In the last article, our discussion focused on the changes that the pandemic brought to agriculture, the extent and duration of inflation, and other key issues influencing the agriculture industry. Let's continue our discussion.

Managing the controllable variables and managing around the uncontrollable variables will be an important strategy for 2022 and beyond. Owners and managers have a finite amount of energy, but society today is designed to distract. It is very difficult to manage what comes out of Washington D.C., Brussels, Beijing, Moscow and any other geopolitical or military challenges. However, focusing on the controllable factors including production, marketing, risk management and finance with strategies and actions will be critical.

A high priority emphasis will be placed on cash flow and budgeting with line-by-line management. Scenario analysis using spreadsheet testing that incorporates a wide range of variables such as production, price, inputs and interest rates is a method to incorporate and manage around challenges.

Financial management cannot be a once-per-year process. More frequent monitoring on a quarterly, monthly and, in some cases, weekly basis allows one to tweak strategies and actions as economic, weather and other conditions change.

Future positives

The next generation of individuals makes me excited about the future of the agriculture industry. I commonly engage with this segment of producers, and they are very entrepreneurial, adaptive, and see the benefits of being collaborative and working with people. They are open-minded about the changes that are occurring in the consumer marketplace. The younger generation places a high priority on meeting the needs of niche markets and doing things a little bit differently, but also still incorporating institutional memory from previous generations.

Regardless of age, size, product or service, the future is for producers with a strong business IQ. They will need a balance of production, marketing, finance and risk management with a quest for operational efficiency.

As we embark on the second quarter of 2022, the pandemic has been a big game changer with many challenges, but also opportunities. Producers who are adaptable, flexible, focused and follow a process will be in the right position for success in the agriculture industry.

Dr. Kohl is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Polytechnic Institute and State University. Dr. Kohl has traveled over 8 million miles throughout his professional career and has conducted more than 6,000 workshops and seminars for agricultural groups such as bankers, Farm Credit, FSA and regulators, as well as producer and agribusiness groups. He has published four books and over 1,300 articles on financial and business-related topics in journals, extension and other popular publications.

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