I just finished a six-week road tour during which I visited nearly 20 states. My groups included producers, agribusiness people, and a number of lenders and bankers’ schools and conferences. What’s the pulse of rural America?
First, for most agricultural enterprises, cash flow and income statements are weak but balance sheets are strong. This is particularly true with the bottom half of the balance sheet that is made up of land or real estate.
Second, most lenders feel land is over-valued for its capitalized agricultural return. From grassland in western South Dakota to prime farmland in northwest Iowa and the Mississippi Delta, land has artificial influences in both sale value and cash rents.
Third, most livestock producers feel we dodged a bullet when the mad cow outbreak hit Alberta. Many say that we need to heed this warning sign, study how Canada handled this situation and develop a proactive plan.
Fourth, health care and insurance costs are driving up the cost to the producer. Some are increasing deductibles while others have eliminated coverage altogether.
Fifth, many of my banker’s school attendees are a younger group with less than three years of experience. We can only hope that we can train them well to avoid another farm crisis like the 1930s and 1980s.
Finally, despite all of the grumbling by producers, many are still optimistic and are adjusting their game plans in an ever-competitive global marketplace.
Good to Great: Why Some Companies Make the Leap…and Others Don’t, by Jim Collins, is a very motivating business read that I highly recommend.
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Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist at Virginia Tech. He recently completed a sabbatical working with the Royal Bank of Canada. He is now back at Virginia Tech with his academic appointment, which is teaching, extension, and applied research.
To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.
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