Farmers are businessmen, and they are competing in a global economy. And the economy is a complex engine that ebbs and flows with many different influential factors.
Those factors have an impact on how farmers make business decisions. According to economist Todd Buchholz, since the recession has been left behind there is now a “global backlash” against making money.
Buchholz spoke Tuesday at the 2015 Northern Soybean Expo at the Fargo Holiday Inn and Conference Center. The event was held by the North Dakota Soybean Growers Association and the North Dakota Soybean Council.
“God forbid you should make a profit anymore. God forbid you make more than the medium income anymore,” Buchholz said. “It is very hard to create a strong economy when you condemn anyone who makes a profit.”
What’s more Buchholz said, globalization can be good but may affect consumer confidence negatively. And with the U.S. dollar being stronger, it will be tougher for exporters.
Buchholz said that while China is a great customer for our products, China’s economic growth is slowing down. However, Buchholz pointed out that China’s population is still slowly growing, with more mouths to feed and more disposable income to spend. He expects that there will continue to be some growth in their imports over the next 10-15 years.
“But in 25 years, China will look like the Old Country,” Buchholz said. “They are yesterday’s newspaper, so I’m not worried about them taking over our economy.”
When asked about Africa, Buchholz highlighted them as being a possible area for future growth.
“This year we will find out for sure if the growth in Africa will continue. Recently, Africa is the strongest GDP region and many investment monies are going there. We will find out with low commodity prices if their growth has been legit. Most of the world does not know or appreciate the growth in Africa.”
Buchholz said that as the economic outlook changes, agriculture needs to take advantage of opportunities in order to avoid being cut out.
Buchholz says now is the time to take advantage of low interest rates. He said he expects the Federal Reserve to increase interest rates around a half of a percent this year.
About commodity prices, Buchholz said he expects many prices have hit a bottom and will slowly improve.
Buchholz has previously served as the White House’s Director of Economic Policy under George H.W. Bush and as a managing director of the Tiger hedge fund.
He spoke at the 2015 Northern Soybean Expo Tuesday at the Fargo Holiday Inn and Conference Center. The event is held by the North Dakota Soybean Growers Association and the North Dakota Soybean Council for area soybean farmers to gain valuable information and take part in their annual meeting. The Minnesota Research & Promotion Council and the Minnesota Soybean Growers Association regularly partner with their North Dakota counterparts, including this educational event since it is open for Minnesota soybean farmers to attend as well.