No doubt, the war in Ukraine has an impact on ag. As this is generated, India has put in a soft ban on wheat produced that isn’t already under contract. That further tightens global supply which makes wheat and as a result, all of its grain family friends, run higher in the market. John Deere still operates its Russian based facility but used GPS location devices to remotely lock access to looted Ukrainian based John Deere equipment. (That prospect is a whole another article waiting to happen, miss a farm operating note payment and have a new, non-movable yard ornament is something ag finance lawyers would likely love to see be thing).
What might not be the obvious connection to ag is the planning and invasion itself and what lessons can be applied to the ag community. First, I am pro Ukraine on this and have been since my dad went on an exchange trip in 1993 to help them calibrate western farm equipment to make the move from collective farming. Having said that, despite the apparent shellacking that Russia is taking, it wasn’t that stupid of a plan from their prospective. Before the invasion, the Ukrainian President had a 31% approval rating with no military background and no long-standing political training. He was no Winston Churchill. He was saddled with a government that still had plenty of Soviet era corruption. The Ukrainian Army had a lack luster performance in Crimea and was bogged down in the eastern front with a static style defense, not a maneuver-based force that modern warfare generally calls for. Polling indicated that up to 40% of the respondents indicated that they would not take up arms in the event an invasion, many of which didn’t think would actually happen. Many citizens spoke Russian as the primary language and had close relatives in Russia. The Russian Army had undergone modernization following their Georgian invasion in 2008 and the results in Crimea and Syria pointed to them adopting to modern tactics techniques and procedures. The result, on paper, was pre-ordained. The proof in the pudding appears to be quite different. Outstanding performance from the president and its highly trained army, citizens that don’t give an inch of ground and massive aid from a previously somewhat indifferent Western Europe along with inept leadership from the Russians with on overrated under maintained and trained military have shaped a far different outcome so far.
Coming up for air from that geopolitical military analysis, what is the connection to ag. Sometimes, things just don’t pan out the way they should on paper. The best laid future plans on succession of the operation, wealth distribution and expansion can and will hit unexpected. Sons and daughters die, divorce and change career goals. Long term landowners who always treated you right go to the nursing home and promises to be first on the hit list to rent or buy go out the window when the out of state niece shows up with a smart phone and a land value calculator app on the phone. Markets change, tornados touch down and the railroad changes its mind on who gets priority shipping. The list goes on.
The ag operator and farm family must both be aware of the only thing constant in life is change and the only thing certain is death, taxes and change. Take the time to review succession plans now. Consider what assets you truly need to continue to hold onto to maintain your operation and lifestyle and which ones are just more gold on the pile. Consider reducing the pile of gold now by strategic gift giving. Contemplate a disaster and what the alternate plan is. Do you have the resources or access to capital to recover? How much property insurance do you have and what does it really cover? Does skimping on coverage to save premium really make sense? What happens if your daughter doesn’t (or does) want to milk cows when you are gone. Do you really care that much about continuing the farm? Do your kids? Is it reasonable to continue to operate the way you operate?
Wills, trusts, rights of refusal and first rights to purchase, LLCs and corporations all have a place at the table depending on these questions and your response. What you do now to shape your battlefield.
