As we begin the new year it is time to look forward to the next decade. Looking back can be helpful in understanding where we have come from and to gain perspective, but making plans for the future helps to guide us to our destination.
During this time of year-end bookkeeping and planning for the coming year, is a great time to look forward and make plans for success. Setting goals and implementing plans after enterprise analysis can help us make sound management decisions.
Many times grain producers will ask me where I think the markets will trade. It is tempting to tell them what I think will happen, but I usually take pause and remember that I really do not know where the markets will trade.
I have spent the last 25 years studying the markets with the tools of fundamental (supply and demand) and technical (market behavior) analysis to try and predict marketing opportunities. I think there is some value in this study, but over the years I have learned that it is much like meteorology. I try to make long-term forecasts just as the weatherman does and find that I am right some of the time and wrong some of the time.
This has led me to the realization that making marketing decisions based on these forecasts is risky at best. Risk is what needs to be managed in order to be able to take advantage of the opportunities that the markets present. Making marketing decisions as a financial decision rather than a trading decision helps to manage this risk more successfully than any trading system that I have ever found to-date.
As I study the market I believe there will be a great deal of opportunity to develop our production ag enterprises into dynamic operations. There will be a great deal of volatility in the prices of inputs and outputs. This volatility is what will bring us the opportunity.
Many times when we think of volatility, this causes us to experience the stress of the unknown. To be successful in the next decade we will need to become more comfortable with these unknown aspects of our business environment. It will be the management skills that we bring to our farms that will be the edge that separates success from failure.
I will never forget the lesson that my Dad taught me when I came home from college. We were sitting around the kitchen table in the farm house and I was espousing all that I had learned at school and identifying all the shortcomings of my professors and administrators. My Dad let me go on for some time without saying a word. I finally wore myself out with the demonstration of my newfound knowledge.
He looked me right in the eye, paused for a moment and then said, “When you are a sophomore you are about as smart as you will ever be in your life.” I looked at him puzzled and asked him what he meant. After what seemed like an eternity, he said, “Any man can tell you what the problem is, but it takes a real man to figure out how to fix the problem.” I was speechless for the rest of the evening.
As hard as it is to find the solutions to the challenges that we will face during this next decade, they will be the “grain angles” that will determine the outcome of our family businesses. Farm families who can work together to find these solutions will have a bright and promising future. As rural communities, we will need to capture these solutions to take us into the next decade.
