Spotlight on a Different Climate
Climate change is a frequent news headline. And while it is an important, long-term weather concern for farmers, so also is our business climate. Do we need to focus on that as well?
I would argue, yes.
Business climate is defined as the general economic environment within an industry that comprises the attitudes of various players in that industry toward business activity.
In the article, “How CEOs Should View Business Climate,” in the September 12, 2018, issue of CEO Magazine, Darin Buelow, principal and real estate and location strategy practice leader at Deloitte Consulting LLP, explains that many factors can make up and affect business climate. These include labor characteristics, the competitive environment, the regulatory environment, the cost of doing business, infrastructure, logistics and access, operating risk and quality of life.
Just as these factors affect big corporations, many of the same factors influence the soybean industry business climate. And we certainly have seen change among these factors.
In 2019, our cost of doing business, operating risk and other factors all have been challenges to our business environment. According to Brent Gloy with Agricultural Economic Insights, working capital is one of the most straightforward and useful indicators of farm sector financial conditions. It affects our costs and risks. And working capital has been on the decline since 2012.
Gloy considers working capital critically low. It is projected to fall by 25 percent from 2018 to 2019 on the heels of a 30 percent drop the previous year.
In this issue of Soy Perspectives, we share a broad and inclusive look at the financial tools that may help soybean producers manage for better business success. These tools include traditional options you may already use, along with outside-the-box ideas from the experts. The article provides practical information to address the cost of doing business and operating risk.
When it comes to infrastructure, logistics and access, read the cover story about the blurring lines we see between commodity and food production. We also take a look behind the business of biologicals and how companies determine where to focus research for future product development.
The Illinois Soybean Association (ISA) certainly does not have all the answers to the business challenges we face, but we are evaluating them to make the most of a tough year.
On a personal note, I have enjoyed serving as ISA chairwoman for the last two years. We have made great strides in advancing the Illinois soybean industry and I know new leadership will continue along a successful pathway. Thank you for the opportunity to serve.