Dave’s Top Ten Questions for 2005 and Beyond
My final column of the year is a quick summary of the top 10 questions I’m asked on the road. (Yes, we’re taking next week off.) Have a nice holiday season and see you next year.
Land values Expect strong land values in the agricultural sector, but a possible pause in prices should interest rates increase, the general economy soften or the stock market surge.
Interest Rates Yes, they will increase from short-term levels of 2.25% to 3.5 or 4.0% in the next 18-24 months. The long-term prime rate generally will have a spread of 3%. For example, if short-term rates are 3%, the long-term rate will be 6%. Remember, in February 2006 Alan Greenspan’s term is over!
Family Farm The mid-sized farm, between $50,000 and $300,000 in revenue, will continue to evolve with fervor. This group will be made up of older producers in the traditional government payment belts and grain producers or less intense livestock farms and ranches.
Oil Prices They will continue to trade high with a $20-40 trade variation range rather than the normal $5-10 trade range due to too much geopolitical risk.
Government Policy 2005 will be a year of posturing for the 2007 Farm Bill. Conservation, water and the environment will be the themes, with either homeland security or energy being emphasized, depending upon their relevance during negotiations.
Traceback Systems Traceback from the embryo or seed to the plate will continue to evolve. A threat to the food and fiber system will accelerate adoption. Why not think North American rather than just the U.S.? Our agriculture is too integrated and our markets on this continent are too large not to think as North Americans.
Water This natural resource will replace oil as the limited resource. Water availability will predominate agendas in the west, and water quality will be a hot item in the east.
South America South America will continue to be the 10,000-pound gorilla to the grain belt, and will become increasingly larger competition in livestock sectors such as hogs and poultry. The Baltic states will become more competitive in wheat and grains and China in whatever they desire to compete against us with, i.e. apples and cotton.
Youth Yes, there are fewer young people involved, but in my seminars I am observing some very bright capable young people, including women, minorities and young men, ready to carry the torch with both the scientific and business management skills necessary to compete.
Future of Agriculture Agriculture will always be a profitable business for people who are visionary, i.e. willing to position themselves to capture the opportunities as they evolve, no matter the situation.
Well, that’s a quick look into the crystal ball for 2005 and beyond. We hope to see you in person somewhere in 2005.
Dave and Alicia
Road Warrior author & editor
My e-mail address is:[email protected]
Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups.
To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.
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