CHS leader: Expect both good times and volatility to continue in ag
John Johnson has had a great run at CHS. U.S. farmers also are enjoying a great run, one that likely will continue, says Johnson, chief executive officer of CHS, But the ongoing success will come with considerable volatility, he predicts. "Get re...
John Johnson has had a great run at CHS.
U.S. farmers also are enjoying a great run, one that likely will continue, says Johnson, chief executive officer of CHS,
But the ongoing success will come with considerable volatility, he predicts.
"Get ready for a wild ride," he says. "I think this (volatility) is a place we're going to live for quite some time"
His advice: "Just get used to this volatility. It's there to stay."
Johnson spoke Dec. 9 at the Prairie Grains Conference in Grand Forks, N.D. About 700 people attended the annual event, which was sponsored by several agricultural groups.
Johnson, a farm kid from Rhame, N.D., has spent 34 years with CHS, the past 16 years as CEO. He began as a feed salesman and worked his way up into management.
He will retire at year's end.
Under his watch, CHS -- a Twins Cities-based energy, grains and foods company -- has grown into one of the nation's largest businesses. It has a major presence from the Great Lakes to the Pacific Northwest and from the Canadian border to Texas.
Farmers on the Northern Plains, on balance, have enjoyed strong success in recent years, he says.
Combined annual revenue for the eight top crops, measured by acres, has tripled over the past decade, he says.
Improving yields contribute to that, he says.
Yields for the eight top crops in the U.S. have increased by 2 to 3 percentage points annually in the past decade, he says.
But even if that rate of growth continues, there may not be enough food for the world's growing population, he says.
"By 2050, we potentially could double the size of the world (population). That's a lot of new mouths we're going to feed over a 40-year period," he says.
The improving quality of people's diets, especially in China, also is driving the need for more and better foods.
China has huge impact
China, which accounts for about half of the world's pork consumption, has quadrupled its soybean imports since 2000.
Many of those soybeans were grown in North Dakota and western soybeans, Johnson notes.
Soybeans produce meal fed to livestock and poultry as well as oil for cooking and food manufacturing business, he says.
Chinese demand for U.S. beans is unlikely to decline anytime soon. As China becomes more urban and less rural and agrarian, its leaders are increasingly anxious to keep grocery store shelves filled, he says.
Johnson thinks the trend of growing Chinese food imports will continue, but that "you've got to be real careful."
Any "hiccup" in the Chinese economy could cause major problems for its trading partners, he says.
CHS has seven foreign offices, includes ones in Hong Kong and Shanghai, China.
"This is a global business. We can't be single-dimensional only in North America," Johnson says.
Having a global presence helps CHS manage risk, he says.
Given the increased volatility in U.S. agriculture, farmers need to find ways to better manage their risk, too, he says.
But while volatility is a challenge, farmers should put current conditions in perspective, he says.
"I'd rather have volatility at $5 corn than volatility at $2 corn," he says.
Sara Wyant, president of Agri-Pulse Communications, a weekly report of agricultural news, farm policy, and rural policy, also spoke at the Prairie Grains Conference.
Her topic was the changing political landscape for U.S. ag.
Her predictions include:
- Continued political polarization in Washington, D.C.,
- More government emphasis on regulation and less on legislation.
- The huge federal budget deficit will intensify pressure to reduce spending on U.S. farm programs, with farm-state legislators facing difficult choices on where and how to make the cuts.
Risk management, research and rural development are key areas to watch, Wyant says.