Cows Can Cool the Climate and other Crucial Consumer Communications by Steve Kluemper

If you are using Internet Explorer to view this site, please use another browser for optimal viewing.

Please share this page with these links to Facebook, Twitter, LinkedIn and Email:

Steve Kluemper Curious Cows

Care – Tomorrow’s consumer wants to have a deeper relationship with their food and how it’s produced.  They want to know how farmers and ranchers care for plant, animal, labor, land and environmental resources to produce safe food.  They are demanding this all across the supply chain from farm to fork. 

Commit – Producers should show society that they are serious about knowing and further reducing their environmental impacts and addressing important societal issues.  If farmers and ranchers don’t commit to consumers about the stewardship they practice to create sustainable systems, who will? 

Communicate – Since no one knows more about what is happening on farms and ranches or has more at stake than the owners, these farmers and ranchers need to embrace and communicate their role and desire to be sustainable stewards of the resources they use. 

I captured these ideas of Dr. Frank Mitloehner, a professor at University of California, Davis , from a recent webinar he participated in as part of the Dairy Signal webinar series presented by the Professional Dairy Producers of Wisconsin led by Shelly Mayer.  The Dairy Signal webinars have provided timely information about the dairy industry. 

Dr. Mitloehner’s focus for this episode was helping beef and dairy producers explain the environmental impact of cows with a special emphasis on greenhouse gases and biodiversity as interpreted and summarized by my following non-scientific perspectives. 

Curriculum concerning cows needs context

I think the reason this episode really hit home for me was because of an assignment that I was helping my 6th grader with during the Covid-19 school shut down and parent teaching experiment.  The correct answer for his assignment according to the materials was that cows create a significant amount of greenhouse gases and are bad for biodiversity and the environment. 

This is a common message and one that isn’t usually fully discussed, especially if the presenter has an anti-animal agriculture agenda.  However, I didn’t have the facts to help explain the rest of the story to my son.  I’d like to summarize the following takeaways from Dr. Mitloehner’s presentation that help frame up the environmental impacts of cows and would have been helpful to have when I was working with my son. 

Cows and other ruminants create biogenic methane

Beef and dairy cows, as well as buffalo, antelope, sheep, goats, moose, deer, bison and giraffes are ruminant animals, meaning that they have the unique ability to ferment plant-based food in their stomachs prior to digestion which allows them to obtain nutrients from grasses, hay, corn stalks and other plants that humans and other animals can’t digest.  A by-product of this fermentation process in the stomach is the production of biogenic methane which eventually ends up in the atmosphere as a greenhouse gas and decomposes over 10 years. 

The ruminant herd hasn’t increased over time

According to Dr. Mitloehner, before European settlement of North America, there were approximately 60 – 80 million bison and 40 million pronghorn antelopes for a total of approximately 100 – 110 million large ruminants roaming what is now the United States.  Today the U.S. has 90 million beef cattle, 9 million dairy cows and only 1 million or so bison and antelope combined for a total of approximately 100 million large ruminants.  The U.S. has merely replaced the wild ruminants in this country with domesticated ruminants and the ruminant herd hasn’t increased over time. 

Ruminants are part of the biogenic methane carbon cycle

Cows and other ruminants are part of the biogenic methane carbon cycle where plants take carbon dioxide from the air and use water, sunlight and nutrients to create oxygen and carbohydrates including cellulose.  Then ruminants take cellulose and oxygen and nutrients from the plants along with water to create human food, milk, nutrients, organic fertilizer, carbon dioxide, biogenic methane and other byproducts.  The biogenic methane is released into the air and converts to carbon dioxide through a process called hydroxyl oxidation over 10 years to start the cycle all over again. 

Biogenic methane is decomposing as it’s being produced

According to Dr. Mitloehner’s research, the biogenic methane carbon cycle is currently so sustainable that the amount of biogenic methane in the atmosphere from cows that is converted to carbon dioxide each year for use by plants is equal to the amount of biogenic methane that is produced by cows each year. 

