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Views and opinions: Good financial optimism vs. financial realism: Who wins?

It goes without saying that farmers belong in the group of what is commonly referred to as the eternal optimists. For farmers, no matter how hard the times, next year is always going to be better. Up until recently, the only group of people more optimistic than farmers were Chicago Cub fans.


As I write this article, there are several areas of the county having difficulty getting planted. In addition, interest rates keep ratcheting up, meaning the era of cheap money is likely over for a while. And, although the recent trade/embargo fears have quieted down, I would say we are only one tweet away from such ramping up again.

I am also hearing many ag lenders saying that this is the make or break year for many of their clients. Already, bankruptcy filings for U.S. farms are on the rise. I just read that Eastern Corn Belt farm bankruptcies are up more than 100 percent from last year.

Recently, I reviewed a list of farm operations that have had to engage in bankruptcy protection during the past year. Many of these operations were successful, large, specialized, very integrated or all four. So, relatively few are immune from the current economic times.

As farmers, there needs to come a point where we balance optimism versus realism. Sure, being optimistic is important. Without it, I wonder if we would have more than just a handful of farmers in this country.

However, an ostrich is likely optimistic when it buries its head in the sand hoping the lion does not see it. If the ostrich is realistic, it knows only its head cannot be seen and the remainder of its body is visible to the lion.

Farmers can be compared to ostriches. After several years of down prices, are we going to be optimistic that the financial lion leaves us alone, or are we going to be realistic that the financial lion will see us, and something needs to be done?

A colleague of mine bemoaned the fact that farmers are historically apt to wait right until the 11th hour to seek help. The same colleague said that if only farms would seek out help, say in the ninth hour, a better outcome could be achieved.

And, “help” does not necessarily mean filing for a bankruptcy. “Help” can come in the form of negotiation with lenders, workouts, and other methods of assistance.

In my humble opinion, now is a good time for farmers to have optimism take a back seat to realism. The current farm economy could stay depressed for many more years. Thus, it could very well be that no matter how optimistic you are, the financial landscape continues to disappoint for quite some time.

Rather, farmers should focus on financial realism. Look at the current financial picture of your farm and see what options exist. Maybe seeking out help with some lender negotiations, workouts or otherwise now prevents a more catastrophic situation from arising in the future.

Not to mention, a person never wants the situation to become so dire that chapter 12 or other bankruptcy options are not viable. Chapter 12 is a restructure, meaning to work there needs to be something left to restructure. If the farm is driven off the financial cliff, it is doubtful a chapter 12 can save the day.

We all know that “a stitch in time saves nine”, but with farming, a stitch in time may save the entire farm. Please be mindful that there is no shame in seeking help early on. Do not let the situation get to the point of no return.

Putting financial reality ahead of financial optimism could turn out to be the single event that ensures a happy outcome.


These articles are for general informational purposes only and do not constitute an attorney-client relationship. John J. Schwarz, II, is a lifelong farmer in Northeast Indiana and has been an agricultural law attorney for 12 years. He can be reached at 260-351-4440,, or visit him at