Spring arrives in about a week and an agricultural economist says 2011 should be a good year for agriculture, but he warns Iowa farmers to pay attention to certain areas over the next few months. David Kohl, president of the consulting firm AgriVisions, says a few overseas markets will likely play a key role in the success of American agriculture this year.
“We’ve gotta’ see if the Chinese and Asian markets will sustain growth,” Kohl says. “If we have the growth rate, which is going about 10% right now, if that goes back to three to five-percent, that’ll knock commodity prices by about 20%.”
Iowa is the nation’s number-one producer of corn-based ethanol, a fuel Kohl says is having a significant effect on the marketplace.
“The ethanol industry has gone from about eight-percent of our corn crop to about 38% of our corn crop,” Kohl says. “Any changes in ethanol and the ethanol programs will have a drastic impact. Keep an eye on the dollar. The dollar encourages exports, but it also increases our import costs and input cost.”
He says weather is another factor that will have an impact on agriculture. “More and more of our production is being concentrated in productive regions around the world and about 80% of our production in the United States comes out of about 25 regions,” Kohl says. “If you have a weather system line up or if you have a disease on the livestock side that happens to hit in one of these productive areas, it throws the supply out of balance.”
Kohl urges local producers to develop a solid management plan for their operation, but he adds, the plan needs to have some flexibility. He says he looks to the future of farming as being bright.
“I am seeing more people under 40 years of age coming to my seminars than I have ever seen,” he says. “I’m also seeing more females and that’s two significant trends. We’ve got some real new energy coming into the agricultural arena and, boy, that makes it very optimistic.”
AgriVisions is based in Blacksburg, Virginia. Kohl was a professor in the Department of Agricultural and Applied Economics at Virginia Tech for 25 years.