The Good, The Bad and the Ugly
The Good, The Bad and the Ugly??
I’m KayDee Gilkey with the Market Line Report for Jan. 2nd. The commodity markets were closed yesterday. So today we will take this time to visit with one of my favorite economists, Dr. Dave Kohl.
Dr. Dave Kohl, Globetrotting Emeritus ag econ professor from Virginia Tech, tells producers that the current time is agriculture is very exciting but the classic movie, “The Good, The Bad and the Ugly” title is appropriate for the current day volatility and what it may bring to ag producers. ?
Kohl: “I would say that that there is going to be more opportunity in agriculture in the next 10 years than there has been in the last 30, 40 or 50 years but then there is going to be more opportunity to fail.Why? Because agriculture producers just look at your input costs. They are probably four times higher than they were a decade ago. You also look at the wide swings of volatility both those combinations require very, very proactive management. Then if we should have a downturn or should we have a slip up in management you can take a lot of equity and liquidity off that balance sheet very quickly and so that is why I say the opportunities are greater but boy the stakes are bigger and the opportunity to fail is also there.”
He says it is critical for businesses to proactively position themselves to be able to manage this volatility, because often the volatility brings opportunity with it.
Dr. Kohl says in order to capitalize on opportunities presented from a rapidly changing environment, ag producers definitely need a risk management plan.?