Keywords from economist Kohl

Washington Ag March 10, 2009 We are going to be in an extended period of economic moderation. That is the outlook from David Kohl, Professor Emeritus Virginia Tech. As for agriculture specifically Kohl says: Kohl: “Agriculture is kind of a shining light. It is the kid in school that hasn‘t got the yet.� But Kohl says whether or not agriculture gets the flu, right now cash is king. Kohl: “And by the way, a lot of people will say your cash is not working for you. If you are in a deflationary economy folks you are getting a return on investment because your cash buys what? More of a cheaper asset. Very few people get that. But should we move to an inflationary economy, which we could expect in another two to three years, then you don‘t want cash, cash, cash.� In addition to cash, something called the psychology financial factor, in other words liquidity, is also key for Kohl. Kohl: “This the thing I have been stressing with agricultural producers, they have to build working capital and liquidity. One of the things about liquidity is if you have a hiccup and a sneeze in a business the liquidity allows you to get through the downturn. However, on the up tick one of the things is it helps you to capitalize on business opportunities out there as the come along. So liquidity is going to be a key word in the vocabulary.� To be successful in these times Kohl says agricultural producers must also be innovative and selective in their opportunities. Kohl spoke to agricultural reporters at a Bayer CropScience Agricultural Issues Forum in Texas. I’m Bob Hoff and that’s Washington Ag Today on the Northwest Ag Information Network.