12 CapitalPress.com
October 6, 2017
‘We’ll get something but it might be 10 cents on the dollar’
COLLAPSE from Page 1
receiving a notice from bank-
ruptcy court.
He was owed $137,000 on
the date of the bankruptcy fi l-
ing but has been paid all ex-
cept $30,000.
Cruickshank said he’ll
make it, as will most of the
farmers who are also owed
money. But the loss still hurts.
“We’ll survive, but it’s just
like (anybody): if you take a
$30,000 hit, it sure as hell ain’t
going to make you feel very
good,” he said.
He’s not sure how much
of the remaining $30,000 that
he’s owed he will actually see.
“We’ll get something but it
might be 10 cents on the dol-
lar.”
Farmers owed
Some Farmers Grain cred-
itors are owed a lot more than
Cruickshank. Court fi lings
show many are owed several
hundred thousand dollars and a
few more than $1 million.
“A lot of my friends and
neighbors have been hung out
pretty bad,” said Ontario, Ore.,
farmer Bruce Corn, who sold
corn to Farmers Grain but is
not owed money by the com-
pany. “There are some people
out there who are owed a lot of
money.”
Malheur County Onion
Growers Association Presi-
dent Paul Skeen, who hauled
a small amount of wheat to the
company this year but is not
owed money, said two of his
neighbors are owed $850,000
between them.
“It’s terrible,” he said of the
company’s collapse. “It’s dev-
astating.”
Jensen Farms in Vale, Ore.,
was owed $176,000 at the
time of the original bankrupt-
cy fi ling but was fortunate in
that it delivered 1,000 tons of
corn to Farmers Grain the day
before the company declared
bankruptcy and ended up get-
ting paid the full amount it was
owed.
“We were lucky, you could
say that,” said co-owner Sheri
Jensen.
Looming problem
However, the Jensen farm,
like many others in the region,
face a looming problem relat-
ed to the bankruptcy that could
end up costing them a signifi -
cant amount of money.
Farmers Grain had contract-
ed for tens of thousands of corn
Sean Ellis/Capital Press
Grain storage bins at the Farmers Grain facility in Nyssa, Ore., are shown in this Sept. 28 photo. The company recently declared bank-
ruptcy and dozens of farms and ag-related businesses in southwestern Idaho and Eastern Oregon are owned a combined millions of
dollars by the company. The company’s assets will be auctioned off Oct. 27.
acres with local farmers, but
those contracts are now void.
With harvest coming within
the next few months, much of
that corn has no place to go and
no one to market it.
“There are a ton of farmers
in the area scrambling trying to
fi nd out what to do with their
corn,” Jensen said. “It’s not a
pretty picture.”
The Jensens have on-site
storage for their corn, but oth-
er farmers don’t, and Farmers
Grain had the largest storage
capacity in the region by far.
“The sheer volume of the
corn means it will be hard for
everyone to fi nd a place to go
with it,” Corn said. “Finding
the storage and a place to mar-
ket the corn is going to be a real
problem this fall.”
Because the corn contracts
are no longer valid, those farm-
ers stand to lose a lot of money
because prices have dropped
more than $30 a ton since the
contracts were signed, Cruick-
shank said.
He said a friend had 400
acres of corn contracted with
Farmers Grain and if that corn
is sold at today’s prices, he will
lose about $280 an acre and
more than $100,000 total.
Cruickshank had 130 acres
of corn under contract with the
company and would lose a sim-
ilar amount per acre.
“That’s the tip of the iceberg
with what (happened) with ev-
erybody,” he said.
Growers in the area said
Farmers Grain was an excel-
lent company to work with and
many of them knew and liked
Galen Jantz, 47, who managed
the company and had a 40 per-
cent interest in it, according to
court documents.
Default declared
Court documents show the
company sought Chapter 11
protection after Rabo AgriFi-
nance declared a default on
a revolving line of credit to
Farmers Grain and called the
entire $8 million balance due.
The company asked the
court for relief from “Rabo’s
continued pursuit of the Jantz
loans and property owned by
(the) Jantz family.”
“This action by Rabo was
one of the precipitating events
leading to Farmers Grain fi ling
its bankruptcy petition,” Farm-
ers Grain stated in a court doc-
ument. “Continued pursuit of
the Jantz loans and collateral
will severely impact the Chap-
ter 11 proceedings and frustrate
debtor’s ability to successfully
reorganize.”
A June 15 letter from Farm-
ers Grain authored by Jantz and
sent to growers expressed hope
the company could regain its
fi nancial stability and continue
doing business.
But the court converted
the Chapter 11 bankruptcy to
a Chapter 7 liquidation fi ling
on Aug. 15 after Rabo AgriFi-
nance, in an Aug. 3 court fi ling,
argued that Farmers Grain was
losing too much money to re-
cover.
