With no abundance of easy answers, careful planning can help farmers make the right choice,
Welch, an economist with Texas A&M AgriLife, described risk management scenarios during a presentation at the 2014
"Do you have the discipline and determination to carry out the plan? If we don't have this foundation, we're very limited in our ability for success," he told a group of young farming enthusiasts at
First, he advised farmers to be aware that environmental conditions are making their jobs more difficult, but demand for their commodities is growing with the world's population.
"Know three things: It's getting hotter, it's getting drier and the world needs more and more of what we do on a daily basis. That creates some challenges," he said.
Welch said some of the crops his audience is likely to grow are becoming less elastic, an economic term that describes consumers' likelihood to purchase a product as their budget changes. Corn, for example, is growing more inelastic, meaning its demand is more recession-proof than, say, luxury cars or vacation packages.
"Corn is driving the world feed grain price," he said. "They want corn, and they'll pay whatever they have to get it. That's inelastic, and we're seeing it more and more in grains."
A 1 percent change in corn supply could mean a 5 percent change in price, he said. Of course, that means a single weather disaster in the Midwest could significantly hinder the overall economy.
"The market's becoming much more responsive to small changes," he said.
Hosted by AgriLife and
"The average age of a farmer is increasing, so we have to have replacement farmers," he said. "Farming is changing so much, and these young farmers need to have the tools to be resourceful."
Other presentations described estate planning, analyzing and financing farming operations, pesticide laws and national agricultural policy.
Follow Josie on
(c)2014 the Lubbock Avalanche-Journal (Lubbock, Texas)
Visit the Lubbock Avalanche-Journal (Lubbock, Texas) at www.lubbockonline.com
Distributed by MCT Information Services