Rensselaer,IN Bankruptcy Sale

Kraft Auctioneers conducted a sale today of land and machinery at Rensselaer, IN. Tomorrow they will sell 500+ black cattle at Milford, IL also. A snip of todays action is the land of 847 acres sold for $4,200,000 with two liens for irrigation equipment. I didn't get any equpment prices of 2 Wilson trailers, 2 Claas 980 choppers with both heads, 9460R, 8360R, S680, tile trencher, and etc.

There was a 3% credit card fee, 10% buyer's fee, and the court appointed receiver was to be receiving $8,000 per week for her fee. Sounds like the creditors are going to be short on collecting the $23,000,000 they were to have been told to have been short. If the owners were banks, they would have been too big to fail and would have gotten TARP moneies.

Is this the tip of the iceberg?

We really aren't in hard times yet down on the farm. We might be standing on he edge looking down, but.....

Farming has been pretty good the past 5-6 years.

Seems a lot of these big outfits went belly up when times were good. Illinois famly farms, stamp farms.....

What will the other big outfits do when we actually get to tough times?

Paul

kinda sounds a bit like the early 80's all over doesn't it? Some guys highly leveraged with new equipment and low commodity prices.

I'm hearing that banks are getting really leery of farm loans of any kind. BTO's are being turned away for operating loans. Some may elect to go with the loan sharks at 15 - 20% interest, but that is only digging the hole deeper.

Oh but 'this time its different'..........


Uh huh.

Paul

We are likely to see some big failures here in the dairy country of NY. With milk prices around $15 and input costs over $17 they can't last much longer. A lot of the BTO operators went deeper into debt when milk was over $25 and now they can't pay the interest on those loans. I understand that some will hang on for a while since the banks have to much to lose if they fail that they keep on giving loans to prop up the farm operatins. It can't go on much longer!

Or could part of the situation be that the BTO's have not learned to extend themselves by purchasing large, expensive equipment and paying exorbitant prices for land without knowing the history of local markets??

Some of the problems the BTO's are facing were created by financial experts. They have been telling these guys to run on operating loans because they cannot only write the operational cost off but also the interest. Same thing with equipment. They have been told to lease so they have the write off. Been told on buying to take the loans for the interest write offs too. Then add in when times are really good they have a tendency to buy more land on credit and that requires more equipment and bigger operating loans. Or they add onto barns and put in more livestock. Then when prices tank as they always will, either through over production or political action (embargos), these guys find themselves in far to deep to ever get out.

I attended a dairy farm bankruptcy auction a few years ago. Everyone was trying to figure out why this guy failed. He was farming land that belonged to his parents rent free. His parents had signed over the farmstead to this guy so he had no debt there. His folks had paid for most of his machinery and livestock too. The cows looked half starved and the machinery was all tore up. Guy was just a poor operator who had not only been using operating loans but took loans out to put in a small parlor system and to enlarge the barn. So the little guy can fail too. Surviving is going to boil down to debt management for some.

Rick

We saw the beginning of the Dairy downturn here in the Mohawk Valley of NY this summer. Several BTOs formed a marketing coop. They were contracted with processors for XXX# of milk per month. Demand dropped, processors didn't renew the contract. Their block of milk suddenly had no place to go. The ironic thing that I find though is the number of tons of fluid milk that are being trucked into NY yogart plants from neighboring states as far away as MI.
Loren

I see in a lot of situations that the truth seldom appears in public. This applies in situations of success as well as failure. The dairy farm failure could have happened for any number of reasons. One good thing about my college education is that you are taught critical thinking which includes looking at things that may not be necessarily on the surface to see. The farmer that you describe may have not had any debt for the public to see but did he have to pay his parents a retirement salary? That agreement probably would not been a matter of public record. It's human nature to put the best spin on a matter of family business. It's always sunshine and roses to the outsiders until the auctioneer and realtor are called.

(quoted from post at 09:06:49 02/10/16) I see in a lot of situations that the truth seldom appears in public. This applies in situations of success as well as failure. The dairy farm failure could have happened for any number of reasons. One good thing about my college education is that you are taught critical thinking which includes looking at things that may not be necessarily on the surface to see. The farmer that you describe may have not had any debt for the public to see but did he have to pay his parents a retirement salary? That agreement probably would not been a matter of public record. It's human nature to put the best spin on a matter of family business. It's always sunshine and roses to the outsiders until the auctioneer and realtor are called.

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Yes I think it is human nature to gossip and spread rumors....who knows, maybe it was just a good time to sell out and still hold onto the land. Most auctioneers do not advertise that a sale is a bankruptcy, but neighbors will assume things. I can't wait to hear the rumors going around when people find out I am no longer doing my roadside veggie stand.....

Yep, even the Mennonites are feeling the pinch even though they have a built in labor force that most others do not have.

Eldon. In a bankruptcy sale they do have to list it as such. That includes the court order case number, the courts name and all the other legal information. They cannot have a bankruptcy sale without the courts aprovel and the courts legal facts.

Not that it always happens this way but that is the reason Farm Credit or the local ag bank tries not letting things get that far. When the loan committee decides that they have had enough they pressure the borrower to have a "retirement" sale where everybody gets to save face. Usually the pressure comes in the form of letting the borrower know that various loans will not be renewed or in some cases the loan is called in.