Dr. David Kohl was one of three guest speakers at the 2013 Fall Ag Conference sponsored by American State Bank Tuesday at the Great Bend Convention Center.  Kohl had a lot of information to share about global economics, mega trends in agriculture, and proactive ag management to the room packed with the area’s top producers, and a smattering of young agricultural producers.
“In recent years, I’ve seen how the ag industry is changing, and you can see it here today. I’m seeing a lot more women, and a lot more younger people who are bringing optimism and new energy, and they have a real grasp on today’s technology, coupled with old-timey work habits,” Kohl said.  “There’s more dual decision making going on with the inclusion of wives in the family business too.”
While the information was geared towards ag professionals, the content proved to be valuable to essentially any American hoping to make sense of the direction in which the world economy is moving.  It was all about how to learning.  Learning how markets in emerging nations affect the bottom line for farmers and ranchers here, learning to recognize the signs that indicate upward and downward changes to the economy and land values, and learning to adapt to a broader market by being open to what works and what doesn’t with labor and employees on the modern ag operation.
Contrasting the economic and social aspects of emerging nations like Brazil, Russia, India, and others in Asia to developed nations like the U.S. and Europe and China, he spotlighted how purchasing power in the U.S. has decreased over past years that has coincided with an increase in purchasing power in emerging nations.  But now, he said, the world is in a fragile position.  Gross Domestic Product is down in emerging nations, and that’s beginning to be felt in the U.S.  
“Machinery dealerships will be the canary in the coal mine for the next economic downturn,” he said.  For the past few years, grain farmers have seen some record market highs, seen rapid appreciation of land values, and that has some concerned a correction is coming.  Kohl confirmed their suspicions and urged them to take a serious look at their financial plans now.  
“Spikes like we’ve seen in land values in the midwest look like one thing--a weed,” he said.
Part of that growth in value has been fueled by ethanol, which he described as analogous with the Russian wheat deal of years past.  
“Expect to see changes,” he said.  “The EPA is scaling back on ethanol, and that can be a real game changer.”
Many young farmers, Kohl said, are in a fragile position.  They were too young to remember the last big economic downturn, which happen about every 30 years.  He’s worked with some who have built a high net worth on their balance sheets, and are questioning if now is the time to buy land or not.  When corn was selling at $7 a bushel, he explained, the indicators to buy were in the green.  But when corn dropped to below $5 a bushel, that pushed two out of three indicators into the red.  A lot can happen in a year, so he advised farmers and ranchers put at least one year debt service away in the bank.
“Before you buy, be sure you are prepared to deal with the six-year economic whitewater if a downturn takes you by surprise,” he said.  That’s how long, he said, it typically takes for a sector to recover to it’s pre-downturn statis.  Producers that will stay in the game will need liquidity of working capital, he said.  Those that have it will be able to buy acres at 70 cents on the dollar.  Those that don’t have it will struggle.
Those who can buy will be competing with investors, both domestic and foreign.  China, for one, is facing a problem that hits home in Kansas.  There is not enough water for the country to develop enough agriculture for it’s own people, Kohl explained.  So, it is looking globally for land it can purchase, both here and around the world.  And often, the purchases are through investment.  
“I simply cannot minimize the need for good people,” Kohl said.  That, and a balanced land grant university system stays balanced.  Currently, he said, there is more of a push towards research at universities around the country, and not enough emphasis being placed on hands on field work.  For young people contemplating a career in ag, he suggested they study some biology, business and economics, and speaking.  
“Farmers are no longer going to be the lone entrepreneur,” he said.  “To reach your full potential in the global marketplace, you and your people are going to be more interdependent and need to be able to work with people, like bankers and marketers, and everyone else on your advisory teams.”
Finally, he urged producers to focus on building their businesses by changing “a hundred things one percent” instead of making one sweeping change to a small part of the business.
“Better is better before bigger and better,” he said.  
Darrell Holaday, president of Advanced Market Concepts, and Randy Blach, CEO of Cattle-Fax, an organization focused on helping member cattle producers make more profitable marketing and management decisions were the other two speakers.  Holaday focused on how demographics and politics drive markets, and Blach talked about how livestock was expected to rebound from the drought and other factors.
Dr. Kohl, in addition to his work as an educator with his company AgriVisions, LLC, is the CEO of a large dairy operation in Virginia, and a regular contributor to the “Corn and Soybean Digest.”