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Episode 60: Agricultural Economic Outlook with Stevan Novakovic

Agricultural economist Stevan Novakovic with Farm Credit of Central Florida says agriculture faces three key economic issues: volatility, inflation, and global shifts. Here’s what farmers can do to navigate these challenges:

Manage Risk

“Uncertainty is just the new norm every day,” explains Novakovic. 

Farmers have long faced pressures in agriculture, but how they effectively manage those challenges is critical. 

“I try to always encourage farmers to really hedge their risk,” shares Novakovic. “We know farmers are already doing this for the most part, but the stakes are just getting higher. You have to lock in profitability when you see it.” 

With volatility, Novakovic’s primary advice is to improve risk management with advanced hedging strategies that maximize gains and minimize margin for error. 

Adapt to Changes

When it comes to inflation, farmers are accustomed to the fluctuation of input costs and have to adapt to rising and falling prices. 

Novakovic asks, “Can you hedge your nitrogen needs? What can you lock in long-term?” 

Strategies such as securing fixed prices could be beneficial goals to aim for in managing costs amidst inflation. 

“The world’s going to change,” states Novakovic. “We’re going to go in cycles, but right now we’re just in a really, really opaque, clouded environment.”

Stay Informed on Policy Shifts

Globally, the economic slowdown in China and the advancements in Brazilian agriculture are two notable shifts. 

China holds significant global reserves of agricultural products, with 62% of the world’s rice, 70% of corn, and 53% of wheat ending stocks. Novakovic explains the U.S. has seen a substantial increase in agricultural exports to China, rising from $9 billion in 2018 to $38 billion in 2022. 

Fluctuating import capacity also adds to the uncertainty.

 “You have to imagine $30 billion worth of grains and oilseeds across the country sitting at elevators, sitting in farm storage with nowhere to go,” says Novakoiv. “And so [China] may not always have the same capacity that we’ve grown accustomed to.”

Despite these ongoing challenges, overall Novakovic says “the ag economy is still in really good shape.” 

“Yes, we’re seeing some slowdowns in global trade, we’re seeing the impact of high interest rates, and we’re seeing the impacts of inflation, but things just are still humming along.” 

For Novakovic, that’s a really good thing.

Here’s a glance at this episode:

  • [01:06] Stevan shares his career background in agricultural economics. 
  • [04:49] Stevan shares his insights on the top three economic issues in agriculture. 
  • [06:00] Stevan discusses the importance of risk management and hedging strategies for farmers, as well as the necessity to adapt to changing costs and stay informed about policy shifts.
  • [13:19] Stevan explains how Farm Credit supports American agriculture through financing and reinvesting profits back into the community. 
  • [15:18] Stevan touches on the timeless value of farmland. 
  • [17:49] Stevan emphasizes the importance of emerging ag tech, like precision ag, AI, and robotics. 
  • [23:12] Stevan gives his perspective on interest rates. 
  • [32:08] Stevan ends with what he wants listeners to know about the current economic climate.


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Voiceover (00:08):Welcome to AgCredit Said It. In each episode our hosts sit down with experts from all parts of the agriculture industry to bring you insights and must-have information on all things from farming to finances and everything in between.


Phil Young (00:22):Here we are back for another episode of AgCredit Said It. This is Phil Young. Today we have Stevan Novakovic with us. Stevan is a senior economist at Farm Credit of Central Florida. He was a presenter at AgCredit's 2024 Emerge Conference earlier this year and generated great reviews from attendees of this session. We thought it'd be great to invite him on and just share his insights on the economy. Welcome, Stevan.


Stevan Novakovic (00:50):Hey, I appreciate it, Phil.


Phil Young (00:52):Hey, we're excited to have you with us. Before we jump into economics and our discussion here, can you share with listeners who maybe weren't at the conference, your background, how you became an economist and how you ended up at Farm Credit of Central Florida?


Stevan Novakovic (01:06):Sure. Yeah, I've been blessed to spend my whole career in the ag space in some way, shape or form. I got my first internship was at Growmark, mostly Midwestern, Cooperative out of Bloomington, Illinois in the plant food department, focused on nitrogen trading swaps. It was a neat little foray at the beginning back in college. And then from there, started on a hedge desk at a grain trading firm called Central States, which was headquartered in Heathrow, Florida, but had some operations around Indiana and North Florida.


