Posted in Crops, Irrigation, Livestock, Programming

Dr. Kohl Recap

UNADJUSTEDNONRAW_thumb_7c93Kicking off the 2018-2019 Farmers & Ranchers College programming year with a full house was Dr. David Kohl, Professor Emeritus from Virginia Tech. As usual, he did an excellent job describing global risks which affect us and how those risks will affect the agricultural industry.  International trade issues continue to emerge and it will be interesting to see how they play out. One of the things to watch closely is China’s “Belt & Road Initiative” which is an ambitious effort to improve regional cooperation and connectivity on a trans-continental scale with China and approximately 65 other countries. This is important to monitor because countries impacted in this Initiative account for about 30 percent of the global GDP and 60% of the world’s population.

In regards to energy economics, the U.S. is the world’s major energy producer. As there is a continued drive towards efficiency, there is also a push for electric vehicles. In fact, Kohl said that Germany and France plan to eliminate combustible engines by the year 2040 and by 2025, one fourth of cars in China will be electric. Since 80% of ag expenses are energy related, this will be a huge impact on the agricultural industry.

Dr. Kohl also stated that the 2020’s will be a decade with lots of change, not only with emerging technologies, but consumer trends, dietary trends and use of “big data”. In the Ag Commodity Super Cycle of 2007-2012, the approximate net farm income in constant dollars was $125,000 which allowed “anyone” to make it financially. From 2013-2017, during the agricultural economic reset, it was $35,000 forcing producers to tighten family living expenses and cost of production. (Data was taken from the Center for Farm Financial Management at the University of Minnesota.) He provided critical financial performance index for debt and risk and critical questions for critical conversations that should occur with one’s lender.

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With my background in leadership studies I found it interesting how more lenders are looking at the character of a client and the role that has in one’s success. Being an honest, ethical and trustworthy client is becoming more important and unfortunately there are character flaws of dishonesty being noticed such as using borrowed money for things not intended to be used for.  I like the adage, “It’s not the bad times that get you in trouble; it’s the good times.” With the past super-cycle, it was really easy for one to become complacent and want more things such as that camper or trip to Disney World, etc. but it’s not likely to resurface anytime soon.

Even with all of the challenges facing agriculture, he stated several reasons to be optimistic about agriculture. A diversified agri-entrepreneur can be successful with multiple income streams. Technology allows individuals to multi-task. Those young people who leave the farm/ranch to work in business or industry or on a different operation are better positioned to be successful because of the knowledge gained with a different point of view. Approximately 21% of American farms have no next generation coming back, so young people interested in farming have a chance to get involved. The younger generation is much more apt to collaborate and work as a team allowing them to help each other. Align yourself with positive people, know your purpose, picture where you plan to go, plan with a business & marketing plan and partner with the right people; doing all of that will help one accomplish more. His advice to young farmers is to invest in productive assets and live modestly. While past generations were independent in nature, future generations will be interdependent and work with people.

Contributions and support of area businesses allow Farmers & Ranchers College program participants to attend at no cost. For more information go.unl.edu/farmersrancherscollege.

Just a reminder of the other Farmers & Ranchers College programming:

2018-2019 Program Schedule

  • January 14, 2019** – “Partners In Progress Beef Seminar” Cow/Calf College at U.S. MARC near Clay Center, NE from 10-3:30 p.m., Registration at 9:30 a.m.
  • February 12, 2019** – “Managing Ag Land in the 21st Century” with Nebraska Extension Educators, Nebraska Extension at the Fillmore Co. Fairgrounds- Geneva, NE from 9:30- 3:00 p.m., Registration at 9:15 a.m.
  • March 14, 2019** – “Connecting Gate to Plate” with Michele Payn with Cause Matters, Corp., one of North America’s leading experts in connecting farm and food at Lazy Horse Vineyard near Ohiowa, NE with registration at 6:00 p.m. Light meal and program to follow.

 ** Programs are free; however registration is appreciated for a meal count. Please call the Fillmore Co. Extension Office at (402) 759-3712 one-week prior to the program to reserve your spot.

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Posted in Crops, Irrigation, Livestock, Programming

Agricultural Update & The Road Ahead

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Those of us in agriculture are no stranger to risks involved with agriculture that are taken every day, whether it is financial, production, legal, price/market or human resource risks.  While we can’t control everything, there are measures that can be taken to protect one’s operation and reduce risk. Each year the Farmers & Ranchers College hosts Dr. David Kohl, Professor Emeritus from Virginia Tech who does an excellent job describing global risks which affect us locally and how those risks will affect the agricultural industry.  He will also provide tips for success and explain how past generations were independent but the importance for future generations to be interdependent and work closely with people.

This year, Dr. Kohl’s program is titled Agricultural Update and the Road Ahead. The program will start at 1:00 p.m. on November 27, 2018 at the Opera House in Bruning, Nebraska. Contributions and support of area businesses allow participants to attend at no cost. To save time at the door, feel free to register online.

The Farmers and Ranchers College Committee consists of Fred Bruning of Bruning, Bryan Dohrman of Grafton, Sarah Miller of Carleton, Jennifer Engle of Fairmont, Ryne Norton of York, Jim Donovan of Geneva, Bryce Kassik of Geneva, Eric Kamler of Geneva, and Brandy VanDeWalle of Ohiowa.