Greenhouse gases from oil continue to build

While methane is a greenhouse gas that causes global warming, it’s important to differentiate between different greenhouse gases.  When greenhouse gases are produced from the burning of fossil fuels such as coal and oil for our transportation and energy needs, those gases go up in the atmosphere and don’t decompose for thousands of years.  They call this process of mining carbon from below the earth’s surface, burning it and releasing it into the atmosphere stock gas since it only stocks the greenhouse gases that don’t go away.  So far, the world has used around 50% of the carbon that’s underground on this planet according to Dr. Mitloehner. 

Herd numbers and biogenic methane levels aren’t increasing

The current cow herd is not adding additional methane to the atmosphere because the biogenic carbon cycle is in balance where the methane produced by cows is converted to CO2 and used by the plants to feed the cows in a sustainable cycle.  Biogenic methane is a flow gas which is being produced and destroyed at an equal rate unless the industry produces less methane which leads to a net cooling effect on the environment. 

Cows can cool the climate while feeding the world

If you decrease methane emissions by decreasing cow numbers or by using anerobic digesters, feed additives, or manure separators, then you are actively pulling carbon out of the atmosphere which creates global cooling.  Cattle producers can be a solution to global warming. 

In fact, California is subsidizing the livestock industry’s cost of capturing methane that is then converted into renewable natural gas and used by vehicle fleets to replace diesel fuel while lowering methane emissions.  This is the new gold rush in California according to Dr. Mitloehner and can be a model for other states and nations that want to subsidize practices that reduce greenhouse gases. 

Cows don’t need to compete with humans for food

The need to increase production to feed the world has been met with concerns about reducing biodiversity and bringing marginal lands into production in the U.S. and around the globe.  Cows are actually well positioned to show their sustainability and promote biodiversity while increasing production since they don’t need to compete with humans for food because of their ruminant stomachs. 

Only cows can produce food from 70% of all agricultural land

Dr. Mitloehner stated that 70% of all agricultural land in the world and United States is marginal land that can only produce grass pastures.  This land can only be used to take carbon from the atmosphere to grow grasses which aren’t digestible by humans or non-ruminant animals.  In California, 20% of agricultural byproducts such as almond hulls, cotton seeds and human inedible products end up in cows. 

Cows step in to convert these plant products to human food as only they can without needing to bring additional acres into production.  This process then releases carbon back to the atmosphere in the form of methane from the cows which is oxidized for plants to use again in this sustainable cycle. 

Each cow is producing more milk

In 1867, the U.S. had 9 million dairy cows producing enough food for 30 million people.  By 1950, the U.S. had 25 million dairy cows.  Today, the U.S. is back to 9 million dairy cows producing food for 330 million people, an 11x increase from 1867 with the same number of cows and 60% more milk produced with 9 million cows today than the 25 million cows producing U.S. milk in 1950, according to Dr. Mitloehner’s research. Since the U.S. dairy herd has decreased since 1950, this has created a cooling effect since then.

Each cow is producing more meat relative to greenhouse gases

Dr. Mitloehner stated that the U.S. produces 18% of the global beef with 8% of the global beef cattle.  The Food and Agriculture Organization of the United Nations states that the North American beef supply chain is already more than 35% more efficient from a greenhouse gas perspective than the global average due to production efficiencies. 

Cows are producing more milk and beef with less emissions

Better genetics, nutrition and vet care for the cows have driven efficiency improvements and a net cooling effect on the environment given the oxidation of the methane.  Just like getting more miles from every gallon of gas is important for providing needed transportation and reducing emissions at the same time, getting more milk and beef from every cow is also important for providing needed nutrition and reducing emissions. 

