Law of the West: Ag disaster relief
April 14, 2006
by John Scorsine
Dear John: My wife and I have a small family farm. The family has been in the agriculture business for four generations. Despite all the advice I have received from my relatives, things just have not gone well for us the last few years. The banker says they may not renew my notes when they come due. First it was the drought, then the fires. With the high price of hay and fuel, I am at a loss as to how I can continue. I know I can make it, if I am just given a chance.
Truly, we’ve had a couple of years that presented mixed blessings for farmers and ranchers. The good news is that there are several avenues available to you for help.
What you need to do is develop a strategy for getting as much help as you may need. The first place to start will be with your lender. If your banker is heavily invested in the agricultural community, no doubt he will be able to provide you a number of avenues to pursue. Generally speaking, bankers are not fond of foreclosing on family farms. They would like to have a strong loan portfolio: all their loans performing. He may be your strongest ally.
Beyond your banker, there are a number of other resources in the community. Your local U.S. Department of Agriculture’s office, the local extension agent, and even you county or state’s emergency management office are the primary ones to look to for alternatives. The Farm Service Agency, an arm of the USDA, has a variety of programs available if your farm or ranch has suffered disaster related losses. These include: the Emergency Conservation Program (ECP), the Noninsured Crop Disaster Assistance Program (NAP), Emergency Loan (EM) Assistance, and Emergency Haying and Grazing Assistance. A great Web resource for anyone who has experienced disaster related losses is htm.www.usda.gov/news/disaster/index.htm.
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If your banker is unwilling to work with you, and the disaster related programs are for some reason unavailable to you, you will need to get together with your attorney and family accountant. Together, they will be able to ensure that you have explored all the avenues. Your attorney may be able to assist you in negotiating new loans or terms with your current lenders.
If every option has been explored and there are no longer any palatable alternatives, there are a few less desirable ones. Ultimately, you may have to seek the protections of the United States Bankruptcy Code. Congress renewed Chapter 12 of the Code, a chapter specific to the family farmer. (We’ll discuss more about Chapter 12 debt relief at another time.)
It is little solace to know that you are not alone. Across this country the ravages of the current cycle of drought has brought many an operator to the end of their rope. Wild fires threaten what hasn’t been destroyed by drought. What is critical to understand is that you have a variety of options available to you. Time is of the essence. As soon as you recognize that you are in financial trouble, get with your family lawyer and accountant. These professionals can help to clear away the fear and emotions, leaving you to do what you know you do best: provide food for America.
The information provided in this column is based upon general principles of law and should not be relied upon in any manner. It is not the intent of this column, its author, publisher or the Fence Post to provide legal advice to any person. You should address specific legal questions to your family lawyer. In Wyoming, the State Bar can refer you to competent lawyers in your community by calling (307) 634-7823. In Colorado, call the Metropolitan Lawyer Referral Service at (303) 831-8000. Readers in Nebraska can receive referrals from the State Bar Association by calling 1-800-742-3005.