(01:46):Ended up getting a master's in econometrics. Focused on econometrics at Georgetown and came back and traded grain for a couple years down in Florida and across the southeast. Went back to grad school at Columbia and studied philosophy for a little bit. And ended up at what used to be Informa, then became IHS Markit and now it's part of S&P Global. And I was an economist there. And then was really thankful to land at Farm Credit of Central Florida and be part of the Farm Credit system. And so I've been doing economic research here for just over three years.


Phil Young (02:27):Nice. And for those of you guys listening, the Farm Credit he's at, like you said, is in Central Florida, very similar to AgCredit. We're a part of the Farm Credit system. It's just he's happened just a different name and he is located in Florida. Can you share a little bit on maybe just the size of your association and a little bit about it? You know a whole lot.


Stevan Novakovic (02:50):Sure. Yeah. We're about $1.4 billion operation here. But our mix, our commodity mix is so much different than a lot of the Midwest and a lot of other regional Farm Credit operations across the country, associations across the country in that our portfolio is heavily weighted towards nursery and strawberries. Those would be our top two. And then citrus, cattle, a little bit of blueberries, and then we've got some rural real estate, rural homes. The home lending side is growing. We've got a lot of folks moving to central Florida.


(03:33):I mean, our territory is actually the 13th county surrounding I-4, so right in the middle of the state of Florida. And we've got now over 9 million people living in those 13 counties. When you think about the pressures on ag, we're really feeling it here just with that, with the population boom, so many people moving to Florida. And it makes for a very dynamic marketplace. And it's really impressive what our loan officers and management have been able to do here to be able to just keep growing in spite of what's a really, really changing state, especially in this I-4 corridor.


Phil Young (04:16):Yeah, it's just amazing. There are obviously associations all across the United States. And obviously we're mainly corn, soybean, wheat, livestock. It's just fascinating to hear about your association and still in agriculture, but just deals in completely different commodities, so that's fascinating. Yeah. Obviously we had you on here. You have a vast education and experience in economics and just wanted to have you share what your top three economic issues you think are facing agriculture right now.


Stevan Novakovic (04:46):Sure.


Phil Young (04:47):What are you seeing?


Stevan Novakovic (04:49):Yeah, the main thing, and this hasn't changed much from when I was so honored to be able to present to the young farmers there a few months ago in Perrysburg, the main thing is volatility. It's this uncertainty. And the other two that I would mention of the three are inflation and then global shifts, like the slow-down in China's economy and the advances in the Brazilian agricultural space. But that's tied to volatility and uncertainty.


(05:21):And things aren't really changing, things aren't getting much clearer right now. And so I would say that's just the main driver right now is volatility followed by those inflationary concerns that are hampering everybody. It's not just producers, it's everybody here in the United States. And then the global re-alignments and shifts that are occurring as we speak.


Phil Young (05:48):I guess on those issues, are there things that people in agriculture can do to deal with those? Are there things that they can become educated on or just practical things that farmers can do?


Stevan Novakovic (06:00):Absolutely. I started, my first job was on a hedge desk. And since then I've been very specific and I try to always encourage people to really hedge your risk. And so what I want to drill down on here today, especially primarily because as you just mentioned, the mix, the commodity portfolio mix in your region is heavily geared towards those commodity crops, your grains and oilseeds.


(06:32):And so, my main response and that I want to encourage everyone is improving risk management. This is going to include more complex hedging strategies, squeezing out every last drop of potential. There's less margin for error at this point. We know, look, farmers are already doing this for the most part, but the stakes are just getting higher. And so, I say you can't be greedy, but at the same time, you have to lock in profitability when you see it.


(07:05):On the inflation side, inflation, it is what is. We're seeing some fertilizer prices drop in parts of the country, but then you always have issues regionally with spot prices and if your dealer can actually get product in. There are always going to be challenges there. You think about just in general, farmers know input costs rise and fall, but that's just life. But you just got to adapt. Can you hedge your nitrogen needs? What can you lock in long-term, pricing it out? And that should be a goal.


