Farm Industry News

Economic Straight Talk

David Kohl, professor emeritus of Virginia Tech, filled an hour time slot at a pre-Commodity Classic conference, held last month, with a rousing, nugget-filled talk. From his fast-paced speech, I've come up with this list of his most quotable statements:

“I see more [economic] danger in crop farms than in livestock. Why? Livestock producers have had to count their dollars. In crop, the two and 10 rule applies: two out of 10 years they make tons of money and in the other eight years, they get by.

“American [farmers should] be careful. A lot of farmers have a lot of money and haven't earned a dollar.

“Eighty-seven percent of farm value balance sheets are land values. What happens if adversity hits? We are vulnerable if we have to unload some of that land.

“Twenty-five percent of small businesses filing bankruptcy come off their most profitable year. Egos get in the way and they live high off the hog.

“Money is cheap, so borrow and expand. Yeah, money is cheap, but payback can be hell.

“We have six million homes that nobody wants now — big Barbie doll houses with high maintenance. They will go the way of the Harvestore silo. Who will buy big houses? Foreign investors.

“We are going to be in an extended economic downturn. Cash is king. Be resourceful and have a game plan to operate in good and bad times. But agriculture is one of the best-kept secrets in America. I think it is an engine for growth.”

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