Analyzing Financial Statements Trends

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Analyzing Financial Statements - Trends

• Agribusiness

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Trends and the Agribusiness

• In this lesson we will investigate
• The different Trends effecting agriculture and
  how our decisions can be guided by trends
• How Trends can be utilized to make educated
  decisions in the Agribusiness.

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Historical and Future Agricultural Trends

• Historical Trends
• Less farms/ranches more acres per farm/ranch
• Population Involved in Production Agriculture is
  less than 2 in the U.S.
• Higher Production on less acres
• Future Trends
• The world population is expected to increase by
  47 or 8.9 billion people by 2050. This equals
  more demand for Agriculture Products.
• More dependence on alternative fuels (ethanol)
  and less dependence on oil.
• Less acres to produce more product.

4
Social Trends

• Consumerism
• Consumer is king in the agricultural
• markets today. Today's consumers are
• concerned about the nutritional
• characteristics, safety, and efficiency
• of preparation of those food products.
• Internationalism
• We live in a global market and a global society.
  
• Environmentalism
• Agriculturalists are looked upon to be stewards
  of the environment More efficient use of
  chemicals
• Technology
• Improved Mechanical Technology
• Genetically Modified Organisms

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Supply and Demand Trends

• Supply and Demand Dictate the products we produce
  and when they are marketed.
• One example of this is crops. Harvest time is
  typically when the price of a specific crop
  bottoms out. On the other hand the height of the
  market is a few months before harvest of the
  crop. This is due to the demand staying steady
  through the year and the supply slowly being
  consumed.
• This trend should be an indicator to producers to
  market their products at the prime time if
  storage is available.

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Supply and Demand Chart for Wheat
The above example shows that the demand for wheat
stays constant over time. It also shows that the
supply of wheat is reduced over time. If you as
a producer could store wheat, the best time to
sell is when the supply is at it lowest. This is
when you will receive the highest price for your
product.
7
Marketing Trends in Crop Production

• Commonly used Crop Marketing
• Sell Grain on the Cash Market (directly out of
  the field to the local elevator.
• Sell grain on a futures contract
• Marketing Strategies
• In years when the supply will be forecasted to be
  large, you should store grain and sell later in
  the year.
• In years when the supply for the product is
  forecasted to be low, you should price early
  (futures contract)

8
Market Trends in Livestock Production

• Livestock Production Trends are cyclical, this
  means that they start and complete a cycle. As a
  producer it is to your advantage to understand
  these cycles and buy and sell when it is most
  effective.
• It is also a good idea to investigate selling
  livestock on a futures contract when available.

9
Cyclical Trends in Agriculture

• Example of Livestock Cyclical Trends

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Trends Recordkeeping in the Operation

• Agriculturalists should be aware of trends and
  their effect on the agriculture economy.
• Agriculturalists should make sound financial
  decisions taking trends into account.
• Careful observation of trends may reduce the risk
  associated with any enterprise.