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May 25, 2012 (800) 657-4665 www.TheLandOnline.com theland@TheLandOnline.com P.O. Box 3169, Mankato, MN 56002
SOUTHERN EDITION
David Kohl talks “the wild world of When global economics” everyone listens. A retired 25-year veteran of ag finance and small business mangement, Kohl said global economics the past decade has positioned agriculture and ag lending with many opportunities. On the flip side, it has also created risks and more opportunities to fail. “The stakes are high today. Agriculture has become extremely capital intensive. The rewards have been and continue to be potentially great, and exciting. But with greater rewards come greater risks,” Kohl said. He indicated the Return on Assets for America’s top 20 percent of producers has been greater than 10 percent for the last 15 years. But are there some “black swans” lurking out there? Agriculture has Oil and Middle East become extremely unrest is the biggest capital intensive. black swan. Oil hitThe rewards have ting $200 and $6 been and continue gasoline could hapto be potentially pen. U.S. public debt issues cloud the horigreat, and exciting. zon. So too the Euro But with greater sector and its growrewards come ing linkage with greater risks. China. And don’t ignore terrorists, dis— David Kohl eases and natural disasters. BRICS ahead What’s ahead? “BRICS” is the nomenclature and it represents the emerging nations of Brazil, Russia, India, China and South Africa. Currently these five countries represent 20 percent of the world economy but 50 percent of world growth into the next decade. Ten years back China ranked seventh in the world’s economy; today China is second. Brazil went from 14th to sixth. “Food, fuel and fiber are what these emerging nations demand. And the market goes to whomever can be the most competitive supplier. That continues to be the United States. China continues at an amazing 8 percent growth rate. If/when that drops to 5 percent, the market price of U.S. farm commodities takes a beating. If growth drops to 3 percent, then $3 corn, $6 beans and $50 oil are very likely,” Kohl said. By DICK HAGEN The Land Staff Writer
See GLOBAL, pg. 13
EXPERT ANALYSIS
David Kohl on the wild world of global economics