenges in Washington, the road ahead could be even more challenging to get the farm bill done again before the current extension expires in September. In the meantime, producers will need to recall the existing safety net programs of ACRE and DCP for 2013 program participation decisions. Lubben will discuss the policy outlook and program alternatives to help producers effectively combine farm programs, crop insurance, and marketing strategies for success.
This outlook agenda is packaged into a 2 ½ hour format to provide producers the best available information and send them home ready to make 2013 management and marketing decisions. The series runs from February 25 through February 28 and varies in time by location. Locally, a session will be held in Geneva at the Fillmore County Fairgrounds on February 25th from 2:30 to 5:00 p.m.
Although there is no cost to participants, pre-registration is encouraged to plan for facilities, refreshments, and materials.
More information and details on all eight of the meetings is available on the webpage. Register by contacting the local Extension office listed for each location. You can also contact Lubben at 402-472-2235 or our office at (402) 759-3712 or myself at email@example.com.