Cows produce natural organic fertilizers

When consumers want plant-based foods instead of beef and milk, those plants are usually fertilized with products creating a larger negative environmental impact due to the use of resources extracted from the earth to produce those nutrients.  Even when consumers want organic food, a sustainable animal production system is still needed to provide the organic fertilizers for the organic crops.  According to Dr. Mitloehner, dairy manure fertilizer components of nitrogen, phosphorus and potassium are in a sustainable ratio similar to what the plants that produce the dairy feed need. 

Less efficient food systems have an environmental cost

When consumers want food from less efficient food production systems such as natural, organic, etc. that use more land and animals for each unit of production, the production inefficiencies and mitigation costs of the environmental impacts compared to conventional production practices are factored into the price to compensate for these inefficiencies and mitigation efforts.  This aligns the costs of these extra food attributes with those who want them and can afford them. 

Communicate the positive impact cows have on the environment

Groups like the Food and Agriculture Organization of the United Nations and the World Wildlife Fund understand the need to balance food production and biodiversity and see the way cows can meet both objectives.  The World Wildlife Fund has recently teamed up with Cargill and Burger King and ranchers in the Northern Great Plains to launch a grassland restoration program where they will take 8,000 acres of marginal crop land and convert it back to ecologically diverse grasslands with beef cattle as the primary grazers in the ecosystem to maintain it.  This is just one more example of the way cows can have a positive impact on the environment, a story that needs to be communicated.

How can AgriStrategies LLC help?

Steve Kluemper AgriStrategies

How Can AgriStrategies LLC Help Agricultural Processors And Marketers Build A Stronger Supply Chain? by Steve Kluemper

If you are using Internet Explorer to view this site, please use another browser for optimal viewing.

Please share this page with these links to Facebook, Twitter, LinkedIn and Email:

Steve Kuemper AgriStrategies

Agricultural processors and marketers need to grow with a supply chain of financially viable farmers that focus on their strengths and grow with the supply chain. 

AgriStrategies LLC can work with agricultural processors and marketers to help farmer suppliers improve their financial management, vision, growth and viability.

Farmers don’t always have the time, experiences, skills, tools, visions, contacts, knowledge, passions, perspectives, aptitudes, or priorities to accomplish all of the crucial tasks on their farms.

AgriStrategies LLC can work with agricultural processors and marketers to help farmers improve their funding, cash flow, profitability and financial management.

Agricultural processors and marketers provide services to help farmers complete crucial operational, technical, planning, analysis, management and decision-making tasks.

AgriStrategies LLC can work with agricultural processors and marketers to help farmers communicate their needs and honor their supply chain commitments.

Farmers often outsource legal, tax, accounting, regulatory, environmental, risk management, marketing, technology and financial tasks to experts that help them complete these crucial tasks.

AgriStrategies LLC can work with agricultural processors and marketers to secure funding for farmers to finance supply chain requirements and improvements. 

Agricultural processors and marketers can build loyalty, trust and their own business by investing in their farmer supply chain and providing services that help farmers manage their business. 

AgriStrategies LLC can work with agricultural processors and marketers to build supply chain value by delivering financial skills to new and experienced farmers. 

How Can AgriStrategies LLC Help?

Steve Kluemper AgriStrategies

How Can AgriStrategies LLC Help Agricultural Suppliers Manage Their Credit Risk? by Steve Kluemper

If you are using Internet Explorer to view this site, please use another browser for optimal viewing.

Please share this page with these links to Facebook, Twitter, LinkedIn and Email:

Steve Kuemper AgriStrategies

As the size, complexity and credit risk of farms increase, agricultural suppliers need to require better information from farmers to plan for and manage increasing credit exposure. 

AgriStrategies LLC can work with agricultural suppliers to help farmers better communicate their needs and how they will meet all of their obligations. 

When farmers request high levels of credit or extended terms, they should be expected to present a cash flow plan that shows how and when they will repay their debts within the requested terms. 

AgriStrategies LLC can work with agricultural suppliers to help farmer customers improve and support their financial management, vision and credit worthiness. 

