A New Endangered Species: The Family Farmer

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"The Engelkens maintain that they were not, in fact, behind on payments at the time the Land Bank sent notification that . . . the farm would be subject to foreclosure."

"We are a borrower-owned lending organization. In other words, you must have a loan with us to be a stockholder. The Board of Directors of the Manchester organization is comprised solely of farmers and ranchers in that area. They make the decision whether to recommend a foreclosure. Our bond investors have nothing to do with it."

David Dudley, of the Manchester branch, concurs with Dan Arbach. "I can't imagine anyone making an unsubstantiated claim as he [Ralph Engelken) has," Mr. Dudley said. "We are a farmer's cooperative investing institution. We're not set up to make a profit, but neither are we a subsidizing operation. We don't get government money. Our stockholders have to eat losses. The situation is actually very simple. There's no complex plot to eliminate all organic farmers. It's just not true."

When asked about the third party's effort to pay off the notes involved in the short-term loans, Dudley replied, "We [at the Land Bank] haven't been contacted about that at all. We'd be glad to have anyone pay off that obligation. I can't speak for Fidelity Bank and Trust, but I'm sure they would take anybody's money as well. There is no incentive not to."

THE PLOT THICKENS

There may have been some incentive not to, according to a third party; who agreed to be interviewed for this story but requested that he not be named. This third party, along with several others, invests in what he refers to as "clean farms". Currently the owner of three organic farms that produce and sell food to "chemically-intolerant people", he views such farms as the best investments available today. "There's a life-threatening day of reckoning in the not-too-distant future. Clean farms are going to triple in value when that happens."

According to the investor, he and his partners offered Fidelity Bank a $1 million "courtesy deposit", guaranteed for a full year, if Fidelity would continue to hold the Engel kens' loans. The group was, I was told, seeking to buy time to work out a new financing package, consolidating all the outstanding loans at a new interest rate. Such a move would require at least 120 days to negotiate. It was hoped that the bank would oblige.

The bank did not. It turned down the $1 million courtesy deposit, and refused a letter of credit . . . after this man had mortgaged one of his own farms to come up with the cash.

The would-be angel of mercy has his own theory as to why Fidelity acted as it did: "This is certainly not a routine foreclosure, but I sincerely doubt that it has anything to do with a national conspiracy against organic farmers. Rather, I suspect it's nothing more than a small-town power play. I'll bet someone in that area, who might pull some weight within the community, was waiting in the wings to scoop up some prime acreage in a prime location for a third of the farm's value.

"Look, Ralph Engelken's farm is pure gold. He's got 16 inches of topsoil, he raises solid stem oats and alfalfa . . . and he currently has no deaths in more than 2,500 feeders [cattle]. Tossing out some hypothetical figures to give you an example: Someone with, say, $100,000 in cash, and additional financing of up to $500,000, could easily pick up a $1.6 million farming operation. Who wouldn't try to do something like that?"

THE CRISIS CONTINUES

Ralph and Rita have vowed to do everything they can to prevent the loss of their farm. In December they filed a Chapter I1 bankruptcy statement, a move to keep their creditors from selling their land and equipment out from under them. This action, in effect, would stop all obligations on old debts.

Then, in mid-January, they went to court for what's called a "cash collateral meeting". The judge granted them the legal right to sell their 1983 hay and cattle and to use the profits for the continued operation of their farm in 1984. The Engelkens are also pursuing a lawsuit against Fidelity Bank and Trust.

How the story will end remains to be seen. In the meantime, Rita and Ralph have expressed their appreciation for the many MOTHER-readers who ordered their book, The Art of Natural Farming and Gardening, and to others who simply wrote to them as a result of the Plowboy Interview.

As always, hindsight proves wiser than foresight. Ralph admits he was perhaps a little ignorant in the ways of financial lending. But perhaps some good can come from his plight if other farmers and landowners take the time and effort to continually educate themselves in the business aspects of their farming operations. Perhaps more important, they should become familiar with their legal rights in the event they fall into a similar situation. Because now more than ever, family farmers need to help each other . . . if they're to survive.

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