FreshRoots Reflections with Dr. Kohl
April 5, 2022
One of my favorite activities on the speaking circuit at the FreshRoots Forums is sharing the podium with Paul Stoddard, agricultural economics lecturer at the University of Illinois at Urbana-Champaign. This young and beginning farmer program is an investment Farm Credit Illinois makes helping the next generation get a healthy start in their career.
As educators, we were amazed at how the younger generation of agricultural producers are evolving. While many participants in the program were from third-fifth generation businesses, some were startups. They are very entrepreneurial, often with a wide range of business entities inside and outside of agriculture. This diversification not only generates income, but allows them to observe and network for new business ideas and possible new markets.
This year's group was very interested in the global economic perspective. Inflation appears to have some permanent tentacles as a result of oil and energy, supply chain, and now geopolitical and military challenges. The young and beginning producers were inquisitive about how to manage this extreme economic volatility.
A critical part of managing volatility is to maintain focus and be diligent regarding financials. One can capitalize on volatility if breakeven points and the cost of production are known. We encouraged the participants to implement a disciplined marketing and risk management program to take advantage of profit windows.
Careful attention to working capital levels, benchmarked by the current ratio of working capital to expenses, provides the agility and flexibility to take advantage of opportunities, block adversity, and bring peace of mind.
The groups in Effingham and Springfield enjoyed listening to the peer panel discuss how the FreshRoots program has benefitted both their business and personal lives. Each producer indicated the learning programs took time to complete, but they were invaluable in advancing their businesses. After completing the various seminars, they were able to make changes in their operations such as becoming organic and serving niche markets, as well as expanding traditional commodity enterprises. Eyebrows were raised when one panelist indicated that shifting some of his operation to organic was two times more profitable on the bottom line, but production and record-keeping took 10 times the amount of work.
Others indicated that the FreshRoots program allowed them to work side-by-side with their team of advisors – including their agricultural lender – when making incremental changes to the business. The following is some of the wisdom gained at the two locations.
- Mistakes are often made during good economic times. Do not overspend at the top of the economic cycle.
- Some used historical data for the business to benchmark and establish targets when developing budgets and cash flows. Other producers elevated their process by comparing financials with farm record databases.
- Establishing written goals is critical in providing focus in a world of distraction and providing business and personal life balance.
- Enterprise analysis is becoming more important in a very volatile, fluid world to determine optimal profit points.
- One of the popular tools illustrated was the Business IQ assessment. Filling out the scorecard allows one to capitalize on the processes and provide feedback and perspectives that could establish deeper roots for a strong business acumen.
Finally, a major takeaway from the program was that both self-worth and net worth are positively influenced by those surrounding you. The FreshRoots program is a great way to fertilize the seeds of your business, family, and personal life. Please take advantage of this program!