Back on the Road
Last week I was at the Southeastern Ag Lenders School at the beautiful Madrin Center, Clemson University, SC. This past weekend I was a co-facilitator with Don Jonovic a Family Business Transition Planner from Cleveland, OH, for a Farm Credit-sponsored Young Farmers and Ranchers Institute, in Sedona, AZ.
Picking the Rates
At the Ag Lender School, I asked participants to pick the interest rate change by the Federal Reserve and how it would impact the Dow and NASDAQ markets by the end of the day.
Interestingly, only one in the group of 26, Glenda, picked 50 basis points with an increase in the NASDAQ and a decline in the Dow.
Yours truly missed this pick, as I thought the Federal Reserve would only lower the rate by 25 basis points because of the lower productivity numbers that can be a sign of inflation. So much for being a teacher!
It was my pleasure to co-teach with Steve Isaacs from the University of Kentucky and Johnny Jordan from Clemson University.
An unpublished study of 200-plus borrowers in Kentucky over the past two years found that 43% of them prepared balance sheets, 52% provided projected cash flow, and nearly 70% prepared income statements. The results from this study demonstrate that many producers are still pure production plant managers who lack initiative and knowledge concerning cost of production and financial results. How do you stack up?
The study also showed that nearly 60% of those responding commingled farm and personal checking accounts. That can often lead to overzealous personal spending habits and lack of knowledge of personal living costs.
Tip of the Week
Have separate business and personal checking accounts. Not only does it make tracking expenses easier, it will also make the IRS happier!
Thought for the Week
Land ownership depends upon mission and goals:
If positive cash flow is a priority, don’t buy land.
If wealth accumulation and profits are an objective, buy land.
Land returns poor dividends but can represent capital appreciation potential.
We are all renters and lessors of land in the long run.
Most producers in our Young Farmer Institute in Arizona were complaining about the steady day of rain because rain in that area tends to hurt profits.
I like the Spurs with David Robinson and Tim Duncan. But the loss of their key player in the earlier series with Dallas may turn the table in favor of the Lakers.
Send comments. I would like to know what you are thinking out there. Next week I will be out West again.
My e-mail address is:firstname.lastname@example.org
Editors' note: Dave Kohl, Soybean Digest Trends Editor, is an ag economist at Virginia Tech. He currently is on sabbatical and working with the Royal Bank of Canada.
To see Dave Kohl's previous road warrior adventures click here
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