January 05, 2018
Now is the time of year to look onward and upward to a fresh slate of opportunities and challenges. As we consider the upcoming year, let’s examine some of the elements that will influence the agricultural landscape in 2018 and through the end of the second decade of the 21st century.
In the first quarter of the new year, the NAFTA negotiations need to be a high priority. As number-three and number-one trading partners with the U.S., Canada and Mexico are a tremendous part of the export-driven markets. In fact, the farm income statements and balance sheets in all three countries could be impacted. If negotiation agreements are tweaked and adjusted, agriculture could benefit. On the other hand, if they are completely overhauled, some in the agriculture industry may be looking at economics from the 1980s.
Another aspect of trade is the CP TPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) negotiations. Countries are forming agreements without the U.S. in another area of the world that has both the population and income growth vital to the industries that support agriculture and rural communities. In other words, keep trade agreements on your agricultural radar screen for 2018.
Next, keep watch on the U.S. Federal Reserve. This includes appointments made by the president to key financial posts. Of course, one should expect rises in interest rates up to three times this year. The good news is that there is a high possibility of a gradual ascent, which allows variable debt holders time to make adjustments.
Another element on the radar screen should be global and domestic economic growth. Specifically, can the world sustain the growth levels of the last six months? The answer to this question is predicated on stock market performance and earnings, and the continued strength of global trade.
As always, policy impacts agriculture; this year, the U.S. Farm Bill will be open for discussion. Issues including crop insurance, incentives for international trade, disaster aid and required standards for program support will all be part of significant negotiations.
The continued evolution of the food industry along with wholesale and retail consumer markets are factors farm businesses need to consider in both their short- and long-term strategic plans. In addition, Amazon and Google, the millennials and Gen Z, along with non-government organizations (NGOs) will each be drivers of change in the agricultural sector. The urbanization of America and the disconnect from agriculture and rural roots will continue to challenge, but also provide opportunities for agriculture.
Even with all the variables to watch in 2018, the key is to maintain focus. Manage the elements you can control, and manage around the others. Of course, management requires developing the plan, executing the plan and monitoring the results in all areas including production, marketing and financial efficiency. This year’s best managers will spend at least 10 to 15 percent of their time in these strategic practices. Now, onward and upward to 2018 and beyond!