CoBank has released a new report: “Ag Retailers Prepare to Navigate 3 Emerging Risks.”
The author of the report is Kenneth Scott Zuckerberg, lead economist, grains, farm supply and biofuels, who shares while ag retailers had record profitability 2022, and 2023 will also present a profitable environment, challenges are coming in 2024.
Zuckerberg details a shifting grain market as higher grain production in the coming year will lead to a downturn and lower grain prices in 2024 or very soon after.
From a big picture perspective, farm supply cooperatives will see challenges in five risk categories
- Macro
- Financial
- Operational
- Business model
- Regulatory
“Over the next five years, ag retailers will need to get a handle on changing customer needs, lower expected industry working capital, and rising property casualty insurance costs,” Zuckerberg writes.
The report details how the three emerging risks above can depress profit margins and challenge the traditional business models may in ag retail have built their business.
And he continues, “Although there is no silver bullet solution for managing these three risks, ag retailers have options and opportunities including selling more value-based alternative products (biologicals, specialty nutrients) to address changing consumer needs, adopting digital technologies, and accessing alternative risk transfer mechanisms (such as self-funded insurance captive arrangements) in addition to traditional property-casualty insurance solutions.”
And here’s a video overview:
