During the past two weeks I received four requests for assistance with farm economic uncertainty. Two inquiries came from farmers with grave concerns about their financial situations; another came from a Farm Service Agency loan officer and one came from a farm business accountant.
I can’t offer as much advice as I would like to these requesters, for the U.S. economy overall is in unfamiliar territory, with a new President and Congress that are figuring out their agendas and roles. Planning a new federal “Farm Bill” also contributes “unknowns” to their deliberations.
Today we look at financial resolution-seeking procedures; next week we will examine behavioral coping skills.
A dairy farmer in the eastern half of the U.S., whose identifying information I modified for the sake of confidentiality, wondered if selling all his dairy cows would be better now, or later after trying “to hang in there.” The dairy farm has a 600+ cow operation.
Another farmer in a nearby state is trying to secure a loan through his county’s Farm Service Agency, which is saying he will have to find another source of off-farm income (his wife already is employed full-time in town), obtain someone with enough resources who will cosign his loan application, or downsize–which means selling off some assets.
These situations are difficult to analyze and assist with, although that is what the people involved in these circumstances requested. They are indicative of what many distressed farm borrowers, their farm loan officers, and farm financial counselors face currently.
While I don’t have specific answers to each dilemma, there are some “ground rules” for interactions between farmers and their lenders that they might consider as they figure out resolutions together.
Approaches to resolution have changed over the past three decades since the Farm Crisis of the 1980s. Most professional associations of lenders, dispute mediators and lawyers have developed codes of ethics that inform them and the people they serve.
Guidelines/recommendations for positive working arrangements by all parties engaged in the financial solution-seeking often include these:
- When borrowers and lenders confer in person, everyone should be accommodated equally, which means everyone has a similar chair around the table and can expect equal respectful treatment of each other
- Most meetings should be exploratory, and not confrontational; the people who call the meeting (usually the lenders) should be ready to offer back-up resources that might be needed, such as information about providers of business advice, behavioral healthcare, and telephone and email support hotlines; five states have farmer hotline/helpline services: Iowa Concern Hotline 1-800-447-1985, Nebraska Rural Response Helpline 1-800-464-0258, New York Farm Net 1-800-547-3276, Vermont Farm First 1-877-493-6216, and Wisconsin Farm Center 1-800-942-2474
- Borrowers should be encouraged beforehand to bring someone whom they trust to provide “a second set of ears” and moral support; often this is a spouse or other family member, but it could include someone else; conference telephone calls should be conducted similarly
- Bringing lawyers as backup into the discussion, at least until discussion reaches “legal” proportions, is usually a deterrent to resolution and a “strong-arm” tactic
- It helps to begin the discussion with an explanation that indicates the agenda and aims of the meeting and asks the participants what they hope to achieve during the meeting
- Most agricultural states offer farm business consultant services, like local farm business accountants, FINPAK (confidential financial analyses of the farm operation by their state University Extension Service), and farm mediation services (www.rma.usda.gov/regs/mediation.html) when impasses in the resolution occur
- Legal proceedings are an option when informal discussion, mediation, and binding arbitration have failed to achieve resolution
It’s tough to face recall of a loan or other procedures that affect our survival as agricultural producers. No one wants to fail, especially agricultural producers who feel an urge to furnish food, materials, and fuel that humans need to survive.
The drive to succeed as agricultural producers has been labeled “The Agrarian Imperative.” It originally appeared in the Journal of Agromedicine in 2010, and has been cited many times elsewhere, including the publication in which this article appears.
There are differing views, such as a counter-argument that access to resources by people who farm, such as land, labor, advice and capital, are the main factors that motivate them to engage in agricultural enterprises; the counter-argument appeared in the same issue of Agromedicine.
The counter-argument doesn’t explain why some people who have access to necessary resources don’t choose to farm, but it does validate that resources are critical to farming successfully.
The current perils of most farmers aren’t as likely to end their careers in farming as those that occurred to a quarter of agricultural producers in the 1980s, but what happened then is little comfort to those who face foreclosure or major restructuring now. The present uncertainty feels overwhelming to struggling farmers and their families.
Please send me your thoughts. We’ll consider behavioral health recommendations next week.