Pain in the Plains - 2

Face a Financial Crisis Head On

Elizabeth Williams
By  Elizabeth Williams , DTN Special Correspondent
Kansas Agricultural Mediation Services report an uptick in distress calls this season, as farmers are forced to sell their grain at lower prices than they hoped. (DTN photo by Elaine Shein)

INDIANOLA, Iowa (DTN) -- Recent calls to the Kansas Agricultural Mediation Services hotline have taken a more emotional turn this year. There are more tears and more silences as some Plains farmers face wheat planting without operating loan approvals or have lost their land leases, reported Char Henton, the Kansas hotline's mediation coordinator. The hotline has not seen a huge increase in the number of calls, but "we're still early into the financial storm," said Henton.

Commodity prices have tumbled since 2013, but wheat's collapse has been particularly damaging. On an inflation-adjusted basis, 2016 wheat prices are running at the lowest level in 50 years, Ohio State University economists calculate. On top of reversals in cattle and energy markets, Plains incomes are in a tailspin, as DTN reported in the first part of this series (…). Lenders and financial advisers are encouraging farm families to manage their psychological health as well as their farm budgets.

"The most important thing for people going through financial stress is to know where to go to ask questions," advised Henton. "Farmers and ranchers do not have to feel isolated. They need to seek out safe places where they can ask questions and explore options."

The Kansas Ag Mediation Service puts producers in touch with Kansas State University financial analysts who use the FINPACK analysis on the farm or ranch operation. (That's software developed by the Center for Farm Financial Management that calculates financial ratios and helps benchmark performances.) "Bankers have learned to respect that program and it is a helpful tool for producers to gain a realistic perspective of what can be done," said Henton. The Kansas service also puts producers in touch with Kansas Legal Services to learn about possible options.

The hotline service also recognizes the need for financially stressed producers to talk through their situation and offers referrals to counselors and community mental health centers.

Often, family members bear the brunt of the pain in a financial crisis. "Each individual reacts to the downturn in different ways," noted Lance Woodbury with Ag Progress, a family business consulting firm in Garden City, Kansas. "Problems arise when those individuals don't share their perspectives with one another. And, the expectations about 'what we should be doing as a business' clash with the reality of how different parties are reacting to the downturn."

In his consultations with farm families this fall, "there's been a lot of evaluation going on about expenses," he said. "Some people jump immediately to freeze all spending. Others are more laid back," explained Woodbury. "Some see a chance to possibly grow and are willing to take some risks in this environment."

To weather the emotional issues that spring from a financial downturn, Woodbury offered this advice:

1. Keep talking it through as a family. Meeting together and talking about it may be tough, but it is important to know how people are doing and where they stand, said Woodbury.

2. Stay close to your professional advisers. Lenders, accountants, lawyers see other families working through the same issues and may have ideas. "Not calling your accountant because of their hourly billing rate is pound foolish," Woodbury added. "They will have ideas if you share your concerns. If they don't, talk to other advisers!"

Woodbury has noticed if there has been communication, the lender has been relatively patient. "If people haven't been in communication with their lender, there could be a surprise in store."

3. Call on your trusted peers. Your peers may or may not be your neighbors, but other business people (both in and out of ag) that you've met at conferences or in peer groups. They may have ideas, or at the very least share the same issues and you can brainstorm together.

4. Read. There is a world of business literature, self-help books, blogs, etc. that offer strategies to make it through a downturn. This is not a new phenomenon; learn from how others have handled it.

5. Call a hotline. Here is a link to the Agricultural Mediation Services by state:… Find USDA background on mediation services at…

Some farm families are studying the "exit" of farming because they do not want to lose significant equity over the next couple of years, noted Woodbury. "Several producers I know have initiated discussions with their lenders -- or their lenders have initiated discussions -- around planning for the future so there is a clear plan on how to go forward."

The key message from advisers: There are options. Seek help. You are not alone. Communication is vitally important.


Editor's note: Next in the series, a veteran of the 1980s farm credit crisis shares how to adapt to prolonged ag downturns.

Lance Woodbury will present a workshop at the DTN/Progressive Farmer Ag Summit in Chicago Dec. 5-7 on "Keeping Peace in the Family" when finances are under stress. For details go to

Elizabeth Williams can be reached at


Elizabeth Williams