Series takes look at COVID-19's impact on agriculture

Lura Roti
For South Dakota Farmers Union

In the midst of helping 4,200 three-week-old baby pigs adjust to their new surroundings, Brad and Peggy Greenway, along with their son Brent and employee Thomas Smith took a break. The Mitchell farm family tuned into a presentation given by David Kohl on the impact of COVID-19 on agriculture.

“We try to glean as much information as we can from outside experts, whether that is our nutritionist, seed company rep or an educational webinar,” explained Greenway, a third-generation diversified farmer. “It’s especially important right now because we are working through transitioning our farm to the next generation.”

Providing education and timely information to South Dakota farm and ranch families is the focus of South Dakota Farmers Union Ag Producer Hour Series, said Executive Director Karla Hofhenke.

“So many factors impact family farmers and ranchers’ ability to earn a profit — weather, markets, management practices — and this year, COVID-19. So, our leadership team thought it was important to bring Dr. Kohl in to provide producers with insight into how this pandemic will impact our industry moving forward,” Hofhenke said.

Kohl, an academic Hall of Famer in the College of Agriculture at Virginia Tech, is the first of four presenters the organization invited to speak. During his talk, Kohl describes COVID-19 as a black swan event. A black swan event is one that occurs about once a decade and tends to accelerate change for consumers, society and businesses.

“You can anticipate black swans. What do they do? They create volatility in extremes; on the price side and on the cost side for consumers,” Kohl said.

Kohl outlined how the pandemic took already depressed markets and made them worse, especially on the livestock side of agriculture. But Kohl’s presentation didn’t end with the bad news. His forward-thinking talk discussed how producers should proceed in the months ahead as well as market indicators they need to keep an eye on:

  • Economic health of the protein sector.
  • Health of trading partners.
  • Weather.
  • Value of the dollar.
  • Consumer trends and ethanol.

“Watch the Big-E. I’m a believer that diversified energy source is critical. Ethanol makes up one third of our corn markets,” Kohl said.

He also stressed the importance of sticking to a marketing plan, even though the events of 2020 may have many farmers discouraged by the results of following their plan.

As one of many farmers who followed his plan and ended up leaving money on the table in 2020, Craig Schaunaman said this is wise advice, and important for young producers to hear.

“A marketing plan is imperative,” explains Schaunaman, a 61-year-old Aberdeen farmer and former director of the South Dakota Farm Service Agency.

Like Kohl, he said knowing the cost of production and using it to guide marketing decisions is the best long-term plan.

When it comes to financial information Kohl said ag producers need to have on hand and organized, Schaunaman also agreed. “Agriculture is a capital-intensive business. We’re going to need to borrow money. You have to have your plan together and know your financials. Now your financial ratios. Know your breakevens.”

Union Center rancher Dallis Basel agreed, adding that he was impressed with the financial information along with a banker’s perspective Kohl provided.

“If someone isn’t getting along with their banker, I suggest they watch this webinar. It would give them some insight into what they need to provide to the banker,” Basel shared.

Kohl discussed the traits of financially successful farmers and ranchers, and encouraged all farm and ranch family members to individually take stock of their business IQ by answering 15-questions and scoring their answers. Once they review their answers, set three goals for improvement.

“Remember the rule of three. Never more than three otherwise it becomes too complex,” Kohl said.

In addition to managing farm and ranch finances for today, Kohl also discussed transition planning for the future. “It typically takes about three years to develop a plan,” he explained. Acknowledging each generation has a unique take on transition planning, he suggested drafting a history of the farm as an important step and a positive way to engage the oldest generation in the conversation.

As he discussed COVID-19’s impact on future markets, Kohl said “You will see a disjointed economic recovery ... good news agriculture is not going to feel the brunt as much as some of the urban areas.”

He followed up by discussing its impact on trade uncertainty, encouraging producers to monitor Asian markets. And not to ignore China’s treatment of countries like Australia.

“Australia started pointing their fingers at China. They basically said, ‘The bug broke out there and spread throughout the world.’ Boy, China did not like it, so they put tariffs and sanctions on their borrowing and a lot of other products, 200% tariff on its wine.’”

He shared how China continues to build up its infrastructure with ambitions to become a world leader economically as well as with their military by 2027. “Don’t bet your farm or ranch on trade with China. Be very careful. It could be here today and gone tomorrow.”

COVID-19 opportunities

agriculture

Kohl focused a portion of the one-hour webinar on potential opportunities for agriculture to come out of the pandemic, including discussing how because of COVID-19, consumers realize the importance of diversified and safe food, fiber and fuel sources and want reassurance of transparency in where food is produced, processed, and distributed.

He added producing food while maintaining healthy soil and water will receive even more attention than before.

“This next century will be defined by biology, where the last century was physics.” As this picks up momentum, Kohl foresees producers receiving payments for healthy soil and water. “I think this is a great opportunity to reposition the image of agriculture, particularly as we see more and more deurbanization as people are moving into rural areas.”

Farm transition focus of next webinar

After listening to Kohl, the Greenway family had a lot to think about when they returned to their hog barn.

“It was pertinent information for what our family operation is going through right now, but also for young producers just starting out,” said Greenway.

Greenway said he and his family plan on sitting down again to answer the 15 questions Kohl outlined.

If you were not able to attend the Jan. 12 webinar, you can watch the webinar on the South Dakota Farmers Union website at www.sdfu.org, located in the Media Library under the News and Events tab.

Kohl’s presentation was the first of four in the South Dakota Farmers Union Ag Producer Hour Series. The next webinar, Farm Transition and Succession Planning, will be led by Poppy Davis and held Jan. 26 at 1 p.m. CST. To learn more and register, visit www.sdfu.org.

During the South Dakota Farmers Union webinar on Jan. 12, David Kohl discussed the traits of financially successful farmers and ranchers, and encouraged all farm and ranch family members to individually take stock of their Business IQ by answering these 15 questions and scoring their answers.