GUEST ARTICLE: Jon Kennedy and Marc Ehlers
Riding Out the Storm How to Manage Rising Costs and Economic Uncertainty in the Wake of the Pandemic By Sarah Kearbey
Many Farm Credit West customers have spent the last several years pivoting their business plans in response to unprecedented shifts in global markets and supply chains related to the COVID-19 pandemic. Today, producers are experiencing a new set of challenges in the form of rising interest rates, soaring gasoline and fertilizer prices, and rapidly increasing inflation, among others. To help customers navigate these uncertain times, we gathered insight from two pillars of the Farm Credit West management team: Jon Kennedy, Senior Vice President for the Tulare Branch in Central California; and Marc Ehlers, Regional Vice President for the Southwest Region in Tempe, Arizona. Each shared both universal wisdom and perspectives unique to their regions. For Marc, one of the most important things for growers to do is know what their costs are and secondly, to have solid, realistic contracts. He suggests growers
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talk to their peers and compare costs, and look down the line at their business. “If you’re in pistachios — a long-term crop — are you going to be able to handle them in 10 years?” he said. “Ask yourself what it would cost you to grow and whether there is a more cost-effective way to get the same result.” He also recommends looking at hard costs like equipment and labor. Old tractors are convenient, but may cost a lot more to run than newer, more efficient models.
Similarly, growers should be analyzing their labor costs, and considering investing in more cost-effective solutions. To that end, some dairies in Central California are converting old barns to a rotary milking parlor, which requires just three or four workers to milk instead of a half a dozen or more, Jon says. For him, maintaining relationships with loyal buyers and suppliers as well as a consistent product is a key business strategy during these uncertain times.
