December 11, 2020
Northwest Farm Credit’s Ag Outlook Conference this year was conducted from “cyberville” as a result of the COVID-19 pandemic. Eric Snodgrass, also known as “Eric, the Weather Guy,” and I engaged with farmers, ranchers and other folks representing the agribusiness community on a recent four-day tour in Montana, Oregon, Washington and Idaho. Eric’s predictions, as usual, were spot-on in predicting a blizzard in Montana and much-needed snowfall in the Western mountains. The participant polls found different perspectives concerning actions taken in business, family and personal life for resiliency and agility when compared to polls from previous years.
Nearly 70% of respondents in Oregon and 55% in Idaho were reexamining business, family and personal goals. The polls found that almost 70% of participants from Washington and Idaho were focusing on building working capital and cash. With 55% of respondents in Montana, the No. 1 ranking for actions to improve resiliency and agility was building working capital and cash.
These rankings are very appropriate for this time of year. Usually the dark, short days at the end of the year are a good time to reflect and set the course for the next year. The key is to write down no more than three business, family and personal goals. Some producers have expanded their goals to include mental, physical and spiritual well-being to balance life's journey.
When examining working capital, there are several questions for critical analysis that must be answered. Did the increase in working capital occur through profits or the sale of capital assets to replenish the war chest? Or was working capital enhanced through a restructure or refinance of debt? What was the reason for the debt restructure? What strategies will be pursued and used to preserve financial liquidity?
Participants were focusing on refining budgets, the cost of production and breakeven calculations. This will be a high priority, particularly if the government payments spigot is not as generous, or if local value-added opportunities are expanding, which was a high priority in Montana and Idaho.
Surprisingly, over one quarter of the participants in all four states were zeroing in on budgeting for family living expenses.
As always, Eric and I enjoyed our cyberville events, but missed the people and the beauty of the great Northwest landscape. Perhaps we will see you another year!