Case Studies
Farm Loans Complicate Family Farm Transition
Farm loan and other credit issues can make a family farm transition complicated and challenging. When the next generation takes over control of the farm, there are difficult conversations required both within the family and between the family and the lender. There are questions about cash flow, debt, workload, and fairness and equity between siblings. Conflicts can arise between parents and their children or between siblings concerning management of the farm, farm credit and other financial issues. If the conflict is not resolved early on and in a constructive manner, families and businesses can be torn apart. The agricultural mediation program has helped several families deal with these issues by working with all family members to focus on their interests and resolve financial and other management issues.
NRCS Cost Share Dispute
A farmer entered into a cost share arrangement with NRCS for a manure storage system. The farmer was concerned that the contractor who performed the work did not follow all the specifications in the contract and refused to pay the contractor the remaining balance. At the mediation, the farmer, NRCS, and the contractor had an opportunity to talk about exactly what was done differently and why it was done that way. Once all the parties had a greater understanding of the nature of the work performed, the mediator facilitated a discussion on possible ways to resolve the dispute. Since mediation sessions are confidential, each party could talk openly about which options could be acceptable. The parties were then able to reach an agreement that was acceptable to all parties and most importantly it provided a means for dealing with any future problems.
Farm Loan Denial
A farmer was seeking a loan guarantee from USDA to purchase the family farm. After months of back and forth discussions between the farmer, a commercial lender, and USDA, the loan guarantee was denied. The process stalled and the farmer did not know where to turn to next. The farmer contacted the agricultural mediation program in his state and requested mediation. At the mediation, all the parties were at the table together for the first time. Mediation enabled the parties to dispel preconceived notions about each other and address each party’s concerns. The mediator assisted the parties in generating options that addressed concerns raised by the various parties and ultimately the parties were able to work together to develop a loan package that worked for all.
Restructuring Farm Loan To Feed Supply Store
A farmer owed his feed supply store a significant balance. Interest was accruing on the principal and the farmer who was struggling to make ends meet did not know how he was ever going to pay the entire debt. The feed supply store was in a tough bind. If it continued to provide feed, the farmer’s debt would likely continue to grow. If it stopped proving feed to the farmer, the farm would fail. Either way, it was not clear how the farmer could pay back the debt. The farmer contacted FSA and FSA referred the farmer to his state’s agricultural mediation program. At the mediation, it was clear that all parties had an interest in the farmer succeeding. The parties discussed several options for restructuring the loans that would enable the farmer to pay back his entire debt. Ultimately, the parties agreed to a settlement that worked for both the farmer’s and the feed supply store’s balance sheet.
The above case studies are either compilations of cases with similar facts or include changes to minor details to protect the confidentiality of the mediation process and the privacy of the parties. Photos of farms and or farmers are used for decorative purposes. These farms and farmers were not involved in the above case studies.