Farmers Await Green Light

February 25, 2008
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Farmers have all the fun — when they're not working. When they take time off for a business seminar, they have a good time, even when it's listening to a university professor talk about the economy.

Last week Macatawa Bank put on a lunch for a few dozen West Michigan farmers in Hudsonville. (The bank has about $70 million to $75 million in agricultural loans, according to a Macatawa executive.) The speaker was David M. Kohl, professor emeritus in Agricultural and Applied Economics at Virginia Tech, who bills himself as the "Road Warrior of Agriculture." Kohl estimated he flies about 250,000 miles a year to speaking engagements throughout the U.S., Canada and Mexico. With a Ph.D. in ag economics from Cornell, he's written four books and more than 500 articles on finance, economics and other business topics related to agriculture. He's involved in a business of his own, too: a home-delivery dairy with $4 million in annual sales.

Kohl talked about the world economy, consumer trends, oil prices and alternative energy, and skyrocketing agricultural land values, all of which have increased the volatility of ag economics. Where there is an opportunity, move on it, he said — but beware of how rapidly situations can reverse now. "Cover your behind side," he said.

He also talked about his own business model, and how it incorporates probabilities.

"You have to start thinking probabilities. There's not going to be an absolute answer" on business decisions facing farmers today, he said.

Kohl finished up his talk with remarks on risks facing agriculture in the marketplace, risks he measured like a traffic light. He figures there is an 80 percent probability for a green light as long as the value of the dollar remains low (ag exports are very high now due to the low value of the dollar overseas), there are low to modest interest rates, low to modest inflation of land values, strong emerging economies worldwide, a modestly strong economy in North America and continuing government support of agriculture energy, food and fuel.

There is a 50-50 probability the light will turn yellow, if the value of the dollar increases and inflation increases, if North American and emerging economies become stagnant, and if there is a reduction of energy and agricultural supports.

"Some conditions are starting to go upside down," he told the Business Journal. He believes the U.S. is in a recession and sees Britain, Europe and Japan "slowing down dramatically." The Chinese economy is also slowing down, although there is no recession there yet, he said.

The probability for a red light for agriculture is still "less than 25 percent," he said. That would be triggered by a rapid appreciation of the dollar, a 200 to 300 basis point increase in interest rates, a global recession, a "flight to liquidity," and a government cutback in energy and agriculture supports.

Those odds aren't too scary, but it's a safe bet those farmers will keep in mind his key advice: "Cover your behind side."

  • A lot of talk and a lot of meetings are going on as Muskegon’s two hospitals, Hackley and Mercy General, inch toward a merger. “But we don’t have a final agreement and the boards have not signed,” said Mercy General spokeswoman Kelly Kurburski. The meetings have covered topics such as where to locate services and how to integrate computer systems, she said. Board members, doctors and employees were asked about the qualities of the two hospitals and their visions for a combined health system, and “the name was part of that,” Kurburski added. “That’s still to be determined.”

  • Sister publication Grand Rapids Magazine last week announced the winners of the annual GRM Dining Awards, adjudicated by a panel of regional residents with various culinary expertise, who use a 100-point rating system created by the local chapter of the American Culinary Federation and instructors at Grand Rapids Community College’s Secchia Institute for Culinary Education. The panel dines anonymously at area restaurants over the course of a year, turning in ratings for each visit. Crowe Chizek accounting firm tabulates all final ballots.

The Grand Rapids Magazine Restaurant of the Year Award is given to the establishment with the highest number of total points and the number of panel members balloting for it. The award was presented to Leo and Amy Beil, of Leo’s restaurant, for the second consecutive year.

The 1913 Room, The Chop House and Reds on the River in Rockford each received a Fine Dining Award of Excellence. Casual Dining Awards of Excellence were presented to Everyday People Café in Douglas, Great Lakes Shipping Co and The Grille at Watermark. Ethnic dining Awards were presented in three categories: Asian, to XO Asian Cuisine; European, to Tre Cugini; and Mexican, Central/South American, to the Beltline Bar.

The awards were presented during an event that featured the students in the GRCC program, who worked in open kitchens to feed guests elaborate and varied foods, following an Italian theme.

The Greater Grand Rapids Chefs Association also lauded area professionals. The ACF chapter named Calvin College Executive Chef Tim England for its Grimod  de la Reyniere Award for Meritorious Service, and Hope College Dining Services Executive Chef Tom Hoover was named Chef of the Year. Honey Creek Inn executive chef Michael Whalen was named Chef Professional of the Year; GRCC adjunct instructor Michael Whitman was named Chef Educator of the Year, and Kent Country Club employee Andrew Eggert was named Junior Culinarian of the year.

  • State Rep. Robert Dean, D-Grand Rapids, introduced a bill that "allows more industrial businesses to receive personal property tax breaks." It already passed the House. Dean's news release said the bill "will ensure that equipment in commercially zoned industrial businesses is eligible for those tax breaks."

Dan Oegema of the city of Grand Rapids Economic Development office said he did not see it so much as a change as a "little cleanup language" added to Public Act 198, to match it up with benefits of the new MBT. And Terry Stanton of the state Department of Treasury also said it was "basically a technical fix" in the wording of the law.

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