Agricultural suppliers need to have a written credit policy approved by the board, management, sales and credit and insist that farmers obtain their credit elsewhere if they don’t meet the policy.

AgriStrategies LLC can work with agricultural suppliers to establish credit policies and support and secure funding for farmers to finance necessary purchases.

Farmers don’t always have the time, experiences, skills, tools, visions, contacts, knowledge, passions, perspectives, aptitudes, or priorities to accomplish all of the crucial tasks on their farms.

AgriStrategies LLC can work with agricultural suppliers to build customer value by delivering financial management expertise to beginning and experienced farmers. 

Agricultural suppliers need to increase sales without increasing credit risk as much so that they actually collect and profit from the increased sales. 

AgriStrategies LLC can work with agricultural suppliers to increase sales by helping farmers improve their funding, cash flow, profitability and financial management.

How Can AgriStrategies LLC Help?

Steve Kluemper AgriStrategies

How Can AgriStrategies LLC Help Agricultural Suppliers Grow Their Business? by Steve Kluemper

If you are using Internet Explorer to view this site, please use another browser for optimal viewing.

Please share this page with these links to Facebook, Twitter, LinkedIn and Email:

Steve Kuemper AgriStrategies

Whether agricultural suppliers sell genetics, feed, chemicals, supplies, equipment or services to the crop or livestock industries, they need to grow with financially viable farmers that are growing. 

AgriStrategies LLC can work with agricultural suppliers to help farmer customers improve their financial management, vision and on-going growth and viability.

Farmers don’t always have the time, experiences, skills, tools, visions, contacts, knowledge, passions, perspectives, aptitudes, or priorities to accomplish all of the crucial tasks on their farms.

AgriStrategies LLC can work with agricultural suppliers to increase sales by helping farmers improve their funding, cash flow, profitability and financial management.

Agricultural suppliers provide services to help farmers complete crucial operational, technical, planning, analysis, management and decision-making tasks.

AgriStrategies LLC can work with agricultural suppliers to help farmers better communicate their needs and honor their commitments to their suppliers.

Farmers often outsource legal, tax, accounting, regulatory, environmental, risk management, marketing, technology and financial tasks to experts that help them complete these crucial tasks.

AgriStrategies LLC can work with agricultural suppliers to support and secure funding for farmers to finance purchases from agricultural suppliers.

Agricultural suppliers can build loyalty, trust and their own business by investing in their farmer customers and providing services that help farmers manage their business. 

AgriStrategies LLC can work with agricultural suppliers to build customer value by delivering financial management expertise to beginning and experienced farmers. 

How Can AgriStrategies LLC Help?

Steve Kluemper AgriStrategies

Why Do Your Lenders Want You To Work With AgriStrategies LLC? by Steve Kluemper

If you are using Internet Explorer to view this site, please use another browser for optimal viewing.

Please share this page with these links to Facebook, Twitter, LinkedIn and Email:

Steve Kuemper AgriStrategies

AgriStrategies knows what lenders want and helps you position your business to attract capital in a timely and cost-effective manner.

AgriStrategies assists your business in communicating with your lenders in a way that reduces the questions they have, the time it takes them to answer your requests and the costs involved in working with your business which improves your profitability and your lenders’ profitability.

AgriStrategies improves the quality of the financial management of your business so that your profits improve, your compliance with your lenders’ requirements are met and your lenders’ risks, interest rates and fees are reduced.

AgriStrategies projects future cash flows under various scenarios and builds a plan that addresses the funding needs for each of those scenarios which minimizes uncomfortable surprises for you and your lenders.

AgriStrategies analyzes your business decisions and communicates the rationale for those decisions to, and incorporates feedback from, all stakeholders including the owners, investors, managers, coaches, employees, lenders, regulators, customers, suppliers, and community members to improve the probability of success and acceptance of the decisions.

AgriStrategies is a third-party, independent, advisor that will bring great perspectives and assistance to your management team on an ongoing basis and help your lenders better understand your business and your industry.

