Agriculture is a strategic industry for Ashtabula County. I ran across a recent agriculture outlook for 2015 and thought I’d share it to remind us to think about economic development opportunities related to agriculture in 2015. Here is a summary:
From a recent agricultural outlook session at Purdue University.
What’s your top trend for 2015?
I have a positive long-term outlook on agriculture—it’s a growth industry. But in 2015, discussions at the coffee shop will focus on how to develop financial resilience during this downturn. Let’s assume I’m wrong, and commodity prices recover faster than the fundamentals suggest. Here’s your most important takeaway: If you position for a downturn, you’ll be better off in the long run, even if it doesn’t occur.
You may be doing well now, but it’s not the time to double the size of your operation—to buy expensive calves or overpriced land. Rebuild your financial strength today and you’ll be better off tomorrow. The cycle will turn again.
10 tips for 2015
1. Keep your costs down. You’re competing with farmers in other countries who might have a six-hour head start on cutting costs.
2. Focus on input costs. Make marketing decisions based on what you pay for inputs. There isn’t much profit potential on the selling side today.
3. Improve efficiency and productivity every way you can.
4. Work hard to protect your working capital so you can rebuild in the future.
5. Don’t be tempted to purchase equipment that you don’t need. We’re seeing significant price drops for used machinery. Some dealers have so much inventory that they’re offering 50 percent discounts on combines.
6. Avoid overpaying. Don’t purchase or rent overpriced land, or pay too much for calves.
7. Lock in interest rates now—they’ll be going up. Consider lengthening loan repayment terms to lessen your payment amounts. If you have enough cash, buy down your debt.
8. Sign up for farm programs.
9. Buy crop insurance.
10. Avoid buying big-ticket personal items like new cars.