FAIRBURY – A famous risk management consultant remains optimistic on the future of agriculture.
Moe Russell, owner of Russell Consulting Group, addressed a group of farmers at an informational meeting held at Marchelloni’s in Fairbury. Raised in eastern Iowa, Russell worked in lending for 26 years before starting his consulting business 19 years ago.
“We’ve had three record crops worldwide. What’s the probability of having a fourth?” Russell asked. “We feel strongly our drop in commodities is behind us.”
Russell believes everyone is on the “same side of the boat” with commodity prices. He has noticed strange occurrences in commodities, such as a recent soybean rally in which prices should not have gone up. Also, the hog market is rallying despite a larger number of hogs. He foresees the world going through the stockpile of corn faster than expected.
When it comes to the world economy, the GDP has increased 18 times since 1970.
“Demographics will determine growth in the future,” Russell explained.
Russell Consulting is one of the few North American companies that provide both financial and commodity advice. The company’s business philosophy remains simple, according to Russell, as they feel profit should be viewed as a cost. Overall farming costs are coming down and the company is seeing that in projected profitability.
“Working capital is the first shock absorber to get you through financial bumps in the road.”
Having a simple farm plan you can understand and follow reduces stress, makes you more profitable and makes farming fun. The future is very promising for agriculture since farmers will need to produce more food in the next 50 years than has been produced over the last 7,000 years. Crop demand will also be up by 25 percent. Russell’s four drivers of change include resources, technology, demographics and public policy.
We are in a changing PR environment and the activists aren’t going away. Russell encourages growers to look for opportunities to develop strategies which differentiate their farm from others, such as animal comfort, water, nitrogen and soil quality. If you quietly go about making these changes without boasting, Russell believes people – and landlords – will notice.
Studying history can make your crystal ball into the future a little clearer. Russell expects good times to be back again in agriculture during the next 100 years but he does not think they are going to last long. There are still great opportunities in the business.
“I believe there’s more money to be made farming than any other industry,” Russell said.
The trick is understanding cycles and profiting from that understanding. Cycles have been around in production agriculture for the last 400 years. The cycles will likely become more frequent with a higher impact. Russell recommends intensive disaster planning when times are good.
In order for farmers to survive, they must do a better job of marketing, maximize machinery use, lower costs, and have better production, in Russell’s opinion.
“Yield is still a very, very important factor,” he concluded.