Audio Clip
Farmers and ranchers are no strangers to volatility and the cyclical nature of agriculture. Although it seems like there’s more uncertainty today than ever before, there are opportunities for producers who implement sound risk management and marketing strategies.
In this episode of It Takes a Co-op™, Ken Zuckerberg with CHS Market Advisors describes the factors driving volatility in ag and global markets and how farmers can manage risk in the unsettled economic environment.
Risk factors
Zuckerberg highlights five risks that could exacerbate economic volatility:
- Persistent inflation
- A secondary spike in inflation
- Labor market uncertainty
- Federal Reserve policy uncertainty
- Bond market volatility
The overall economy has a significant impact on agriculture, Zuckerberg says. He anticipates crop farming profits will continue to be under pressure the next few years, since the ag sector is still in a downcycle and economic volatility persists.
“This too will eventually pass,” he explains. “In prior cycles, we have seen resilient and innovative farmers and co-ops rise up and be better for it.”
Next steps
Zuckerberg recommends farmers know their production costs, capture profit opportunities when they exist and hedge against downside risks. Cooperative advisors are available to help.
“Winning has to do with being a low-cost operator and flawless execution,” Zuckerberg says. “In challenging times, there are often opportunities to reinvent your business model.
“A combination of offense and defense and focusing on operational excellence is clearly a strategy to win in this environment.”
Each month on It Takes a Co-op, we introduce you to people working in agriculture and energy, inside and outside of CHS, whose ideas and insights will help you, and your cooperative, succeed.
Follow and listen to the show on your preferred podcast app. And watch video versions on the CHS YouTube channel. Episodes are posted monthly.
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