Just a reminder of the other Farmers & Ranchers College programming:

2018-2019 Program Schedule

  • January 14, 2019** – “Partners In Progress Beef Seminar” Cow/Calf College at U.S. MARC near Clay Center, NE from 10-3:30 p.m., Registration at 9:30 a.m.
  • February 12, 2019** – “Managing Ag Land in the 21st Century” with Nebraska Extension Educators, Nebraska Extension at the Fillmore Co. Fairgrounds- Geneva, NE from 9:30- 3:00 p.m., Registration at 9:15 a.m.
  • March 14, 2019** – “Connecting Gate to Plate” with Michele Payn with Cause Matters, Corp., one of North America’s leading experts in connecting farm and food at Lazy Horse Vineyard near Ohiowa, NE with registration at 6:00 p.m. Light meal and program to follow.

 ** Programs are free; however registration is appreciated for a meal count. Please call the Fillmore Co. Extension Office at (402) 759-3712 one-week prior to the program to reserve your spot.

Posted in Crops, Livestock, Programming

Reflections from Dr. Kohl

Those of us in agriculture are no stranger to risks involved with agriculture that are taken every day, whether it is financial, production, legal, price/market or human resource risks.  While we can’t control everything, there are measures that can be taken to protect one’s operation and reduce risk. Each year the Farmers & Ranchers College hosts Dr. David Kohl, Professor Emeritus from Virginia Tech who does an excellent job describing global risks which affect us locally and how those risks will affect the agricultural industry.

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Approximately 120 people gathered for the first Farmers & Ranchers College program for the 2017-2018 programming year.

Several points I’d like to share in this week’s column are what Dr. Kohl coins as the top 40% of proactive producers or “greenliners” and the bottom 30% of producers or “redliners” and his top twelve practices observed of successful farmers and ranchers.

Characteristics of the top producers include being proactive by challenging themselves to improve their operation in three areas. These producers also have a sound financial system which includes accrual adjustments, knowing their cost of production for each enterprise or even better, each field.  Sound financial systems also look at trend analysis and ensure the records are in a safe and secure place (backed up, protected from cyber-attacks and in a fireproof safe). Proactive producers also have lower rental and fertilizer costs, have a third-person audit their practices and practice modest living. Understanding that a family might have to make sacrifices and pass on that new boat or trip can cut costs drastically, as they rose during the “good times”.

Now let’s take a look at the bottom 30% of producers. These producers typically overpay on marginal resources such as land. They lack financial or marketing skills. Kohl pointed out that something as simple as making one’s own spreadsheets or utilizing a solid record-keeping system is crucial to monitoring one’s cost of production and recommends quarterly meetings with your lender.  “Redliners” often do not make necessary improvements in their operation to keep with the times such as replacing worn out equipment. In fact, when operations are transitioned to the next generation, if everything is rusted and wore out, that next generation’s chance of “making it” are significantly reduced. These producers need to manage taxes, not minimize taxes. These producers often have a high cost of living and lack the ‘HUT’ principle which is to Hear what others tell you, Understand what they are saying and Take Action.

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College students who attended the program were tasked with asking someone for agricultural advice and Dr. Kohl had them report back to the group what they discovered.

Dr. Kohl also shared when he teaches producers strategies for success, he spends a large amount of time teaching about goal setting. Half the problem with businesses is that they don’t have WRITTEN goals. These should include business, family, personal, one and five-year goals. Balance in life is essential in every career, including farming and ranching. Making time for your spouse and other family members will prevent problems down the road. In addition to goals, he teaches producers to have a projected cash flow, break evens calculated, consider different “what-if” scenarios, updated balance sheets by Groundhog’s Day, develop a personal living budget and monitor your business with a lender or advisory team on a quarterly basis.

Dr. Kohl also provided the ten commandments of character. Character is often overlooked, but crucial to one’s integrity and success. His ten commandments of character included:

  1. Follow thru on commitments (educational program and financial statement requests).
  2. Use borrowed funds as agreed upon.
  3. Be accurate with financial statements such as balance sheets, income statement, etc.
  4. Have a willingness to sacrifice lifestyle pursuits and balance with business growth.
  5. Practice good communication of goals and in times when there are issues and challenges.
  6. There should be minimal surprise business purchases.
  7. Be willing to work with an advisory team, including a third party.
  8. Consider constructive coaching.
  9. Properly use profits, cash flows and windfalls.
  10. Utilize a network of people, peers and pursuits.

In summary, those who are unable to embrace change should open their minds and consider making changes. Kohl encouraged the college students in attendance to do an internship or take a job away from home to learn from others and bring fresh, new ideas back to the operation. He applauded those producers in attendance, as they are willing to learn and improve their business. When you graduate from high school or college, you are not done with learning and if you think you are, you will likely be left behind. This is where I’m proud to be a part of Nebraska Extension as we offer educational programs that provide research-based knowledge and our Nebraska On-Farm Research Network is a great avenue to test new practices, ideas or products.

Posted in Crops, Livestock, Programming, Uncategorized

Agriculture at the Crossroads

The agricultural economic reset is in the mid inning, analogous to a baseball game. What forces will change the current economics? How will interest rate and land value changes influence profitability and your balance sheet? Dr. David Kohl, Professor Emeritus with the Dept. of AAEC, VA TECH will present his challenges & opportunities tool kit to give you some tools to help your business position for success so be sure to attend this information packed, high energy session, sponsored by the Farmers & Ranchers College.kohl-program

This year’s program will focus on how to be a better borrower in these economic times. Dr. Kohl will discuss burn rates on working capital and burn rate on collateral. A special segment will examine what adjustments producers are making to navigate the economic white waters and position the business to evaluate opportunities.

This educational program will be held December 14, 2016 starting at 1:00 p.m. at the Bruning Opera House with registration starting at 12:30 p.m. Due to the generous support of area businesses and organizations, this program is free, but arrive early to save yourself a seat!

To speed up the registration process, online registration is available at fillmore.unl.edu; this will enable you to put your initials by your name, rather than filling in your full name and contact information.