Walking in the misty rain Thursday, it just felt wonderful to get some moisture, even though it became ice! Sharing some things learned from Dr. David Kohl that day. His overall theme was to “Be in the black (profitable) without the government”. Many illustrations he likened to sports in needing to stick to fundamentals such as knowing cost of production, our marketing plan, staying the course with what we can control vs. getting derailed by what we can’t. Media headlines can rapidly change things thus the extra importance to stay the course. Ag is such a global market. With all the politics, he emphasized the need to have a fuel and fertilizer input cost strategy as China will more directly trade with Brazil/Argentina first. And, because of the world dynamics, he emphasized several times to “Never bet your farm or ranch on an authoritarian government”. Another thing that’s kept me thinking was “People who are successful are 5% better in a lot of little areas”.
My colleague, Brandy VanDeWalle, wrote the following in her column, “Recently at a Farmers & Ranchers College program, Dr. David Kohl emphasized the importance of maintaining working capital or cash for businesses and families, among other important business principles. As always, his global knowledge of events and how they impact U.S. agriculture is fascinating.
One of the mega-trends for producers to pay attention to is the increased focus on healthy soil and water. Healthy soil and water quality creates healthy plants, animals, humans, and environment. Likely there will be paid incentives for producers who excel in these areas. Continuing to reassure consumers where and how food is produced, processed, and distributed remains important. It is also crucial to know your cost of production to plan best, average, and worst-case scenarios. Kohl also recommends overestimating capital expenditures by 25%.
His “Rule of 78” caught the attention of a lot of participants. When most people reach 78 years of age, usually health starts to decline unless you practice 8 habits. Those eight habits to have a quality of life included taking care one oneself physically by drinking water, exercising regularly, eating healthy and getting enough sleep. Mentally, people should have a support network, life purpose, engage in mental activities such as reading or meditating and practice your faith/spiritual life. He emphasized the importance of allowing oneself 2 hours per day with no technology.
Farmers and ranchers should also manage things that can be controlled and manage around those that cannot be controlled. He reinforced the idea that for a successful operation, you must plan, strategize, execute, and monitor. Examine monthly or at least quarterly financials to ensure you are on track. Those with a written business plan are four times more profitable than those without a plan. Also, the mental health of those with a business plan have two times the mental health as those without a written plan.
Kohl reminded participants of his business IQ exercise that ANY business should undertake. The areas in the business IQ included cost of production knowledge, cost of production by enterprise, goals (business, family, personal), record keeping system, projected cash flow, financial sensitivity analysis, financial ratio/break evens, those who work with an advisory team/lender, those whom have a marketing plan and execute, those whom have a risk management plan and execute, modest lifestyle habits, strong people management plan, transition plan, those whom attend educational seminars, and their attitude.
To determine what your cost of production is, a hands-on training will be held at the Fillmore County Fairgrounds on Thursday, December 15th from 1-3:00 p.m. This program is free, but registration is preferred for planning. Register at cap.unl.edu/abc/training. Attendees are encouraged to bring their own laptop or tablet to the workshop.”
Nebraska Mesonet are the weather stations located throughout our State with the data shared in our UNL CropWatch site for ET, soil temperature, precipitation, etc. But beyond farmers/ranchers and Extension using it, the data’s also used by National Weather Service, NOAA, Drought Monitor, etc. Please consider reading this article to become more familiar with what the Mesonet is and its importance regarding what shutting down locations means for Nebraska: https://go.unl.edu/a64h.
There’s perhaps a certain anticipation to see the end of each year and the dawning of a new one. That speaks to optimism and hope many have.
While covid changed many things in 2020, there’s many positive things that happened too. One has been watching families, communities, and neighbors rally around each other as hard times and losses were realized. I hope that’s something that never changes within our communities. Both personally and professionally, covid also provided an opportunity for increased focus and intentionality on what was genuinely important in my life. Perhaps for others as well?
In Extension, and most likely for all, the challenges forced us to stretch, learn new technologies, and think outside the box more. For example, video production via smartphones out in the fields, pastures, and feedlots exponentially increased and more of my colleagues learned video production/editing. The 4-H, Family, and Food/Nutrition teams brought many virtual learning opportunities to family living rooms and provided fitness challenges for families. We also made some changes for county fair that worked better. Being forced to think outside the box was beneficial in many ways!
I’m also so grateful for my administrators allowing and trusting me to do my job in serving people in the midst of covid. That may sound strange to say, but I have colleagues in other states who weren’t allowed to leave their homes for work…essentially research shut down and anything done Extension-wise happened virtually. So I’ve been incredibly grateful that much of my job remained the same with field visits and conducting on-farm research studies!
As we approach a new year, how can some of the challenges and positives of 2020 impact our 2021? Are there things in our lives that aren’t necessarily bad, but are keeping us ‘busy’ and taking time from the more ‘important things’? What realistic yet necessary goals should we individually set for 2021? Here’s wishing you a blessed 2021!
Business IQ may be one key to success in the 2020’s: This may perhaps help with some goal setting. In a recent webinar, Dr. David Kohl, Professor Emeritus Ag and Applied Economics from Virginia Tech, shared a ‘Business IQ’ spreadsheet with 15 key performance indicators ranging from knowing cost of production and having a written marketing plan to one’s attitude. It’s an assessment where farmers (or any business owner) can honestly score oneself. He then suggests to write down 3 areas to continue and 3 areas to improve (no more than three each). I’m unsure I can share it on a website, but am willing to email or print a copy if you’re interested.
He also shared two poll results. In the first, 976 ag lenders were polled in the summer of 2020 on “Characteristics That Are Important to Agricultural Producers for Resiliency & Agility”. The top three answers included: knowing cost of production (62%); executing a marketing risk management plan (58%); and strong working capital (41%). In the second, 300 Kansas farm and ranch women selected their top three “Specific Actions You Are Taking in Your Business, Family & Personal Life for Resiliency & Agility”. Their collective top three answers included: Reexamining goals-business, family & personal (68%); Building cash and working capital (41%); and Refining family living budget (39%). If you’d like to learn more, his recorded presentation is available till January 10th at: https://go.unl.edu/dec10recording.
Extension Survey: It’s also that time of year for annual reporting. If you could please help me out by completing this 5 question anonymous survey, I’d appreciate it: https://app.sli.do/event/s8g48y8z. Thank you!