“It takes a village to succeed in agriculture today.”
While initially many question the exact meaning of that comment, Tony English summarized his ten-point presentation that way in discussing what will affect the agriculture industry in 2014 and beyond.
Speaking at the 580 WIBW Farm Profit Conference in Lyndon, English, who serves as chief financial officer for Frontier Farm Credit, contended: “It is an increasingly complex environment, and the rate of change is accelerating, so we must build a team of experts.”
Thus, “It takes a village” to achieve success as agriculture goes beyond the home barnyard to the “U.S. economy and the world today,” according to English, who is closely tied to all facets affecting agriculture through his Manhattan-based association serving 41 eastern Kansas counties.
“No. 10: Janet Yellen” was the lead-off Power-Point screen shown by English, who pointed out Yellen is the first female chairperson of the Federal Reserve, taking office early this month.
Yellen is considered by many to be a “dove,” more concerned with unemployment than with inflation and as such to be less likely to advocate Federal Reserve interest rate hikes.
However, some predict Yellen could act more as a “hawk,” if economic circumstances dictate. She would then favor increased interest rates in order to keep inflation in check. Yellen would become less concerned with economic growth than with recessionary pressure brought to bear by high inflation rates.
“The actions of Janet Yellow can impact agriculture, and oversight is essential. We don’t want the Federal Reserve independent of Congress,” English contended.
“Taper Tantrum” was the No. 9 item listed by English explaining that the Federal Reserve has continued its tapering process, slowing monthly purchases of Treasuries and mortgage-backed securities another $10 billion to a total of $65 billion per month.
In a technical discussion, English predicted: “Tapering is happening and will continue,” as he declared, “There is an addiction to free money,” while advising: “The market reacts more calmly when
it is not surprised.”
“Congress is in therapy,” said English tongue-in-cheek, pointing out: “Democracy is the worst form of government with the exception of everything else we have tried.”
Pulling no punches, English proclaimed: “Congress has been dysfunctional.” But with crediting optimism, he added: “The Beltway (Washington, D.C., leadership) is still bad, but improving.”
There are geopolitical risks. “In today’s environment with instantaneous communication and information, those with political agendas often look for a ‘big splash,’” English warned.
Claiming there “continues to be numerous ‘hot spots’ in the economy,” English analyzed: “Supply and demand ultimately drive markets, but markets can remain illogical far longer than any of us can remain liquid.”
Again reflecting that today’s agriculture is in a global economy, English said that currencies plummeting in Argentina and Turkey have had a contagion effect upon the emerging markets.
“Turkey is a significant player, too, that is in trouble. Poor economics leads to political strife,” English alerted.
“We want and need healthy trading partners with consumers who can afford our products,” English said emphatically.
“Rain gauges are obsolete,” spouted English as farmers’ eyebrows raised.
“Technology and ‘Big Data’ are changing the way we do things,” English said. “The world is flat,” so we can know what is happening, weather, crops, economies, politics, anywhere with the flip of a computer button.
“We are on the cusp of another ‘tipping point.’ Who knows we might really have ‘green cows’ before we know it, or can even believe it,” English smiled.
Talking about strength of the U.S. Dollar, English is confident: “The U.S. Dollar is the best horse in the glue factory.”
He predicted, “Our Federal Reserve will tighten sooner and more aggressively than most developed economies.”
However, “in isolation: higher rates equal a stronger dollar which equal lower commodity prices,” stated English, admitting: “Liquidity driven inflation is the wild card.”
Optimistic for agriculture, “A burgeon middleclass in developing nations will demand a higher quality diet, especially protein. Others will tie their diets to stances on social issues.
“There are incredible opportunities for niche players,” English decreed.
No. 2 on English’s list affecting 2014 agriculture: “Trade policy is a big deal.” He recognized, “This is the biggest news story you don’t hear anything about.
“The European and Asia-Pacific trade deals have the potential to change direction of agriculture in the United States,” English explained.
In summary, “It takes a village to succeed in this increasingly complex environment where the rate of change is accelerating.
“You must build a team of agriculture experts to stay informed and remain engaged,” English concluded.