The Future - Prepare, Don’t Predict

When I was doing the Agribusiness Icehouse programme we were fortunate to have a Bill Malcolm, Economist from the Department of Agriculture and Food Systems of the University of Melbourne, present to us.

He has recently delivered some very interesting thoughts on the future.

There are still a few things about the future for certain:
    The future will arrive
    The future will be a different world; they will do things differently there
    Much about the present will be present in the future
    Much about the future cannot be known
    Current farmers will age, depart and (sometimes) be taxed
    Another 3 billion people will arrive in the next 40 years
    Some important principles that work now will still work in the future
    Much of what we believe to be right now will be known to be wrong
    The things that we currently think will be the major factors affecting our lives will not be so
    The things that will be the major factors affecting our lives will be things that we have not even imagined will be so.
If you think about it –
    We do not know much and cannot know much.

    We do not know for sure and cannot know for sure.
If we do not know for sure what will happen and we cannot know for sure what will happen then what does it mean for running a farm business today?

"Prepare - Don't Predict"

So back here in New Zealand we need to work with what we know and prepare for what we don't. Sounds funny, but that's so true.

Bill Malcolm also quoted the following principles that are fundamental to all businesses and agriculture.
    The laws of supply and demand
    The principle of comparative advantage
    The principle of diminishing marginal returns
    The principle of increasing risk
    The probability principle
    The risk versus return principle
    The 'big booms have big busts' principle
    The 'whole of business' principle
    The 'all farm systems and their managers are unique' principle
    The 'quality of management is the hidden, unmeasured input to success and failure' Principle
    The 'question is the answer' principle, and
    The 'we don't know much and can't know much' principle
In New Zealand agriculture I think we may have got carried away and forgotten some of these fundamentals.

Big boom, big bust has led us into total disarray. We all forgot that "what goes up must come down". The dairy industry is in deep dilemma at the moment with some farmers unable to see next season underneath their enormous debt.

We are now facing a 20% decline in farm values in many sectors and how will that affect our country, and the banks for that matter?

Agriculture will go through a recovery phase only to realise that fundamentally the world remains short of food. Why would Daewoo and Bin Laden Corporation plus some Middle Eastern countries be trying to lease/buy cheap land to grow rice?

The question arises: would you rather have a bag of rice or a barrel of oil?

Preparing for the future means:
    Having a sustainable business
    Identifying the risks and preparing for them
    Looking after your land and pass it on to the next generation
    Having a succession plan
    Lowering costs and maintaining profits


We all forgot about preparing because we thought boom times would never end. We thought we, in New Zealand, were 10' tall and bulletproof.

Now that we know otherwise, we need to prepare for tough times, prepare for difficulty and prepare for the unknown.

It is for certain that you do not know what the future holds.


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