AgriStrategies focuses on defining success, assessing strengths, and then leveraging those strengths to achieve success with a plan that shows lenders the potential of your business. 

How Can AgriStrategies LLC Help?

Steve Kluemper AgriStrategies

What Typical Steps Are Involved In Working With AgriStrategies LLC? by Steve Kluemper

If you are using Internet Explorer to view this site, please use another browser for optimal viewing.

Please share this page with these links to Facebook, Twitter, LinkedIn and Email:

Steve Kuemper AgriStrategies

Step 1 – Initial Consultation

  • Can be over-the-phone or in-person when possible at no charge.
  • Goal for AgriStrategies is to learn about your business.
    • Current situation, goals and needs.
    • Can include a financial assessment.
  • Goal for you is to learn about AgriStrategies.
    • How can AgriStrategies help my business?

Step 2 – Project Consultation

  • AgriStrategies will deliver a defined service in a one-day to three-month timeframe.
  • Project definition, scope, deliverables, costs, etc. are agreed upon ahead of time.
  • Meetings and discussions will occur as needed.

Step 3 – Periodic Consultation

  • Contract CFO role where AgriStrategies has a monthly/quarterly ongoing responsibility.
  • Plan/actual variance and updates with continual management and improvement objectives.
  • Advisory perspectives, stakeholder communications and ongoing analysis.
  • Project definition, scope, deliverables, costs, etc. are agreed upon ahead of time.
  • Meetings and discussions will occur as needed.

How Can AgriStrategies LLC Help?

Steve Kluemper AgriStrategies

What Questions Can AgriStrategies LLC Help Answer For Your Business? by Steve Kluemper

If you are using Internet Explorer to view this site, please use another browser for optimal viewing.

Please share this page with these links to Facebook, Twitter, LinkedIn and Email:

Steve Kluemper AgriStrategies LLC

How can we improve the cash flow, profitability and financial and risk management of our business and justify the reinvestment that is needed for our business?

How should we communicate our vision for the future, manage the business and especially the finances, facilitate discussions with lenders, vendors and investors, analyze decisions that need to be made, and use independent perspectives to run our business?

How will we find the time and expertise to answer these questions, keep projects and ongoing operations on track and periodically review actual results and upcoming plans? 

How are our business model, strategic partners, management philosophies, risk appetite, perspectives and decision making going to change to adapt to the future of our business?

How do we make sure that we communicate with all existing and potential stakeholders such as the owners, investors, managers, coaches, employees, lenders, regulators, customers, suppliers, and community members that have a say in the decisions that need to be made for our business?

How should we assess and leverage our strengths and the internal and external environments to be sure we have the right perspectives, plans and goals for our business?

How can we define success for our business and create a plan to achieve it?

How will we identify, approve and work with internal and external stakeholders to meet their needs and obtain the funding and approvals for our business?

How are we going to make sure we have the time and resources for developing knowledge, skills, abilities, and procedures to achieve success for our business?

How Can AgriStrategies LLC Help?

Steve Kluemper AgriStrategies LLC

AgriStrategies LLC Steve Kluemper Bio

If you are using Internet Explorer to view this site, please use another browser for optimal viewing.

Please share this page with these links to Facebook, Twitter, LinkedIn and Email:

Steve Kluemper AgriStrategies LLC

BACKGROUND AND EDUCATION

Steve grew up on a grain and livestock farm in Southwest Indiana, earned a bachelor of science degree from Purdue University in Agricultural Economics and ten years later earned a Food and Agribusiness Masters in Business Administration degree from Purdue.  Steve has a passion for bringing his agricultural background and education to others involved with the future of agriculture as a way to pay it forward for everything agriculture has given him and his family.

CAREER

Prior to founding AgriStrategies LLC in 2019, Steve lived in Indiana, Colorado, Missouri, Georgia, Kentucky, Wisconsin and Michigan during his 28 year professional career as an agribusiness banker with business development, portfolio management, underwriting, credit approval, policy/procedure administration and personnel management and development responsibilities.