(07:42):On the China side, on the global risk side, there's a lot. And this is not me spouting off some sort of grand conspiracy. I mean, these are just numbers. I'm going to read a few I put down for today. Look, in China, there are massive inventory reserves. This, I pulled from the WASDE. They've got 62% of the world's rice ending stocks right now, 70% of global corn ending stocks and 53% of wheat. I mean, these are big numbers. And so when you think about where a lot of our exports are going, in 2022 the US total ag exports to China were $38 billion. That's a big number.


(08:27):I mean, when I was an economist at IHS Markit, back in 2019 we did a study. We looked at the Phase One trade deal. Can China really import as much as they're agreeing to in that Phase One trade deal they got signed at the beginning of 20... Was being worked on late 2019 and no one thought we could. And the main thing is, you look at the numbers, here's another one. In 2018, China only imported $9 billion worth of ag products, 9 billion. You go from 9 billion in 2018 to 38 billion in 2022. That's a huge number. But look, this could happen again.


(09:15):You have to imagine $30 billion worth of grains and oilseeds across the country sitting at elevators, sitting in farm storage with nowhere to go. Right now, this year we're on a pretty strong clip, so I'm not trying to scare anyone for sure. We're on a pretty strong clip through March. We're on track I would say for another 27, 28 billion in ag exports this year. Just a little bit below where we were last year. In '23, we were at 29 billion. You can't take it for granted, that's for sure.


(09:47):Look, the point is China, there were years when China wasn't allowed to import American corn. This was a big issue for years, or very minimal quantities. China hasn't always existed as a major buyer. And so it may not always have that same capacity that we've grown accustomed to. What does that look like? What are the ramifications of that long-term with the crop mixes, with the different acreage mixes? How much more land ends up going into conservation? The CRPD program, more diversity.


(10:25):I was listening to Secretary Vilsack speak a few months ago. And he specifically stated that this administration's goals are focused more on the small and medium-sized farmers, on the reliance, the local reliance within the American ag mix. And so, the administration has woken up to this. The ag economy is dynamic, it's changing. And farmers really have to stay up to speed and be willing to adapt. And so, bring it all together just with the three issues. It's relevant. These points are relevant to all three issues. It's all volatility, and uncertainty. You can't fight the waves. You got to ride the waves.


(11:11):And right now in the US, we have unpredictable domestic policy. Globally, we have shifting alliances. We've got multiple land wars going on right now across the globe. High interest rates, low unemployment though so people are still spending money even with these inflated prices. Where are we going? No one has a crystal ball here. Uncertainty just is the new norm every day.


(11:36):You have to hedge your tail risk. You have to protect yourself from those events, they're going to wipe you out. Farmers know there are going to be ups and downs, but you're going to have losses at some point, but how do you manage those properly and keep them to a minimum? And so, that's really what I want to hammer home because the world is changing. The world's going to change. We're going to go in cycles, but right now we're just in a really, really opaque, clouded environment.


Phil Young (12:06):It one of those things where, there are so many negative variables that could happen, and I always preach to farmers, "You have to hedge against adversity." And adversity shows up in multiple forms, whether it's weather-related, whether it's domestically or whether it's on the international stage, which you guys have been talking about.


Stevan Novakovic (12:25):Yes, that's exactly.


Phil Young (12:26):Internationally, someone could pull the rug out from under us, and then we have all this inventory that has nowhere to go.


Stevan Novakovic (12:32):Exactly.


Phil Young (12:35):As far as having what can you control, it's like you said, knowing your numbers. It's having a budget and knowing your profitability.


Stevan Novakovic (12:42):Exactly.


Phil Young (12:43):And knowing what that number is to have a profitable operation.


Stevan Novakovic (12:47):Exactly.


Phil Young (12:48):It's hard. I know for some guys, that's not the most fun thing in the world is to sit down in front of a computer or have a pen and paper and crunch your numbers. They like to be out in the field, they like to be doing stuff.


Stevan Novakovic (12:56):Correct. Yep.


Phil Young (12:58):And so, they love to be doing what they do, and that's farm, but you have to stay on top of it. I think you're right.


