The brutal facts of the ag economy tempered by the faith of a farmer will pull U.S. agriculture through a tough economy. Take it from a Vietnam-era prisoner of war.
That’s the lesson David Widmar, managing partner at AEI, delivers in this week’s Ag Marketing IQ In Depth. Widmar leans into the Stockdale Paradox to help producers navigate these turbulent times. Named after former POW Admiral Jim Stockdale, the paradox teaches the importance of balancing optimism with the resolve to confront harsh realities.
Widmar explained that Stockdale observed a key difference between those who endured hardship and those who struggled. As a result, the Stockdale Paradox emphasizes the need to maintain hope while facing the brutal facts of the situation. Widmar believes this mindset is critical for farmers today.
“Farmers don’t have to look far to find optimism—whether it’s markets improving, a trade agreement, or a new farm bill,” Widmar says. “But we can’t anchor to that optimism. We need to focus on the resolve to make tough decisions, like getting costs under control and right-sizing operations.”
Three of Widmar’s tips are:
Resolve to control costs
Widmar highlights the importance of managing fixed costs, such as machinery, land and labor. “Great managers peel apart variable and fixed costs,” he explains. “Variable costs like fertilizer and seed are harder to control, but fixed costs are where producers have the most influence. Spending time benchmarking and creating a plan to reduce these costs can yield long-term benefits.”
Talk to your lender
Widmar encourages farmers to see lenders as a valuable resource.
“When you embrace the Stockdale Paradox and confront the realities of your financial situation, lenders can help you create a plan and hold you accountable,” Widmar says. “They’ve worked with many producers and can offer insights to help you succeed.”
Focus on working capital
Ultimately, Widmar urged farmers to maintain their optimism while taking decisive action. “The faster we get back to profitability, the less working capital we burn,” he says. “Agriculture’s strength lies in its community. Let’s help each other unpack optimism and resolve to get through this together.”
To hear more of Widmar’s conversation about quickly returning to profitability, watch Ag Marketing IQ In Depth.