He has coached agribusiness management teams including producers, processors and suppliers from startups to large corporations across the U.S.  He focuses on improving the health of the business, not just fixing the symptoms.  He’s worked in various agricultural industries understanding the ins and outs of all aspects of the supply chain.

He has arranged funding for agribusinesses from capital providers in the form of unsecured cash flow lending, receivable and inventory financing, equipment and facility leasing and loans, real estate lending, and second lien financing as a single lender and as part of multi-bank syndications. 

KNOWLEDGE AND EXPERIENCE

Steve is experienced in and has a passion for coaching and assisting his agribusiness management teams regarding what he and they can do to maximize the value of their business and make themselves most attractive to capital providers.  This is done after assessing the businesses’ situation and setting realistic goals.  He has worked with dairy, poultry, swine, cattle, row crops, vegetable, permanent planting, greenhouse, grain, feed, farm supply, processing and other livestock and crop businesses of all sizes.  He is also experienced in and passionate about finding capital partners that have the risk appetite to achieve the agribusiness management team’s goals and objectives by utilizing his vast network of industry professionals. 

How Can AgriStrategies LLC Help?

Steve Kluemper AgriStrategies LLC

Cash is King in Agriculture by Steve Kluemper

If you are using Internet Explorer to view this site, please use another browser for optimal viewing.

Please share this page with these links to Facebook, Twitter, LinkedIn and Email:

Steve Kluemper Cash

Number one, cash is king…

number two, communicate…

number three, buy or bury the competition.”

the late Jack Welch, God rest his soul

Number One, Cash is King

Steve Kluemper Farm Cash Receipts

How are your cash receipts going to be impacted by COVID-19?

FAPRI projects a $32.2 billion decrease in farm cash receipts in 2020 due to COVID-19. As you work with your consultants and advisors to determine your future, what do your projections show for 2020 and 2021 based on what you know under various scenarios?

Steve Kluemper Commodity Prices

In a recent farmdoc presentation, University of Illinois Agricultural Economist Nick Paulson and International Food Policy Research Institutes’s Joe Glauber  showed three scenarios that the WTO is using to project estimated global GDP impacts. Are you looking at similar scenarios?

Steve Kluemper GDP Estimates

Have a business plan including a marketing plan and work with it even when you are busy doing other things. Your consultant can help with this to minimize the time it takes. There will be opportunities to lock in prices in 2021 and 2022 that you won’t regret just like there have been for 2020.

Gregg McConnell and Marin Bozic delivered a great webinar by Farm Credit East, ACA about the time that should be spent on a risk management strategy for 2021 to “minimize regrets”. While the webinar is dairy focused, the concepts apply to all sectors.

Steve Kluemper Minimize Regret

The cards are pretty well dealt for 2020 and they will need to be played appropriately to get to 2021. That doesn’t mean that risks can’t be managed differently in 2021. This plan presented above is one of many strategies that are available.

Work with your consultant to set a strategy that works for you including the time involved, the frequency of review and most importantly, one that reflects the changing environment you are operating in.

What are you doing to make sure you get your fair share of the cash?

The U.S. Department of Agriculture is throwing a tremendous amount of cash at agriculture to make up for some of the lost revenues. The latest reports show a new $16 billion in direct government payments going to agriculture with $9.6 billion for the livestock industry ($5.1 billion for cattle, $2.9 billion for dairy, $1.6 billion for hogs), $3.9 billion for row crop producers (with most expected to go to corn and the rest going to soybeans, cotton and others), $2.1 billion for specialty crop producers and $500 million for other crops.

How much each farmer receives will be largely based on how the USDA wants to support large vs. small producers by using individual dollar caps vs. basing it solely on production. The government is even opening up some of their Small Business Administration loan programs to agriculture which is a first but again is focused on small businesses, not large agriculture corporations with over 500 employees. If you don’t feel like you’re getting your share, notice that the poultry industry is projected to have a revenue decrease larger than dairy, yet is not getting any allocation in the $16 billion.

