The Mega Forces of Agriculture and the CEO Producer, presented by Dr. David Kohl.

1. Dr. David M. Kohl Professor Emeritus Agricultural and Applied Economics Virginia Tech Blacksburg, VA 24060 (540) 961-2094 (Alicia Morris) (540) 719-0752 (Angela Meadows) e-mail: sullylab@vt.edu Weekly Website Columns : Ag Globe Trotter: www.farm-credit.com Road Warrior of Agriculture: www.cornandsoybeandigest.com Mega Forces of Agriculture & the CEO Producer

3. Contrasting Economies stockpiling food & fuel QE2 Response inflation deflation Issue $3,500 $47,000 Household Income 35% 72% Consumer Spending/GDP 33% 92% Debt/GDP 9.6% 2.0% Growth Rate 4.4% 0.6% Inflation #2 #1 Ranking China (Avis) USA (Hertz)

5. World Growth Source: www.Economist.com U.S. 3.2%Q3 Brazil 8.8%Q2 GDP Growth % Change from Year Ago 2010 Latest Quarter Figures December 9, 2010 Australia 2.7%Q3 Mexico 5.3%Q3 China 9.6%Q3 Japan 5.3%Q3 Indonesia 5.8%Q3 Canada 3.4%Q2 France 1.8 %Q3 Euro zone 1.9%Q3 Britain 2.8%Q3 South Africa 2.6%Q3 India 8.9%Q3 South Korea 4.4%Q3 Germany 3.9%Q3 Iceland -2.1%Q3 Russian Fed. 2.7%Q3

6. Global Economic GDP Growth Benchmarks *Brazil, Russia, India, and China © 2010 by Dr. David Kohl & Dr. Ed Seifried Location Green Yellow Red USA >3% 0-3% Negative Europe >3% 0-3% Negative Japan >3% 0-3% Negative BRIC Nations* 8-10% 4-7% <3%

7. Global Economic GDP Growth Assessment *Brazil, Russia, India, and China Fill in current status and check green , yellow or red for each region. © 2010 by Dr. David Kohl & Dr. Ed Seifried Location Current Green Yellow Red USA Europe Japan BRIC Nations*

12. Producer Dashboard Economic Indicator Benchmarks ¹Ten indicators make up the LEI - measures % that are increasing; ²Includes food & energy; ³Consumer’s perspective; 4 3-Month Treasury Bill rate to 10-Year Bond rate Indicator Green Yellow Red The Conference Board Leading Economic Index ® - LEI Increasing Flat to Decline Decline 0.3% for 3 consecutive months AND >1% over the period LEI Diffusion ¹ >60% 40%-60% <40% Purchasing Manager Index - PMI >50 41.7-50 <41.7 Housing Starts (millions) >1.5 1.0-1.5 <1.0 Factory Capacity Utilization >80% 70%-80% <70% Unemployment Rate 5%-6% 6%-8% >8% or <5% Core Inflation 0%-2% 3%-4% >4% or <0% Headline Inflation ² 0%-3% 3%-5% >5% or <0% Oil Price ³ ($/barrel) <$50 $50-$100 >$100 Yield Curve 4 Steep Flattening Inverted

13. Producer Dashboard Economic Indicator Assessment Fill in current status and check green , yellow or red for each indicator. © 2010 by Dr. David Kohl & Dr. Ed Seifried Indicator Current Green Yellow Red Leading Economic Index - LEI LEI Diffusion Index Purchasing Manager Index - PMI Housing Starts (millions) Factory Capacity Utilization Unemployment Rate Core Inflation Headline Inflation Oil Price ($/barrel) Yield Curve

15. Financial & Management Decision Priority Guide For Land Acquisition, Expansion, or Major Capital Expenditures 1 If High in most metrics, and 40 to 50 in the sixth “C,” major changes may be considered. 2 If most metrics fall in the Medium column, and 35 to 39 in the sixth “C,” major changes should be delayed until improvement occurs. 3 If most metrics fall into the Low column, and sixth “C” is below 34, implement a strategy to improve both finance and management systems before making major changes. Metric High 1 Medium 2 Low 3 Your Farm/Ranch Percent Equity >60% 40 to 60% <40% Working Capital/Revenue >33% 10 to 33% <10% Return on Assets >10% 4 to 10% <4% Balance Sheet Earned Net Worth/Net Income >25% 10 to 25% <10% Operating Expense/Revenue Ratio excluding interest & depreciation <65% 65 to 80% >80% Risk Management Plan All components Some None Discipline and Execution (% decision making-% interacting-% doing) 60-30-10 33-33-33 10-30-60

16. Evaluating the Sixth “C” Please rate each area from 1 to 5. 1=Poor and 5=Excellent Total Score Assessment 40 – 50: Green Light : Above average on most attributes 35 – 39: Yellow Light : Several areas need focus to be successful 30 – 34: Orange Light : Focus on improving below average attributes <30: Red Light : Many areas need improvement Rating Area 10. Balance business, family, and personal issues effectively 9. Communicates the vision and goals clearly and prioritizes focus on day-to-day decisions with global awareness 8. Conveys an organized team culture with synergy that evolves given business and economic conditions 7. Accepts challenges and problems willingly; seeks solutions and execution of strategy 6. Uses a systems approach to total management, I.e. production, marketing, finance, transition, and exit plans 5. Utilizes a strong network of alliances and advisors 4. Has handled adversity successfully in the past 3. Utilizes a written business plan with actions, execution, and metrics 2. Attracts and retains quality people inside and outside the business 1. Is experienced in disciplined management of large amounts of debt, equity, liquidity, and /or profits