Stevan Novakovic (13:03):Absolutely, absolutely. Yeah, that's the main takeaway. 100%, you're correct.


Phil Young (13:09):I guess when we're looking at Farm Credit, Central Florida, AgCredit, our role in the future ag economy, what do you see in there?


Stevan Novakovic (13:19):Sure. Look, I mean, Phil, as you know, Farm Credit has been indispensable to American Ag since it was founded in 1916, since the law came into effect. That's nearly 110 years. AgCredit and the whole system, Farm Credit of Central Florida, we have skin in the game. We're serving the producers. We have a vested interest in the success of the ag economy. That's just baseline.


(13:45):And so, we pay patronage. The profits go back to the farmers. I mean this is what we do. AgCredit, the whole Farm Credit system is going to continue to provide financing. And one thing that doesn't get mentioned as often as it should is risk management through crop insurance in a way that helps give producers peace of mind. And that's part of hedging your tail risk is that crop insurance aspect.


(14:11):The Farm Credit system, we've been riding with producers across many economic waves for over a century. There's been a lot that's happened in American Ag over the past 110 years. Some great times, some not so great times, a lot of big changes. And so, it's still here and Farm Credit's not going anywhere. It's that trusted advisor that's been with you all the way and been with American Ag for well over a century.


Phil Young (14:38):Shifting gears here, I don't know how much you dabble in the real estate market. Or I know you're in Florida, the real estate slot can't be a lot different down there. 


Stevan Novakovic (14:46):Sure.


Phil Young (14:46):I know you mentioned that a little bit in your intro. Real estate around here is the highest it's been ever.


Stevan Novakovic (14:51):I believe it.


Phil Young (14:52):We're on the peak here. We're seeing locally here in Northwest Ohio, seeing anywhere from, I don't know, probably five, $6,000 increase per acre from where it was a few years ago.


Stevan Novakovic (15:05):Wow.


Phil Young (15:06):I don't know what Florida's experiencing. I don't know if you have a perspective on real estate across the United States.


Stevan Novakovic (15:11):Sure.


Phil Young (15:12):Or as farm real estate. What do you see in there?


Stevan Novakovic (15:18):Sure. Something I think about, I am not sure who I should give credit to this statement, but I heard at a conference recently. And the speaker basically made the point, "Have you met anyone who really regretted buying farmland 10 years later?" As in 10 years after they bought it, maybe they complained about then, but 10 years after they bought it, or 20 years, have you ever heard someone who bought cropland in say 2004 or in the early 2000s, and they're sitting around saying, "Man, I really paid too much for that cropland. I really wish I wouldn't have bought that. I wish I would've waited"? And so this is the thing, it's simple, it's maybe an over-used statement, but they're not making any more of it. Here in Central Florida and Florida in general, land is not going into ag. It's already in ag.


(16:16):You've got some strawberry acres, they're shifting into less expensive regions of the state. With cattle, the numbers just don't work to buy land. Land is too expensive in Florida to put into cattle. The cattle are on land that's already existing cattle land. And I'm not of course too familiar with your market up there, but you can never say that there won't be a correction. Who knows what's going to happen? If we start having reduced exports there may be some changes in how ag land is valued and what the demand ends up being. But right now it's market to market. But I would say, just going back to that first statement, I don't meet many people, I can't say I've ever met someone that regretted, 10, 20 years after they purchased farmland, regretting it.


Phil Young (17:12):Curious, just from shifting gears here again, about your role as an economist and just the questions you get thrown at you and the presentations you give. Is there an economic topic you think needs more attention that maybe doesn't see the light of day or no one's really talking about this, but they really should be? Whether it's... And I don't know how much you dabble in this, but the thing that central bank, digital currency, that kind of stuff.


Stevan Novakovic (17:41):Sure.


Phil Young (17:42):But there's stuff there where it's like, man, this is boiling under the surface and this could change a lot of stuff if it comes to fruition.


