Three Actions For Strategic Planning In 2023

Executive Summary

• With the recent decline in inflation and stability in grain prices, a status quo mindset may set in. 
• Reality: labor problems will persist, and the crop cycle will eventually turn down. The world faces more risk and volatility than in decades. 
• Agribusinesses must acknowledge these realities.     

1. The Situation

As usual, January had a lot of noise. The World Bank cut outlook for global growth, and investment firms called for a U.S. recession. However, inflation continued to decline, and Federal Reserve rate increases slowed.  

2. Implications

The recent declines in natural gas, fertilizer and material prices, coupled with reasonably steady grain prices, provide additional fuel to the positive fire of farm emotions. 

I sense a return to “status quo” thinking rather than accept the reality, which is more difficult. The post-COVID world is undergoing numerous evolutions and revolutions—involving demographics, population shifts, global power struggles, weather volatility, supply chains and trade flows—that make business more volatile, uncertain, complex and ambiguous—that is, “VUCA”-like. 

For strategic planning to be most effective, it’s critical to acknowledge realities, adopt best practices and evaluate resiliency to future scenarios. Start with two realities:

• Crop farming is a cyclical business with a few good “up” years followed by several difficult “down” years. We are entering year three of the cycle’s upturn. 
• The labor problem is not going away. New hardware exists to help narrow the labor gap. Must we endure a farm crisis before embracing the technology? 

3. Call to Action

Amid chaos comes opportunity, especially for companies that can strategize for the future. Current circumstances—and the inevitable downturn in the crop cycle—require deeper, thoughtful and immediate action. Going forward, strategic planning should focus on three tangible activities: 

• Add diversity to the board and management ranks to avoid doing the same over and over again but expecting different outcomes.
• Conduct modeling to outline future business scenarios. One example is Aimpoint Research’s “wargaming” simulations.
• Improve internal risk management through adoption of advanced software technologies, such as AgroGraph, RealmGive, and SmartWyre, Inc. 

Kenneth Scott Zuckerberg is Lead Industry Analyst, Grains, Farm Supply & Biofuels, CoBank