Dr. David Kohl`s 2015 Keynote Presentation

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GLOBAL ECONOMICS AND TRENDS:
POSITIONING YOU AND YOUR
BUSINESS FOR SUCCESS
Dr. David M. Kohl
Professor Emeritus, Agricultural and Applied Economics
Virginia Tech, Blacksburg, VA
(540) 961-2094 (Alicia Morris) | (540) 719-0752 (Angela Meadows) | [email protected]
Macro Clinic Video Blog: http://agstar.com/edge/
January 8, 2015
Road Warrior of Agriculture: www.cornandsoybeandigest.com
Ag Globe Trotter: www.northwestfcs.com
Dave’s GPS & Dashboard Indicators: www.farmermac.com
Commodity Super Cycle
Burnout
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slowing of emerging nations’ economies
ethanol & biofuel mandate softening
central bank stimulus
inefficient infrastructure in emerging nations
weather – northern southern hemisphere
2
Grain Industry- “Margin
Flipping”
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easy money has been made
top flight managers still earn profit
high overhead/fixed cost structure
game of chicken with land rents
duration of cycle
four strategic factors
3
Managing Thru the Cycles
Cycle Duration
Credit Issues
One Year Cycle
Repayment Ability
Two to Three Year Cycle
Repayment Ability/Liquidity
Three to Five Year Cycle
Repayment Ability/Liquidity/Equity
4
Livestock Industry “Margin
Flipping”
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strategic resource changes over past decade
50 to 65 year olds will not return
price, early cycle margins
cost, late cycle margins
young people migration
mistakes made in the best of times
duration of the cycle
5
Horticulture, Vegetable, &
Retail/Entrepreneurial
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growth of the economy
housing starts
lower unemployment
growth of local, natural, and organic
population dynamics
6
Global Economy Update
Country
Code
Europe
Red
China
Yellow
Risk Ranking
Russia
Red
Japan
Red
Middle East
Red
•
•
•
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Argentina
Red
Brazil
Red
Portugal
Red
U.S.
Green
Geopolitical
Trade tensions
Natural resource
Economic reform
7
World Economy PerspectivesEurope
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German elections
zero growth
debt levels
Euro additions/eliminations
currency/other
8
World Economy PerspectivesChina
 new leadership
 population shift
 rural to urban
 state directed-capital growth
 consumer based capitalism & growth in Asian
exports
 trade
 natural resource issues
 social disruptions
 debt:shadow banking
9
U.S. Economy Update
Indicator
Employment
• Numbers
• Wages
• Participation
Code
Yellow/Red
Factory Utilization
Housing
Green
Yellow
Oil/Interest Rates
LEI & PMI
Yellow
Green
10
Global Economy
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geopolitical trade risk
volatility in revenues and cost
agriculture’s movement to emerging nations
opportunity
failure
premium on planning, execution, and
monitoring
“Think globally but act locally.”
11
Technology
 convergence of technology
 bio tech
 engineering
 information/big data
 high levels of talent
 innovation vs. technology
 systems
“High tech, high touch.”
12
Consumers
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local, natural, & organic
GMO/non-GMO
ethnic groups
global consumers
consumer trends 2025
“Consumers will drive the business model.”
13
Potpourri Trends
 2050 - 70% of the world’s population will be
urban
 85% of Americans are 2 generations away
from farm/ranch
 animal welfare
 environmental
 black swans
“Expect the unexpected.”
14
Rural Communities
The characteristics of thriving communities are:
 healthcare & preventive health
 internet access
 infrastructure
 lifestyle amenities such as
shopping & recreation
“Rural communities will define your
business/people strategy.”
15
Education/Lifelong Learning
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internships
experienced education
knowledge centers, blended education
vocational schools
emotional intelligence – 4-H, FFA, rural
leadership groups
 First job
 Baby Boomers = age 12; Millennials = age 22
“750 universities and colleges will
file bankruptcy by 2025??”
16
New Wave of Players
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under 42 years of age
age wave is world wide
women
minorities
lifelong learners
new entrants
“Hire for attitude, train for aptitude.”
17
Natural Resources
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quality land is premium
water quality & quantity
infrastructure issues
energy
growth vs. efficiency
“Local, regional, national, and
international conflicts over water.”
18
Transition & Evolution
 60% of U.S. farm ground will change hands by
2030
 independent vs. interdependent
 lending: banks, Farm Credit, FSA
 agribusiness
 family and business dynamics
“Heart vs. head concept.”
19
Global Economic /
Government Policy
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China 2030
debt issues worldwide
tax laws
new leadership
other
“You can only imagine!”
20
Strategic 2025
1
CEO/ leaders will be “visionary/champions” vs.
“gate keepers”
“big enough to serve but small enough to care”
 alignment & collaboration- agribusiness,
education & lenders
 technology strategy- value added, big data
 refinement of processes- collaboration, training,
& execution
 human resources- talent alignment, culture,
recruit, & retain
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Strategic 2025
2
 knowledge, intellectual research, information
 Global, domestic, industry, region, & local
 capital, liquidity, profitability, & efficiency
 public policy, public regulatory voice
 education- internal & external- “life long
learners”
 natural resources- demographic, drive your
model
 transition- evolution of customers, association,
footprint- corporate vs. family
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Ten Strategic Rules on
Diversification
1
 Is your strategy consistent with resources?
 land
 facilities
 human resources
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Is there a market? “James Bond Plan”
takes five to seven years for branding
word of mouth marketing “media”
25% more time, money, & resources
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Ten Strategic Rules on
Diversification
2
 Have you conducted enterprise analysis?
 business financial system dashboard
 business lifecycle- “wonder, blunder, thunder,
under”
 trend is your friend
 Profit rule: > interest cost/inflation/opportunity
costs
24
12 Golden Rules for
Business/Lifestyle Success
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1
Profit Equation: P=O+C+L+M²
Profit Allocation: 60-30-10 Rule
People Equation: 40-20-40 Rule
Victims & Know It All’s Elimination
Bus Rule: Good to Great/ Coach “K”
Financial Records that Talk to Business
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12 Golden Rules for
Business/Lifestyle Success
2
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Dash Boards: Financial/Production
Advisory Teams/Relationship Lender
Time Management Rule: 3000/500 hours
Spend One Percent of Revenue on
Education
 Children Rule: 50-25-25
 Goal Setting Rule: 80-16-4
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