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Planning and preparationBy Greg Wolf "Some people skate to the puck. I skate to where the puck is going to be." --Wayne Gretzky The interesting thing about Wayne Gretzky is that no one, including himself, pretended that he possessed more talent as a hockey player than others that he competed against. The quote above is actually his explanation for why he was extremely successful at hockey in spite of the fact that he wasn't more talented. In working with family businesses, we sometimes help business owners articulate and document a common "vision" for the business. Gretzky's quote expresses what we mean by vision in a family business setting. We envision moving the business to a particular place, with the expectation that some opportunity will be coming our way when it gets there. Agriculture seems like a particularly good industry for this idea, given we deal with so many unknowns each year. One big picture example, that has a lot of current relevance to the entire ag production industry, is the recent national conversation about ending direct government support payments to agriculture and replacing them with compensation through a yet to be decided "cap and trade" system. I have been, at least, a skeptic and, at times, a cynic regarding global warming. I'm old enough to remember talk of another ice age; and, I wondered whether we really had the capacity to monitor the earth's temperature over a long enough time period to have any relevant grasp of true trends. Also, I really wonder whether or not humanity really has the capacity to significantly alter the earth's temperature, either to warm it or to correct it. A couple weeks ago, I enjoyed a dinner meeting with a group including Dr. Barry Flinchbaugh, and he approached this by sharing some of his early and similar hesitations. However, he then made this conclusion--"the global warming debate is going to go on, scientifically, but it is already over, politically." In other words, there is broad support for forward momentum with legislation involving "cap and trade." Agriculture has as much potential to be a part of the solution in that context as any industry, regardless of the recent suggestion of eliminating direct farm payments. Environmental stewardship is a part of who we are as an industry, completely irrespective of potential cap and trade legislation. We can't go far in discussion of that stewardship without considering carbon and how we manage it, which is at the heart of reduced-tillage and managed-grazing regimes on our land. So even though we don't know for sure where this puck will end up, I'm much more comfortable now seeing the industry move toward where we think it might be going, expecting to find opportunity for our industry and businesses when we get there, and knowing that learning and sharing more of what we can do to manage carbon is the right thing, anyway. Another example that is more immediate at the business level is that of stepping into the production year with a lot of market uncertainty, both in agricultural commodities and in the general economic environment around us. Really though, isn't that almost always the case over time? In fact, isn't that the very essence of capitalism--to put capital at risk in the expectation of return over the long term? Obviously, we don't want to put it at risk unwisely. I would be rich if I got a dollar every time I heard someone in my life referring to farming as a "gamble." But it isn't. It is simply capitalism at work, taking calculated business risks, although, in our case, it is within a unique relationship with nature. I am not a market prognosticator but I wrote a column in October 2007, about developing a "bottom up" marketing plan, where we inform our marketing targets with data from our own cost structure. Six months later, I almost regretted writing that column, because it seemed out of step when corn was over double where it was when the column came out. Inputs soon followed, and then grain plummeted and December 2009 corn futures are today, ironically, within a dime of a target I suggested in that October 2007 column ($4.07). Everything I've seen since then, though, simply confirms my thinking-producers must understand their own cost structures and combine them with some forward-looking assumptions, to inform and place in context their marketing plans--"it is hard to go broke making money." Going into this crop year certainly has some parallels that Gretzky might appreciate. We don't really know where "cap and trade" will end up, and neither do we know when the markets might drive or dive, in this year. But we can still skate to where we think the puck is heading, with an expectation that somewhere an opportunity will cross our path and we'll be prepared to push it successfully to the goal. Editor's note: Greg Wolf is a consultant with Kennedy and Coe, LLC (www.kcoe.com) and works to help clients of the firm navigate toward better returns in all areas of their businesses. He is based in the firm's Pratt, Kan., office and can be reached at 620-672-7476.
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