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Macro View of Agriculture – Dr. Mike Boehlje

Seminar 3 began with a presentation from Dr. Mike Boehlje on a macroeconomic view of agriculture. Dr. Beohlje talked about how agriculture will experience higher capital costs as interest rates go up, which will increase the cost of ownership of assets. Every business has unique characteristics to consider, but my take away regarding his general recommendation for ag businesses was to consider paying down debt in the next 12 months to achieve a lower debt to asset ratio and locking in interest rates. The group also discussed the multitude of factors that will impact when our country will recover from the recession. These factors include exports, government spending, and consumer spending with business investment to follow.

I readily admit I was challenged by this subject matter and Dr. Boehlje’s chart! However, I found this discussion fascinating because it opened my eyes to all the external economic factors that impact agriculture. For example, Dr. Boehlje talked about how the financial markets are linked to the commodity markets and drove the restructure of the agriculture industry. I also learned how agriculture can look to other sectors for indicators, such as a large retailer that is building up financial reserves for later use at the current low interest rates.

This session got me thinking about agriculture in a global economic context and why it is important to look outside agriculture for economic opportunities and challenges.