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South Central Iowa | http://www.mlive.com/news/grand-rapids/index.ssf/2017/08/zeeland-ba...
Based on the lawsuit, 25,000 acres of corn and 58,000 acres of soybeans for 83,000 acres total
CHS is suing for $145,000,000 total and $50,000,000 in crop revenue immediately. Using $250 rent and $350 corn input and $220 soybean revenue, that would be $20,750,000 rent and $21,510,000 inputs for $42,260,000 total. Just estimating, it sounds like a roll-over loss plus this year's costs. It is really impossible to tell how bad their situation is from that. If that roughly $95 million remainder is owed on 20,000 acres of purchased farmland, there should be the security necessary to restructure as that would be a debt of $4,750 per crop acre. Without knowing how many "owned" acres are on the asset side of the balance sheet, it is impossible to say if it is really a bankruptcy situation.
It mentions CNH as being owed $24,000,000 for equipment and they have not been paid. I don't know if that is the total value of their equipment, what their annual payments are, or arrears and current liabilities. If it is total value of all equipment, that is not a concern; it is slightly under $300 of equipment assets per acre. If you farm 2,000 acres and own a $100K Tractor, $50K Planter, $150K Combine, $20K Corn Head, $10K Platform, $20K Grain Cart, $30K Semi, $30K Grain Trailer, and $30K Pickup; you own $440,000 in primary equipment or $220 per acre. That would be similar to these people if it is total equipment value. If it is annual payments; that is massive trouble!
It doesn't mention anyone else, but does say there are likely other creditors. It all comes down to what these amounts are for. If CHS Capital is the sole real estate and operating lender and 1/4 of the land is owned ground that secures the note; something could be done and it really isn't much different from a lot of farm operations, just more commas and zeros. If CNH is recent parts and labor and the total debt of equipment, it is high, but not unfathomable.
Need more information to assess the situation.
Edit: Guess I should mention, those corn and soybean input costs are just what mine are, but they do include the full cost of my equipment payments within them. Maybe that would be a little high since equipment debt is owed to CNH. Maybe they had a bigger carryover loss. Maybe their rents are higher than $250 on average. Some people seem to spend more on crops than me, maybe I am in the lower part of COP. (Shrug)
Double Edit: There is no way their annual payments are $24 million on equipment. If you had leases on 20 brand new combines and heads, 20 brand new tractors, and 20 brand new planters, it would still only be $4 million per year or so on your most major equipment with CNH. This sounds like a lot of fluff up if these people own a sizable minority of their farm acres and have no real estate lender aside from CHS Capital.
Edited by Conan the Farmer 8/31/2017 21:03
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Low Corn prices starting to take its toll on Big Farms