Stevan Novakovic (17:49):Sure. The short answer is yes, yes, there definitely are. What makes it tough is for those of us that are really deeply invested in ag, I think we often miss how under-educated a lot of the rest of the populace is on ag. And so, you think of how many people, and this is maybe once again an over-used example. They go to the grocery store to get food. They have never seen how lettuce is harvested. They don't know what a combine is. They've never heard of a sprayer before. They think a drill is made by DeWalt.


(18:35):You're dealing with some massive siloing in the knowledge base. And a lot is going on in agriculture. I mean, I have this as one of my examples earlier, I was at another conference a few months ago. And a gentleman, about 12,000 acre corn and beans farm, and he was telling me about the drone he got to target just problem spots in his acreage. It was a sprayer on a drone, and it was just for targeting bad spots on his fields.


(19:10):And there's so much, we talk in ag, we talk about precision ag, we talk about developments. We've got a really cool strawberry harvester that's coming out that's been used a little bit that's finally coming out here in Florida, a robotic strawberry harvester. There are some really neat things that are going to change the ag economy, that are going to help to make it more efficient around the margins, because that's where we are.


(19:40):I mean, you look at the chart on the yields, and we had this skyrocketing of yields from the '70s through the 2010s, and now we're starting to sort of plateau again and because ag has just gotten so efficient. American farmers are phenomenal. And they've done an amazing job of being so efficient and so productive. And now we're entering with AI, with all the new technology. We're starting to enter a new plane when it comes to that, and we don't really know where that's going.


(20:14):We're so fresh into this next technology level that it's going to be a really interesting time. And I think I mean entertaining in a good way. We're going to see a lot of neat improvements in American ag on top of the amazing job these folks are already doing. I think technology, look, we can harp on interest rates all day. I mean, there's interest rates, we know that matters, inflation. I think it is, supply chains are one I think of, I studied in undergrad. And I never thought about supply chains until the pandemic. And then all of a sudden people discovered this term, supply chains.


(20:59):People suddenly realize you have goods shipped from China, and then they have to get unloaded somewhere. And then they have to get on a truck, and then that truck has to get to them. All these different things, people started to discover what we've been doing for forever. And so that's I guess what I would say is we're finally over the course of the pandemic. A lot of economic topics are finally getting a little more press and a little more coverage because people have discovered what happens when the infrastructure of the economy starts to have some cracks. I think though for us in ag, technology is a good one. And we're going to see just a lot of dynamic changes in that sphere.


Phil Young (21:46):Yeah, it just seems like autonomous tractors, drilling capabilities, I mean just there's going to be a huge leap forward. AI, just the information we're going to be able to gain from having AI maybe be a part of agriculture is going to be pretty awesome.


Stevan Novakovic (21:59):Yeah. The advancement of some of the electric tractors, I mean, there's some neat stuff out there and you think for... I know there's interest in some of say the wine growing regions of California, or I'm sure in say strawberries or organic blueberries or something like that where you, it's just slightly cleaner out in the field potential. I think just there's a lot of neat stuff that's coming online. People using data-driven solutions. There's more and more data than we've ever, it just keeps expanding. And what we're going to do with that on the margins, plus, as you said, yeah, AI. There's a lot to look forward to and to watch in the next few years.


Phil Young (22:45):As somebody who sits down face-to-face with farmers a lot, I mean the first question I get all the time is, "Man, what are interest rates going to do in the next 12 months?" I wouldn't be doing a service to the podcast if I didn't ask your perspective on this. I know it's an unanswerable question.


Stevan Novakovic (22:59):Sure. 


Phil Young (22:59):But just your perspective. I know that it's more to your last eight months or so. And they feel like it's every week they come out and it's kind of this ping pong. But what's your perspective on interest rates?


Stevan Novakovic (23:12):Sure. I'll be careful because I don't want to give too hot of a take here as a representative of Farm Credit of Central Florida.


Phil Young (23:21):Sure.


Stevan Novakovic (23:21):But I have taken the over for the past since they started raising rates. I think that, and I said this at the beginning of the year when I did some analysis for us here, and what I present is I'm sticking with higher for longer. At the beginning of the year in December, at the end of December, the market was pricing in seven rate cuts. Everyone, you read the real estate wires, you get on Twitter or you get on the financial news and they say, "Wait to buy a house. Wait to buy a house till the fall, because interest rates are going to be down to 3% again. They're going to be back down. We've got seven cuts. The Fed's going to cut, cut, cut."


(24:07):And look where we are now, we're in May. And the market is now predicting one cut before next March. That's a lot that has happened in five months. That's just the market understanding of what's going on. And I would say at the beginning of the year, they're saying seven rate cuts. And I'm saying higher for longer. I'm going to stick on the overage. I don't think that we're going to see any major cuts.


(24:45):And the main thing is that what I try to reiterate is that if we had major cuts, that means there are bigger problems in the economy. For us to really cut rates, you've got more problems going on around you that are going to impact your operation than the interest rates. When you look at historical rates, we're not actually that high. We just, we got used to almost free money. It was really nice, and we had it for a few years. And people loved it, and it just became the new normal. And everyone... I mean, you've got, I think is the average right now, mortgage interest rate across the country is something like 3.6% on houses. I mean, that is a low. That is just unbelievable.


(25:44):And maybe I'm slightly off. I think it's over 60% are under 4%. People locked in some really good rates on the real estate side, on the home side. And people have gotten accustomed to this, they've gotten used to this. I think people need to just understand, I think some of the folks that have been around for a while in the '80s, the folks that remember the early '80s when rates were up 12, 15%. I'm not predicting that. I'm definitely not predicting that. But that's a high. We're sitting around coming out the Fed at five and a quarter, five and a half. If you're at seven and a half, eight, nine, depending on what you are, Farm Credit or just your lending, that's not way above where we've been historically.


(26:41):And so, I would say, once again, it goes back to the first point, this volatility, this uncertainty is that what's your profitability? Do you need a loan? Can you make money at the payment that you have? Can you make money? Is it profitable for you to take out this loan? Do you need to grow? Well, can you pay back the loan and can you make money with the loan? That's the important thing. That's where it is.


(27:11):If you need it and you can pay it back and you're going to make money off of it, then get it. I mean, it's just, it's that simple at this point. Because if you're sitting around waiting, waiting, waiting for rates to go down, you might be sitting a lot longer than you intended at this point.


Phil Young (27:29):No. Yeah, I think you're right. Yeah, I mean, I think perspective is everything, is what I always tell people.


Stevan Novakovic (27:33):Sure.


Phil Young (27:33):When you look at rates, you can't have tunnel vision. You can't be short-sighted in looking at rates, because like you said, we've lived in this space where they've been really low. And that's not the norm if you zoom out and look at the last few decades.


Stevan Novakovic (27:48):Correct.


Phil Young (27:49):I think you have to put your perspective goggles on it and look at it. I think that's a big part of it.


Stevan Novakovic (27:50):Correct. Absolutely.


Phil Young (27:55):Yeah.


Stevan Novakovic (27:57):Yeah, I agree.


Phil Young (27:58):And I'd like, to your point, usually there's a negative outside force that causes rates to go down, but they lower rates. It's a huge economic disaster.


Stevan Novakovic (28:10):Exactly.


Phil Young (28:11):It's a 9/11. It's a pandemic.


Stevan Novakovic (28:12):Exactly.


Phil Young (28:13):It's the crash in 2008. That's what shoots rates down. Those were not fun times.


Stevan Novakovic (28:19):Correct. Exactly. Exactly.


Phil Young (28:22):And that's the why they decrease so fast and so rapidly and stay in that space.


Stevan Novakovic (28:27):Exactly.


Phil Young (28:27):Because there's a lot of more negative stuff going on than just rates. Yep.


Stevan Novakovic (28:31):Yep.


Phil Young (28:33):Yeah. I guess, are there any good economic metrics that are out there that you're seeing? Is there anything positive that you're like, "Hey, this number's looking pretty good"? I feel like obviously inflation gets a hot topic in the news, and it's on the upright.


Stevan Novakovic (28:46):Sure.


Phil Young (28:46):And not in a good way.


Stevan Novakovic (28:48):Sure.


Phil Young (28:48):Are there any good metrics out there?


Stevan Novakovic (28:50):Sure. Yeah. I mean, look, the truth is Americans are working. I mean, a lot of places just can't find employees, can't keep employees around. The unemployment rate is really low right now. We're sitting at 3.8, 3.9% unemployment. That's really low. And sure, I dig into these numbers all the time, we have had a lot of people leave the labor force. That's true. We have, the participation rate hasn't quite gotten up to where we'd like it to be. But the fact is, this is one of the drivers of inflation. And it is a good thing people have jobs. That's a very good thing that Americans have jobs.


(29:40):People use this metric thinking about when is the Fed going to cut rates? The truth is... And people say, "It's strong employment numbers, so the Fed's going to keep rates where they are." When you think about it, I mean, it ties back into the interest rates side. We don't want Americans losing jobs, but that has ramifications as well. The economy's dynamic, the economy's interconnected.


(30:05):And so, I would say farmers for the most part, I know the folks in the grains and oilseeds with the futures price environment right now, it's been tough, but farmers had a few years of plenty. And so I think the ag economy is still in really good shape overall. Look, there are definitely a lot of pluses out there. That's why people have been watching for this recession that still hasn't occurred. And some people argue, "Well, maybe we actually are in one. The BEA just hasn't declared it a recession." And sometimes I look at the everyday America and I wonder what's going on? How are people surviving in these high-priced environments and things like that?


(30:53):But the truth is, we haven't had this massive correction that a lot of people expected. People expected at the end of '22, people expected beginning of '23. And here we are almost halfway through '24, and this expected correction still hasn't hit. We're just grinding along. The whole economy just keeps moving, and it just keeps going. And so, there are a lot of positive metrics in the economy that are part of what's keeping us going.


(31:26):People are still buying houses. I mean, the numbers are a lot lower, but people are still buying. People are still buying cars. Even if they're paying a 10% interest rate on their car loan, people are still buying cars. People are still buying food at the grocery store in spite of prices rising. People are working second... Maybe you don't want to work a second, third job. I understand that. No one wants to maybe work 80 hours a week. But the truth is people are working, people are making money, people are spending. And working and having money to spend is a good thing.


Phil Young (32:07):I guess last question for you.


Stevan Novakovic (32:08):Sure.


Phil Young (32:08):Is there anything from your presentation you did at Emerge or anything we didn't talk about today that you're like, "Yeah, I want people to know? I want people to know this item"? Is there anything we didn't talk about that you wanted to share item-wise?


Stevan Novakovic (32:19):Yeah, that's a good question. The presentation was about an hour. That gives me a good bit of time to cover a lot of topics. I would say going back to the previous couple answers, it all ties together, is that what really is just, I wouldn't say what drives me crazy, but it's the uncertainty overall is that we're still sitting, like I just said, the economy just keeps grinding away day after day. And I don't necessarily want some major catalyst. I'm not just sitting here waiting here with popcorn, hoping the whole system's going to come tumbling down. But, I think about this a lot as well, is that we're just humming along.


(33:11):And no one really can predict it. A lot of people are trying to predict it. They're predicting a crash here. They're predicting some massive unrest here. They're all these different things going on. And we just somehow keep moving, keep grinding along. And so, I would say nothing, there aren't really any major updates in the last few months. That's I guess the crazy thing is that I don't have a lot to update folks from my live presentation.


(33:42):We're in a lot of the same boat where we were just a few months ago. And if I look back at some other presentations from before then, from six, eight months ago, you look at the global unrest across the world, it's sadly impacting a lot of people in those regions, but the rest of the world seems to be just humming along. The economy keeps moving. And we're seeing some breakdown. We're seeing some minor slowdowns. We're seeing slowdowns in global trade. We're seeing the impact of high interest rates, we're seeing the impacts of inflation, but things just are still humming along.


Phil Young (34:23):Well, Stevan, thank you so much for joining us today.


Stevan Novakovic (34:27):Absolutely. No, thank you. Thank you for having me.


Phil Young (34:29):Thank you for carving out the time to do this. Guys, thanks for joining the podcast today. Remember to check out previous episodes of AgCredit Said It. And join us next time as we sit down with Neil Schuller from The Andersons, where we discuss great marketing plans for your operation. Thank you, guys. See you next time.


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