Are your costs generating cash?

Steve Kluemper Net Farm Income

In this environment, cash expenditures must be critically examined to prioritize needs before wants. Some commodity input costs such as energy, protein, purchased livestock, fuel and fertilizer are naturally coming down while others such as labor, DDGs and imported supplies might be increasing due to availability.

Steve Kluemper Ending Stocks

The Purdue Center for Commercial Agriculture has predicted in a recent webinar that before the 2021 U.S. corn crop is harvested, there could be enough corn from the 2020 crop left over to meet almost 30% of the annual corn demand. That would be a record high level going all the way back to the over supply and resulting low prices of the 1980’s.

While low corn and bean prices are good if you are buying feed, it is not good if you are buying or renting high priced land to produce a crop that doesn’t cash flow. Cash rents far exceed returns to the land and must come down to reflect the profitability of farming those acres.

Steve Kluemper Return to Land

Now would be a good time to have a projection that can be tweaked with updated scenarios that will look quite different from those that were run two months ago. Projections must be developed and an emphasis on both business spending and personal financial habits will be critical.

Be thinking about fall fertilizer, fuel and feed costs now and have a plan as you go throughout the year. Have a rolling 12 month plan where you at least look at opportunities before you produce the product. Focus on field by field and animal by animal decisions to manage cash.

What are your top spending and investment priorities given various scenarios? What could impact the availability of key resources, supplies, processors and markets? Closely monitoring projections and activities will be crucial as you manage your business.

Number Two, Communicate

Steve Kluemper Dashboard

Communicating with Dashboards

In Dr. David Kohl’s article for Farmer Mac he talks about the importance of communicating with stakeholders. Dashboards are a great way to do that. His dashboard benchmarks for farmers and lenders is shown above.

As you work with your consultant to build your dashboard that you use to run your business and change it with various metrics over time, decide which metrics are appropriate to share with your spouse, family, employees, customers, vendors, lenders, investors, etc.

Steve Kluemper Dashboard

Give these various stakeholders a dashboard that is appropriate for them. Ask them to have one that they share with you as well. Make sure to include metrics about how you’re doing personally and emotionally and seek input from your stakeholders on how they’re doing and see you doing as well.

Communication is even more important in these volatile times. While things change rapidly, having a process to keep your most important stakeholders informed and able to provide their input is crucial. Don’t go through this alone. Let others pull on the rope with you and appreciate the successes and failures together.

Communicating with Capital Providers

Timely, accurate and concise communication with capital providers such as lenders, vendors and investors is very important, especially when you want them to relax rates and terms, defer payments, restructure obligations or even provide more capital now or in the future.

In this environment, Dr. Kohl talks about the need to have a written marketing and business plan that lays out the details of your future plans and monitors economic shifts to justify these requests and show how the stakeholders shouldn’t be harmed.

Steve Kluemper Credit Committee

The plans will need to be clear and concise and supported well enough so that the person you present it to can use it to present it to their superiors and regulators who usually make the final decision without meeting with you.

Try to find ways to establish a relationship with the credit analysts and credit committees to build your support within their organization. Be ready to take the time or use your consultant to answer follow-up questions and provide additional details.

As headwinds facing the agricultural economy persist, insured institutions must be prepared for agricultural borrowers to face financial challenges by employing appropriate governance, risk management, underwriting, and credit administration practices.” “Managing risk over the life of a loan includes: carefully documenting all lien perfections and other loan instruments; closely overseeing sale proceeds; conducting timely, independent collateral inspections; and developing a process for monitoring collateral values.” “A continuous credit grading program can help management identify credit risk early and take preemptive steps to prevent further deterioration.”

