In the next two years, the actions you take in business will define what happens in the next 20 or 30 years. That’s the outlook from Ken Zuckerberg, director of global research for CHS Inc.
With the current ag cycle, which Zuckerberg notes is in calendar year 3 of a downturn, and the uncertainty driven by the unknowns around U.S. trade policies, he says there are two steps every ag retailer can make:
- don’t be forced into making quick decisions
- get out and see your customers
“Things are going to be tricky for awhile,” he says. “And it will be less about your actions and what you do—more about your mindset through this time.”
Zuckerberg says we’re in a classic case of a period classified as VUCA—volatile, uncertain, complex and ambiguous.
“What it boils down to is the equity markets don’t necessarily equate to the economy, but equities tend to be a forward discounting mechanism, and what the equity market is saying is 6 to 9 months from now there’s some uncertainty, and hence the volatility in share prices.”
He says where current events seem unpredictable, the biggest takeaway is that everyone is going to be wrong with predictions.
Specific to ag, Zuckerberg is watching farm income levels and profitability.
“This is a really difficult business. I appreciate every farmer in America staying the course, because it’s not easy to have 2 or 3 good years, followed by 5 to 6 difficult years,” he says.
Due to the current economic hardships in the row crop market, he sees potential for opportunities to be realized in vertical integrations/consolidations for how efficiencies can be gained.
As for where American ag can grow over the next 10 to 20 years, Zuckerberg says it’s like a “Shake ‘n Bake” recipe for identifying alternative markets. There is a recipe of factors that can help scope out potential.
“It’s about the markets experiencing the highest growth, and where the U.S. has trade routes to,” he says. “These countries have emerging manufacturing economies, a supply of younger workers that can participate in the participate in the manufacturing economy, and a growing middle class.”
As examples he gives Bangladesh, Thailand, Vietnam, Indonesia, Philippines, and Malaysia.
“These are alternative hubs to China, which has a population slowing if not declining,” he says. “Let’s be clear—they’re not going to overtake China as the No. 1 manufacturing anytime soon. It’s not a 3 month story. It’s not a 9 month story. It’s probably a 5 to 10 year story, but it’s an exciting one.”
