Ag Financial Counselors Best Advice: Start Early, Get Help

I met with the South Dakota Ag Mediation/Financial Counseling Conference in a training program. I also consulted with Willard Brunelle, an ag financial consultant serving northwestern Minnesota. The Ag Finance Counselors shared with me their observations on some of the self-defeating behavior they observe when they meet with clients. They also shared their ideas on what farmers could do differently to avoid the depth of financial and emotional pain that accompanies financial crisis.

1. Seek out professional health resources for depression and 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 a farm gets close to not having enough assets to keep farming, there is almost always marital discord. Decisions to continue to dump income into the farm causes conflict, especially when it is the wife’s off-farm income which is 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 lonely 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 times divorce could have been headed off if the couple had started two years sooner. They estimate that discipline problems with teen-agers begin about 18 months after a financial crisis begins.

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.

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

The financial counselors agreed that most of the time they are getting to these farmers about one to two years late to prevent the financial wrecks they find when they first make contact. 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.

One ag financial counselor felt that what is needed is a "wellness" model. The financial ideas and help they offer could help salvage farmers’ equity if the process were started soon enough.

5. Make tough family decisions. Trying to farm together (father and son operations) may jeopardize the financial viability of both operations. The son may have a better shot at financing or face the reality of not being able to farm without the parents’ involvement. Perhaps both families are too unrealistic in their approach to farming. Too many people 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. These kinds of decisions are best made with outside consulting to take the emotion out the decision-making process and to wrestle with what the numbers actually mean.

6. Don’t wait 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.

Interest rates are atrocious and their finances continue to spiral downward. There are other ways of financing that are shaky if not shady. Be careful of other financing schemes. Main street and credit card debt adds to the family’s woes and problems.

Late filers are often so busy with day-to-day operations that they ignore the future and long term planning. The later they file their loan applications and financial statements, the greater the likelihood 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.

Late filers too often may be hoping for outside help like government bailouts or deadline extensions. Putting off decisions or reviewing their finances is a way of continuing to deny their problems.

I have nothing but admiration for ag financial counselors. They are truly on the front lines for mental health, family well being, and financial concerns. They listen. They don’t judge. They develop trust. They care. They are wise. They are patient. They make good referrals. They like their opportunities to help farm families in trouble. 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.