Volatility is the New Normal

Volatility is The New Normal

I’m KayDee Gilkey with the Northwest Farm and Ranch Report.

The more things change, the more they stay the same ... so the old adage goes. Well, agriculture has always faced ups and downs in prices, and in expenses. That is nothing new, but Dr. Dave Kohl, Globetrotting Emeritus ag econ professor from Virginia Tech, says today’s rapidly moving environment isn’t going away anytime soon.

Dr. Kohl speaks to the volatility that farmers and ranchers face today.

Kohl: “Often times we see and hear in the farm press that we in a new normal, we are on a new plateau. I forewarn people that the future of agriculture is going to be one of volatility, but it is going to be volatility at its extremes. We will go from the very, very best years to the very, very worst years. What businesses have to do is to proactively position themselves to be able to manage this volatility, because with volatility comes opportunity.”

Dr. Kohl says in order to capitalize on opportunities presented from a rapidly changing environment, ag producers definitely need risk management.

Kohl: “One of the things is that with the opportunities that come with volatility is that you have to have a very, very sound risk management program. A sound risk management on the revenue side, also on the cost/input side, and on the interest rate side. And what it requires is serious business planning and being able to execute when the opportunity comes along.”

I’m KayDee Gilkey with the Northwest Farm and Ranch Report on the Northwest Ag Information Network.