An auction of the business-
es’ assets has been scheduled
for Oct. 27 beginning at 10 a.m.
at the Farmers Grain facility in
Nyssa.
In the Aug. 3 fi ling, Rabo at-
torneys said Farmers Grain as-
sets “that secure repayment of
(the company’s) loan appear to
have diminished by almost $1.5
million in the two weeks after
the bankruptcy fi ling.”
The company’s monthly
operating report for the period
ending May 31 showed further
fi nancial decline, Rabo added.
In the six weeks that Farmers
Grain had been protected by
Chapter 11, Rabo said, its assets
decreased by $3 million while
its liabilities only decreased by
$514,000.
While Farmers Grain
claimed its total assets could
generate about $20 million, a
Rabo appraisal placed that val-
ue closer to $9 million, accord-
ing to court records.
Rabo spokeswoman Sarah
Kolell said the company does
not anticipate being paid back
in full from the liquidation of
Farmers Grain’s assets.
“While Rabo does antici-
pate receiving some value from
the liquidation of its collateral,
we also anticipate that there
will be a substantial defi cien-
cy remaining once the Farmers
Grain case is concluded,” she
told Capital Press in an email.
Complicating matters, Jantz
suffered what Rabo, in court
fi lings, said it was told was a
mental breakdown and had left
town, abandoning his farming
and personal operations, as well
as Farmers Grain.
Conservator named
As a result, the court ap-
pointed Steve Neighbors as a
conservator to handle Jantz’s fi -
nancial affairs. He is certifi ed as
a business turnaround specialist
by the Turnaround Manage-
ment Association.
Neighbors told Capital
Press that according to Jantz’s
family, he began having coher-
ence problems in the past year
and there is a history of early
onset dementia in the family.
“He would be talking and
babbling at times,” Neighbors
said. “He was making a lot of
irrational statements and deci-
sions in his last year at Farmers
Grain is what his family told
me.”
Neighbors said Jantz be-
came depressed as a result of
the mental strain he was under.
“He felt he had to get away
from everything to prevent
himself from being suicidal,”
Neighbors said.
Jantz and his family of
four are currently staying with
a relative in another state,
Neighbors said. “He had to get
distance. He went away to get
healthy.”
The Capital Press attempted
to contact Jantz by leaving mes-
sages at several phone numbers
connected with him, including
at Farmers Grain’s main tele-
phone number at its headquar-
ters in Nyssa. None of the calls
were returned. Other numbers,
including his home number in
Vale, Ore., were disconnected.
Neighbors said Jantz feels
he let his community down
and voluntarily turned over $8
million in personal assets to the
court and asked Neighbors to
make sure creditors are made
as whole as possible and that no
one creditor seizes everything.
“He asked me to make it as
right as I can to all of his cred-
itors,” Neighbors said. “I’m
trying to make everything as
transparent as I can to all the
creditors so they have their
fair shot at whatever” is owed
them.
Neighbors said he has au-
thorized $3,000 a month for
eight months for Jantz to take
care of his family during the
bankruptcy proceeding.
“That’s all Mr. Jantz want-
ed,” he said. “He wanted ev-
erything else to go to his cred-
itors.”
Neighbors said he believes
a couple of main factors led
to Farmers Grain’s fi nancial
collapse, including that some
accounting and record-keeping
that should have been done,
wasn’t.
“I think those complexities
went beyond his ... training,”
he said.
“He didn’t understand his
costs fully and didn’t under-
stand the full implications of
cash fl ow,” Neighbors added.
Some important business
decisions that should have been
made in the past year weren’t
because of the mental strain
Jantz was under, he said.
For many farmers affected
by the company’s bankruptcy,
their hope now is that another
business will step in and take
its place.
Corn, the farmer, said Farm-
ers Grain was a good business
for area farmers while it was
running “but when it went
bad, it went bad in a hurry. My
hope is someone will buy it and
make it work.”
Kolell, the Rabo spokes-
woman, said what the liquida-
tion of the Farmers Grain assets
will look like is an open ques-
tion.
“If someone wanted to
step in and purchase all real
and personal property assets
and reopen the business, Rabo
would be supportive of that,”
she said.
Canola growers, seed companies hope issue will be less divisive following report
CANOLA from Page 1
Oregon lawmakers passed a bill
that year prohibiting most canola
production but allowing 500 acres a
year to be grown as part of the OSU
study.
With OSU’s report due Nov. 1,
both canola growers and seed com-
panies hope the issue will now be
less divisive as ODA begins devel-
oping recommendations for the crop
based on the study’s conclusions.
“We know coexistence is possi-
ble, it’s just a matter of convincing
people,” said Anna Scharf, whose
family farms near Perrydale, Ore.
