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Positives in the Winter Economic Cycle: Part 1

The current agriculture economic cycle is definitely in the winter season for most commodities and business enterprises.

Behavioral economists are generally in agreement that economic cycles are created by human behavior. One of the more famous economists that studied economic cycles was Nikolai Kondratiev, a Russian economist who developed the wave theory. The bottom line of the wave theory is that individual and global economies cycle every 40 to 70 years. The major economic recessions or depressions occur during the “wintertime” or the trough of the economic cycle. He further concluded that the winter segment of the economic cycle is necessary to weed out inefficient businesses or households. Winter is followed by the spring season with green sprouts of innovations, new methods, and adaptation in building on previous successes.

The current agriculture economic cycle is definitely in the winter season for most commodities and business enterprises. When engaging with agriculture groups, one has to be careful not to see the “cup half empty” in an economic environment that has plenty of negative headlines. Well, let's find some green shoots emerging during the winter economic cycle in the agricultural landscape.

There is a new group of young farmers and ranchers emerging to take over the helm. I usually engage with at least 20 young farmer groups annually. Young farmer groups can be very energized with their enthusiasm for education and networking. These educational events are often sponsored by many in the agricultural community such as lenders, agribusinesses, and leadership organizations. Young farmers come in all shapes and forms with an attitude that one size does not fit all.

Some young farmers will enter into the world of agriculture following school either through family connections or via a new start-up, depending on their nonfarm income or wealth brought to the agricultural industry. Other young farmers are classic boomerangers” who have worked and gained experience outside of agriculture through business or the military and seek to engage their entrepreneurial spirits within the agriculture industry.

Niche and value-added markets are growing in leaps and bounds with this group of new entrants who seek to align their resources and skill sets to a marketplace that desires an experience, as well as a product with transparency, personalization, and customization. This business model can be profitable and also very fulfilling.

Still other young farmers are benefiting from the implementation of technology to gain efficiencies or a competitive edge in the marketplace. Other groups are going the low tech route by utilizing their abilities with used equipment or sustainable practices that require low inputs and provide the most effective business model.

This winter cycle of the agriculture economy appears to be as long as the preceding “summer cycle of the commodity super cycle from 2007 to 2012. The next generation of young producers appears to be creative and open-minded yet grounded enough to create their own economic cycle. In the next article, we will examine some of the best practices of these young farmer groups.

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