EMBRUN — When asked for the most important management strategy, agricultural economist Dr. David Kohl had to think about it. He thought about it over a game of basketball and while working in the barn. He asked around and threw the question to one colleague, a young mother, who replied almost without hesitation: "Be flexible."

Kohl, who spent 25 years teaching agricultural finance at Virginia Tech and who worked with Canada’s Royal Bank on new initiatives, was bound to agree. It has now become the core message on his speaking tours.

"Be flexible with your expansion plans, your management plans, your income statement, balance sheet, your family and personal plans" because industry changes are happening swiftly and the cyclical swings in agriculture are going to be greater in the future, Kohl told a crowd of farmers invited by the Royal Bank to a meeting at Embrun Jan. 30.

"You can go upside really quickly," he warned. Among his listeners you could hear a few groans of agreement. "You can go from the best year you ever had to the worst year you ever had to the best year you ever had to the worst year you ever had." Groans of agreement got louder when he added: "If you don’t have the stomach for volatility you are in the wrong industry."

He noted that in the United States 25 per cent of businesses filing for bankruptcy just had their most profitable year. Why? "You spend to minimize taxes and on killer toys," he said, adding "you get away from doing the things that got you there. When you’re on top it’s hard to stay there."

Sometimes it’s good to pay taxes, he added, noting that finding ways to drive down your revenue to pay less tax oftens means deferring taxes until next year.

Being flexible allows you to change plans, sell half the herd, some quota, tighten the belt, forgo the new truck or jump on an opportunity, he said. "You have to maintain flexibility to see technology because it’s really coming on."

Kohl noted these developments: Research plots in sub Sahara Africa are producing 150 bushels an acre of corn in 3 inches of rainfall, which means those countries will be in an export position by 2020. Corn yields will double in the next 20 years. Indiana farmers yielded 268 bushels an acre. "That’s corn on steroids." With new soybeans on the market yields will increase 17 per cent in the next two years.

He noted his own experience with flexibility. Wal-Mart asked his dairy farm and processing company to supply a store in his home state of Virginia. But his farm sells milk in glass bottles and Wal-Mart asked them to switch to cardboard and plastic. They turned down the giant retailer. Instead they started home delivery that includes selling their own ice cream and other farm products like Omega-3 eggs because consumers wanted it. He was able to pull this off because he had decided to park profits in the bank for fast liquidity if an opportunity arose. It did. Another company was selling off delivery trucks. He bought 10 trucks for 28 cents on the dollar, he said.

Speaking on "How to make money in agriculture today," Kohl notes trends and future markets and his philosophy of farm management: