He said grain markets are in an “eight-year super cycle where weather and markets lined up. That can be a problem if producers are undisciplined. It is not a new normal, however.”

Headwinds include the livestock sector and problems for the Southern and Coastal ag areas. Input costs, consolidation, regulation, liquidity, equity declines and volatility also pose challenges.

Consumer perception of agriculture also may sway legislators. “The perception is that farmers are all fat cats,” Kohl said. “That’s a disconnect,” with reality.

He expressed concern for the U.S. economy, especially a growth rate of less than 2 percent. “The Fed likes 3 percent to 4 percent and it should be 8 percent to 10 percent with all the stimulus. Inflation is under control in the United States but we need to watch it.”

Kohl said the United States needs the “economic heart to put the economy in order. From 2000 to 2006 we didn’t know we were slipping.”

Even with the potential for excellent opportunity for agriculture over the next decade, Kohl suggested several challenges that bear watching. Those include: 1) volatility of the global market; 2) normalization of deviation (expecting a new normal. “Special conditions are not normal and will not last forever.”); 3) young lenders and producers who have never faced a downturn in agriculture; 4) the agriculture business cycle; 5) and the penchant for making decisions on tax returns instead of on accrual-adjusted records.

He said agriculture is not currently in a credit bubble but an asset bubble because of land values.

Early warning signs for the ag sector include a total U.S. farm debt to net farm income ratio greater than 10.1 and GDP growth of BRICS less than 3 percent.

He said warning signs for producers include: more than five different sources of credit, debt to asset ratio above 50 percent, working capital to revenue below 20 percent, and growing too rapidly. “If it grows too fast, then it’s a weed,” he said.

He said the same about land values. “Now, 89 percent of the value for (farm) assets is in land. Every time we have a war and every time we have a super cycle, land values go up. If it grows too fast, it’s a weed.”

He said land value corrections could happen with a global economic downturn, tightening of government policies, renting/growth oriented farms where all profits go for expansion leaving none for liquidity, and large blocks of land available in an area.