from a CEO's Perspective

Random demand and the capacity to handle it are major challenges facing Ag retailers and their customers today.   Weather, technology, and producer capabilities are contributing factors.   Capacity, technology, and producer capabilities create large disparities between the level of service and capacity a retailer needs to provide from year-to-year. For example, think about drying capacity: for many years, whether there would be a need to dry corn was an unknown.  Now we have seen little to no corn drying for 3-7 years, followed by a year where everything needs to be dried. How does the system build capacity for this scenario?  It is impossible to do a financial pro forma and make it show profitability. How can we justify spending money on an asset that will only be used for these odd years? We simply can't build enough dryers when producers only use them every 3-7 years. Similar issues happen with LP delivery equipment and storage, and crop nutrient application equipment and manpower. Typically, these are compounded by a weather event, and these times of extreme capacity need seem to get larger as time goes on.

How do we solve this? There is no easy answer, as it will need to be a combination of several things.  Additional capacity will need to be added at a retail level, but with retailers under the current levels of financial stress, there will be minimal additions. Some producers will make financial investments, but again, with the current margin structure, it will be limited. I feel the biggest change needs to come in peoples’ mindset. In the extreme years, work is going to get spread out, and it will take longer to complete harvest. It will take longer to get the agronomy work completed. We all have this modern mindset that everything must happen now and we get frustrated when the seasons are long and drawn out. We must remind ourselves that we work in a business where mother nature holds most of the cards. No matter how much we scream, holler, or jump up and down, we don't always get our way.  In years like we are experiencing now, we all must go in with the mindset that it will take longer and there will be stress. But in the end, we will get through it. I am confident that CFS and our customers will continue to invest and improve. CFS will continue to do our best to accommodate our customers’ needs during difficult seasons. However, we all need to realize that we will have these years and they will not be perfect. I also believe the disparities from year-to-year will continue to worsen as we see volatility in weather, production, pricing, government policy, and a whole host of other circumstances that come into play.