Page 5 - Midway District - March 2017

MICHELLE BUCHANAN AGRICULTURE & NATURAL RESOURCES

Liquidation? First Comes Realization,
Then Comes Communication

It’s a word that no farm family wants to hear of real estate or a security interest in terms of

uttered around the dinner table or out in the chattel assets. This includes machinery and

farmyard. Low commodity prices are making it livestock. It’s good to check out those documents

more and more difficult for some farmers to cash to see what a creditor has an interest in for

flow their operations and tough choices may lie collateral purposes.

ahead for farmers to make sure they stay in The Kansas Ag Mediation Services is also

business. available. Mediation can help with problems

It can be a combination of factors that bring a between family members that may arise due to the

farm family to the point of liquidation, which can circumstances or can bring a producer together

be full or partial. Many times the decision to with creditors to hash out the details of the

partially liquidate has been proposed by a lender to liquidation. Communication is a key to any

help pay down debt so that they can continue to liquidation. Mediation is a tool that can be very

provide financing for helpful to keep the

the farmer. lines of

There is a Farm KSRE programs help communication
Analyst program that open.

works in conjunction farmers navigate a Producers need
with Kansas Ag to be proactive if
Mediation Services. they find

It is a good idea to themselves in a
tough situation.
downturn in the farmconsider this before
coming to a big The sooner a
economy.
decision like producer can

liquidation. There recognize this, the

may be some things sooner they can get

you can do to change pointed in the right

your operation or the structure of your debt, to direction with a clear and concise plan. There may

make things work better. Seeing where you are at be ways to avoid a total liquidation if things are

currently is imperative. looked at sooner rather than later. There’s no

If it gets to the point that a producer decides to call question it’s a stressful process. But there is help

it quits, there are several things to keep in mind. and there is life after liquidation.

The potential tax burden should be top of mind Programs have been held locally and regionally
for producers. If care isn’t taken through the to help farmers take a closer look at their financial
process, a producer could pay off debts and owe situation and make adjustments to weather the
the IRS a lot of money. Debt forgiveness is potential economic storm resulting from low
taxable, recapture of depreciation assets is taxable, commodity prices. Some of the programs include:
and capital gains on the sales of assets like land are Grain Marketing Strategies for 2017, Top 10
all taxable. A good tax practitioner should be Considerations to Navigate a Struggling Farm
contacted before you do the liquidation to make Economy, Farm Analyst consultations, Kansas Ag
sure things are in order. Mediation Services, Kansas Farm Management
Association, etc. These programs focus on changes
It’s also a good idea to look at what the loan from soil sampling to marketing to restructuring
documentation is with respect to creditors, to see
exactly what they have a mortgage against in terms debt that can and are helping farmers.