When I was doing the Agribusiness Icehouse programme we were fortunate to have a Bill Malcolm, Economist from the Department of Agriculture and Food Systems of the University of Melbourne, present to us.
He has recently delivered some very interesting thoughts on the future.
There are still a few things about the future for certain:
So back here in New Zealand we need to work with what we know and prepare for what we don't. Sounds funny, but that's so true.
Bill Malcolm also quoted the following principles that are fundamental to all businesses and agriculture.
Big boom, big bust has led us into total disarray. We all forgot that "what goes up must come down". The dairy industry is in deep dilemma at the moment with some farmers unable to see next season underneath their enormous debt.
We are now facing a 20% decline in farm values in many sectors and how will that affect our country, and the banks for that matter?
Agriculture will go through a recovery phase only to realise that fundamentally the world remains short of food. Why would Daewoo and Bin Laden Corporation plus some Middle Eastern countries be trying to lease/buy cheap land to grow rice?
The question arises: would you rather have a bag of rice or a barrel of oil?
Preparing for the future means:
Now that we know otherwise, we need to prepare for tough times, prepare for difficulty and prepare for the unknown.
It is for certain that you do not know what the future holds.
He has recently delivered some very interesting thoughts on the future.
There are still a few things about the future for certain:
- The future will arrive
The future will be a different world; they will do things differently there
Much about the present will be present in the future
Much about the future cannot be known
Current farmers will age, depart and (sometimes) be taxed
Another 3 billion people will arrive in the next 40 years
Some important principles that work now will still work in the future
Much of what we believe to be right now will be known to be wrong
The things that we currently think will be the major factors affecting our lives will not be so
The things that will be the major factors affecting our lives will be things that we have not even imagined will be so.
- We do not know much and cannot know much.
We do not know for sure and cannot know for sure.
| "Prepare - Don't Predict" |
So back here in New Zealand we need to work with what we know and prepare for what we don't. Sounds funny, but that's so true.
Bill Malcolm also quoted the following principles that are fundamental to all businesses and agriculture.
- The laws of supply and demand
The principle of comparative advantage
The principle of diminishing marginal returns
The principle of increasing risk
The probability principle
The risk versus return principle
The 'big booms have big busts' principle
The 'whole of business' principle
The 'all farm systems and their managers are unique' principle
The 'quality of management is the hidden, unmeasured input to success and failure' Principle
The 'question is the answer' principle, and
The 'we don't know much and can't know much' principle
Big boom, big bust has led us into total disarray. We all forgot that "what goes up must come down". The dairy industry is in deep dilemma at the moment with some farmers unable to see next season underneath their enormous debt.
We are now facing a 20% decline in farm values in many sectors and how will that affect our country, and the banks for that matter?
Agriculture will go through a recovery phase only to realise that fundamentally the world remains short of food. Why would Daewoo and Bin Laden Corporation plus some Middle Eastern countries be trying to lease/buy cheap land to grow rice?
The question arises: would you rather have a bag of rice or a barrel of oil?
Preparing for the future means:
- Having a sustainable business
Identifying the risks and preparing for them
Looking after your land and pass it on to the next generation
Having a succession plan
Lowering costs and maintaining profits
Summary
We all forgot about preparing because we thought boom times would never end. We thought we, in New Zealand, were 10' tall and bulletproof.Now that we know otherwise, we need to prepare for tough times, prepare for difficulty and prepare for the unknown.
It is for certain that you do not know what the future holds.
