“Straight Talk, Straight Actions” says it all in the title of this high energy, no-holds-barred approach session. Straight talk on the global economic trends that will impact your business bottom line and decision making will be presented in a manner that links global economics to your farming operation, family, and personal life. Straight actions in business and financial decisions will be discussed as to what actions need to be taken to keep the business on course and also position it for new avenues of success. “Straight Talk, Straight Actions” will provide insight and answers to the most common questions asked by producers, owners, and managers. This energetic session will provide information and perspectives which will be invaluable not only to your business but also your personal life.

1. STRAIGHT TALK,
STRAIGHT ACTIONS
Macro Clinic Video Blog: http://agstar.com/edge/
Road Warrior of Agriculture: www.cornandsoybeandigest.com
Ag Globe Trotter: www.northwestfcs.com
Dave’s GPS & Dashboard Indicators: www.farmermac.com
Dr. David M. Kohl
Professor Emeritus, Agricultural and Applied Economics
Virginia Tech, Blacksburg, VA
(540) 961-2094 (Alicia Morris) | (540) 719-0752 (Angela Meadows) | sullylab@vt.edu
February 9, 2017

2. State of the State of Agricultural
Economics Reset: The Mid Innings
 emerging nations, BRICS & KIMT, slow
growth, one half in recession
 ethanol & oil’s impact on commodity prices
 Central Banks - U.S. & abroad
 duration of the strong dollar
 weather: supply & demand
2

3. Game of Economic Reset
 Innings 1-3
 profit margins decline, cash flow issues
 Innings 4-6
 relief pitcher, use working capital, refinance
 Innings 7-9
 core equity, sale of property, multiple refinancing
3

4. Global Economics: Europe
 Brexit
 immigration issues
 next year’s elections
 break up of euro
 other
4

5. Global Economics: China
 TPP: China’s role
 water, soil, & air issues
 asset bubbles:
 stock
 real estate
 other
 military buildup
 South China Sea
5

6. Global Economics: Japan
 leader in support of TPP
 aging population
 Central Bank’s stimulus
 military
 shrinking economy
6

7. Global Economics: Russia,
Brazil & Others
 Oceania
 political disconnect
 economic challenges
 currency valuation
 weather
 other
7

8. New Administration
 international trade
 banking regulations
 health care
 immigration
 taxation
 trillion dollar infrastructure spending
8

9. Federal Reserve’s
Interest Rate Barometer
Indicator Status
Unemployment 5.0%
GDP Growth 3.0%
Inflation 2.5%
Consumer Sentiment >90%
9
• Three increases in 2017!
• stock market/real estate wealth effect
• copper prices

10. State of the U.S. Economy
 90 months of expansion
 106/120 months
 coastal vs. fly over states
 Republicans/recession
 velocity of money
 stock market
10

11. Mega Trends 2017-2025
11

12. Mega Trends 2017-2025:
Global Economy
 moderating economies in emerging nations
 agriculture is “point dog” in political, military,
and social actions
 geopolitical trade risk - biggest risk to
agriculture
 creates tremendous opportunities and
opportunities for failure
“Business planning scenarios,
execution and monitoring” 12

13. Mega Trends 2017-2025:
Consumer Trends
 splintered marketplace
 local, natural, & organic
 GMO vs. non-GMO
 food expenses
 traits to plate
 ethnic group linkage
"20/20 foresight: perceptual acuity”
13

14. Mega Trends 2017-2025:
Innovation & Technology
 convergence of technology
 bio
 engineering
 big data
 higher level of talent
 employees, suppliers & advisors
 systems/replicate
 too connected
“Hear the silence.”
14

15. Mega Trends 2017-2025:
Non-Government Organizations
 biosecurity
 open pens
 antibiotic free
 organic/natural
 animal welfare
15

16. Mega Trends 2017-2025:
The Millennials
 group exceeds baby boomers in size
 will be on forefront on consumer, social, and political
trends, changes & issues
 75% of workforce by 2025
 40-20-40 Rule
 feedback and recognition are important
 balance of work and lifestyle
 innovation/technology with “old time” work habits
“Financial self worth equates to
network of people.” 16

17. Mega Trends 2017-2025:
The Disconnect
 by 2050- 70% of world population will be urban
 85% of Americans are 2 generations away
from farm
 political power disappearing
 less government support levels
 extreme groups
 social media
“Connectivity strategy- sixth sense”
17

18. Median Net Farm Income:
All Farms vs. High 20% vs. Low 20%
18

19. Median Net Farm Income:
By Enterprise
19

20. Net Farm Income, 2015
20

21. Bottom 20% of Producers
 wishful thinking for revenues
 not aware of costs
 don’t know cost of living
 won the cash rent lottery
 never updates the balance sheet
 emotional vs. objective
 no fall back plan
 no active responsibility / not at fault
 wants easy out in adversity
21

22. Top 20% of Producers
 know cost of production
 realistic revenue targets
 keep in touch with lender
 keep up with finances before December
 take responsibility for outcomes
 fall back plan
 training family members to takeover
 better before bigger
22

23. 10 Good Reasons to Start
Farming/Ranching Today
1. machinery & equipment values are down 20%-40%
2. low interest rates
3. 20% of family farms have no next generation
4. one size does not fit all
5. capitalize on local niche markets
6. control vs. ownership of assets
7. collaboration of assets and talent sharing
8. 60% of land turnover by 2030
9. 50-70-70 rule
10. raising a family/children
23