Co-op Bankruptcy Causes Need for Information

April- June 2002

Dennis Thomas , Farm Management Field Specialist

Problem

A large farmers' cooperative in south central and southwest Iowa had been rumored to be in financial trouble for the few years. Some farmers were concerned about selling grain to them and storing grain in their facilities. They were unsure about the consequences if the cooperative would have financial problems or would declare bankruptcy.
On September 26, 2001, the co-op did declare bankruptcy. Farmers were confused and very worried about doing more business with the co-op or keeping stored grain there.

Response

Before the co-op declared Chapter 11 bankruptcy, I wrote a generic news article explaining the grain indemnity fund, risks with certain grain contracts, and storage under a federal license. I mailed it to the county extension education directors (CEED) in southwest Iowa .

Some used it as a handout for farmer clients. Some used it as a news release or a newsletter article. One CEED who used it as a news release saw it printed on the same page as the announcement of the co-op bankruptcy.

More information was provided as the co-op moved through bankruptcy and a group worked to save it as a value-added co-op. The information was used by the CEEDs as handouts and news releases.

Impact

Timely and desperately needed information was provided when farmers were hurt by the business failure of a co-op. Many of the CEEDs thanked me for the information that they used in keeping their clients informed. These clients also continued to view ISU Extension offices as the place to contact for timely information.

 

Page last updated: July 11, 2006
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