A high-level management mindset should be top priority this year regardless of operation size, enterprise, or business cycle stage. Place your energy on controllable variables and manage around the uncontrollable like geopolitics, weather, or unexpected ‘black swan’ events.

The agriculture economy is currently bifurcated with the grain and row crop sectors in an economic downcycle while livestock and diversified enterprises are generating a positive return. Regardless of sector, focusing on business fundamentals is critical.

As you develop monthly and quarterly cash flows, consider current interest rates and inflation levels and evaluate your best, average, and worst-case scenarios with adjustments in production and costs. For grain producers, generating a small profit or minimizing losses on working capital reserves may be the most realistic goal, while establishing a profit plan may be priority for diversified operations. The balance of capital expenditures, tax planning, and building working capital for adverse events in a downcycle must be weighed. Plus, cash flow can be used as a tool to follow the acronym R.E.M.:

Respond by developing an operational cash flow plan with marketing and risk management practices

Execute strategies, actions, and tactics

Monitor outcomes throughout the year so adjustments can be made given uncertainty in a dynamic economic environment

After decades as an educator, speaker, and agribusiness owner, I’ve recognized economic downcycles often bring out the best business practices because of increased attention and focus. On the other hand, favorable economics encourage complacency and lack of management intensity.

Downcycle opportunities:

• Quick money and wealth build ego, while slow and steady disciplined gains build character, resiliency, agility, and nimbleness.
• Selecting the right partner affects business and life success.
• Strive not to be the fastest, but the one who finishes the race most successfully.

I wish you and your family a safe planting season. Remember, there is no successful culture in the world without success in agriculture. You make a difference!