Keep in mind this guidance coming from the FDIC that will be seeing tremendous stress across most industry portfolios at their banks and especially in agriculture which has been struggling for a few years while the rest of the economy was improving. Everyone has someone to answer to and they need you to help them gather the answers.

Number three, buy or bury the competition

Steve Kluemper Buy or Bury

Assessing your Competitive Strengths and Cash Resources

Buy, Bury, Be Bought or Be Buried. Which of these four paths will you take? What are your strengths? What resources do you have available to you? You need competitive strengths and cash resources to execute your plan. With only cash resources and no competitive strengths, you can potentially buy strengths to be competitive. With only competitive strengths with no cash resources, you will need to raise cash to be competitive, usually by selling all or part of the business. With neither cash resources, nor competitive strengths, you will be buried.

Answering these questions and determining how to manage your business in this new environment can be accomplished during the process of developing your business model and a strategic plan that will generate cash and manage risk. AgriStrategies LLC can help you with this.

Excess Cash is Better than Insufficient Cash

Take matters in to your own hands. Ask for liquidity from lenders, vendors and investors when it’s available so that you have the cash to run and grow your business. Don’t wait until it’s needed. Make your case that you are thinking ahead and have a business plan as compared to others that are just going to wait and see what happens until they are bought or buried.

Maximizing liquidity and cash from all sources is crucial for the success of your business. Even if your business doesn’t need it, one of your key vendors or customers or even competitors might need a lifeline that could benefit your business. It’s important to put yourself in a situation to take advantage of these opportunities.

Cash is King. Communication is Crucial. Crush the Competition.

AgriStrategies LLC can help!

Stay Home, Stay Safe by Steve Kluemper

If you are using Internet Explorer to view this site, please use another browser for optimal viewing.

Please share this page with these links to Facebook, Twitter, LinkedIn and Email:

Steve Kluemper Stay Home Stay Safe

With Michigan’s “Stay Home, Stay Safe” Executive Order and similar orders across the country, we are all spending a lot more time at home with our spouses and children.  This is a great blessing.  To help keep them safe, I am suggesting that there is something we know we should do and now would be a good time to do it as we’re looking to be productive but need breaks from work, school and Covid-19 news. 

Blue Cross Blue Shield of Michigan sponsors the Healthier Michigan website which offers Tips for Prescription Safety, Storage and Disposal.  I suggest that you read and follow their tips.  Why do I bring this up?  Because their advice on things such as refraining from storing prescription bottles in dark places, not disposing of original packaging, never storing multiple medications in one bottle, locking up medications and more can help keep your family safe.

I know because around noon on August 18, 2019, I must have mistakenly and unknowingly taken some Ambien that was stored in an ibuprofen bottle while I was alone at our cottage on Lake Huron.  Ambien is a dangerous drug as noted by the U.S. Food and Drug Administration in 2019.  This resulted in me getting arrested for something I’ve never done before but didn’t and don’t have any memory of doing.  Before anyone, including me, knew that a medical reaction to Ambien was involved, the sheriff’s office issued a statement that spread like wildfire on social media such as www.9and10news.com, www.petoskeynews.com, www.upnorthlive.com, www.miheadlines.com, www.minews26.com, www.truenorthradionetwork.com, and of course, www.facebook.com

I have spent these past seven months being thankful that the situation didn’t turn out as bad as it could have, looking for a new job after resigning from my employer who was embarrassed by the news about me on social media, convincing the court system to dismiss all charges after they heard the facts, trying to find the right time to tell my children, family, friends, co-workers and prospective employers about the whole story, and determining where I go from here.  I have received a lot of support from my family, friends, former co-workers and prospective employers to lead me to start AgriStrategies LLC and move past this unfortunate event.  It definitely didn’t turn out to be the best time to start a business that preferably involves lots of face to face discussions, but video and phone will have to be sufficient for now.

This could have all been avoided if I had listened to the advice that was available. So, take some time to properly store your prescriptions to protect your family and avoid preventable accidents and misuse of prescription drugs.