Dr. Val Farmer
Rural Mental Health & Family Relationships

Ag Financial Counselors Advice: State Early, Get Help

September 21, 2009

A segment of agriculture, particularly dairy and pork producers, are facing tough economic conditions. Ag financial counselors have observed several common mistakes and self-defeating behaviors some farmers make when facing overwhelming challenges.

Here are six recommendations on what farmers can do differently to avoid a downward spiral of financial and emotional pain.

1. Seek out professional health resources for depression and/or suicidal thinking. Medication and counseling together are extremely important in treating depression. Physical ailments are one way the stress and depression are manifest. Seek out family physicians, clergy, outreach workers, and the extension service for ideas on where to go for assistance.

2. Keep the faith. Look to a higher power. Keep attending your church. Find support in a spiritual setting or in a support group. Hold your head up and let your friends know what is really going on with you.

Social withdrawal and shame turn the problems inward, exactly where they don’t need to go. Move into the future in a proactive sense. Don’t dwell on mistakes. Don’t blame yourself for things you had no control over.

3. Keep the family together. When debts mount and obtaining a loan is difficult, there is almost always marital discord. Decisions to continue to dump income into the farm cause conflict, especially when it is the wife’s off-farm income barely keeping the farming operation afloat at the expense of family living and high stress.

Couples need to be mutually supportive and work through their solutions together instead of withdrawing into isolated, aggressive or solitary positions. Ag counselors often find that by the time they arrive at a farmstead they have two clients with two opposing agendas.

Marital tension needs to be addressed quickly through outside guidance. Get a good word-of-mouth referral on who can help you. Ag financial counselors believe that many a divorce could be prevented if couples start seeking help two years sooner than they do.

Pride is a factor. Farmers want to put up a good front with their local clergy and professionals. They don’t really turn a corner and get the help they need until they stop worrying about what others think. They also need to be assured of confidentiality and, if possible, anonymity.

4. Start sooner to get help. Don’t try to work through the process alone. Farmers in this position need help with decision-making, information about tax and legal consequences. Ideally it takes one to three years to dissolve a farming operation while winding down slowly.

Be careful to select accountants and attorneys who have a good understanding of "farm law." Too many farmers rely on "hearsay" or gossip in the farm community about how to solve their problems without actually turning to experts for second or third opinions.

Financial counselors feel they get to farmers about 1 ½ to two years late to prevent the financial wrecks they find when they first make contact. The financial ideas and help they offer could help salvage farmers’ equity if the process were started earlier.

Too many families are not realistic when it comes to their family living expenses. They guess too low. They live on credit cards. If the bank cuts them off, they turn to their credit cards as a quick fix.

5. Make tough family decisions. Trying to farm together - father and son operations - may jeopardize the financial viability of both operations. Too many families are trying to earn a living on too few acres.

Big mistakes are made when the parents go out on a limb to keep their children in farming and end up losing their own farm. Farmers may ignore reality in order to keep a son or a son-in-law in farming. An outside consultant can help take emotion out the decision-making process and explain various options based on what the numbers actually mean.

6. Waiting until the last minute. Don’t put off paperwork to the bank until the last minute. Farmers may end up getting the bank decision about the status of their operational loans too close to spring planting. By then they have made decisions and commitments so, if they are denied their loan, they try to farm with main street credit and credit cards.

Alternate ways of financing are shaky if not shady. Be careful of financing schemes coming from non-traditional sources.

Later filers are often so busy with day-to-day operations that they ignore the future and long term planning. Putting off decisions or reviewing their finances is a way of continuing to deny their problems.

The later they file their loan applications and financial statements, the greater the likelihood is that they haven’t discussed their plans with anyone and haven’t rehearsed their answers or presentation. By preparing early, they have a chance to get some input from an advisor before trying to "sell" the bank.

Ag financial counselors are truly on the front lines for mental health, family well being, and financial concerns. My experience is that they listen, they care and are patient. They understand the referral network and make good referrals. The main thing they wish is that they could be on the scene a lot sooner to prevent some of the pain and suffering they encounter.