Scharf said her family has suc-
cessfully been growing canola near
fi elds dedicated to radish seed, a re-
lated crop.
Hopefully, OSU’s study will
show there’s a capacity in the Willa-
mette Valley to grow multiple types
of brassica, she said.
“I don’t want this turning into a
fi ght again,” Scharf said.
The Willamette Valley Special-
ty Seed Association, which fi led a
lawsuit against ODA’s canola reg-
ulation in 2013 and supported the
production moratorium, appears to
be taking a more conciliatory ap-
proach to the crop.
“We expect the need to coexist in
the future with some level of cano-
la,” said Greg Loberg, the group’s
public relations chairman and man-
ager of the West Coast Beet Seed
Co.
Specialty seed growers are antic-
ipating the report will result in con-
cessions to canola growers, such as
reduced limits on the crop’s produc-
tion, Loberg said.
The association will be talking
with canola growers and ODA to
retain some protections for special-
ty seeds, such as production area
sanitation requirements to prevent
canola volunteers from becoming
widespread, he said.
In return, canola producers will
likely want to participate in WVS-
SA’s system for maintaining isola-
tion distances among brassica crops
to avoid cross-pollination and other
issues, Loberg said.
The goal is to arrive at a solution
without reliving the previous con-
fl ict, he said.
“We don’t want to continue to
have legislation directing the pro-
duction of any crop,” Loberg said.
“It’s really not the best solution, it’s
just the solution that happened.”
As part of the OSU study, rough-
ly 500 acres of canola a year were
compared with 500 acres of radish
and 500 acres of turnip and forage
rapeseed.
By the end of the three-year pe-
riod, OSU was monitoring about
1,500 acres of each crop type for
disease, insect and volunteer weeds,
said Carol Mallory-Smith, the weed
science professor leading the re-
search.
The study examined residue
breakdown of the different crops
— which has implications for dis-
ease management — under various
tillage methods, she said.
The report will include a map
identifying acreage available for
brassica seed production, which
will help guide where canola can
be planted in relation to other
crops, Mallory-Smith said.
Based on the report’s findings,
ODA is expected to deliver its rec-
ommendations for canola cultiva-
tion to the legislature by mid-No-
vember 2018.
Kathy Hadley, who grows cano-
la and other crops near Rickreall,
Ore., said she’s hopeful the OSU
study will lead to cooperation
among canola and specialty seed
producers, both of whom contrib-
uted data to Mallory-Smith.
“They’ve had as much op-
portunity as anybody to influ-
ence what she presents,” Hadley
said.
Under the settlement, amount of water is reduced for growers to make more available to frog
Source: U.S. Fish and Wildlife Service
ample, fi lling a reservoir re-
quires reducing downstream
river fl ows.
Nonetheless, the Fish and
Wildlife Service concluded in
its biological opinion that the
water regime mandated by the
settlement won’t jeopardize
the frog’s continued existence
or destroy its habitat.
20
126
126
THREE
SISTERS
WILDERNESS
Bend
Crane
Prairie
Reservoir
Alan Kenaga/Capital Press
“On the balance, there is
slight improvement, most no-
tably at the Crane Prairie res-
ervoir,” which is important
because it contains a healthy
population of frogs, Moran
said.
Moran characterized the le-
gal settlement as the “bridge”
to a more comprehensive
Riv
e
20
r
Sisters
242
Deschu
tes
Oregon spotted frog
Binomial name: Rana pretiosa
Appearance: Medium-size frog ranging from 1.75 to 4 inches long. Body
color varies with age. Adults appear brown to reddish brown with black
spots with ragged edges.
Courtesy of U.S. Fish
Range: British Columbia, Washington,
and Wildlife Service
Oregon and California
Habitat: Found in or near
perennial bodies of water that
include zones of shallow
water and vegetation.
Status: Threatened
Reasons for decline:
Habitat loss, competition
from non-native species,
predation
Area in
detail
Areas
affected
by Oregon
spotted frog
settlement
R o ad
At a glance
Lava Lake
FROG from Page 1
In other words, when prob-
lems are suppressed in some
areas they are aggravated in
others due to the complexity
of the irrigation system, which
relies on water from the Crane
Prairie, Wickiup and Crescent
Lake reservoirs.
Under the settlement, the
amount of water is reduced for
growers in fi ve irrigation dis-
tricts to make more available
to the frog, which is protected
under the Endangered Species
Act.
As reservoirs are drawn
down, the water level falls
below vegetation that spotted
frogs rely upon for breeding
and shelter from predators,
said Moran.
“It’s really about whether
the level of fl ow allows the
frogs to access their habitat,”
she said.
However, retaining wa-
ter in one part of the system
means that it’s reduced some-
where else, she said. For ex-
97
La Pine
58
Wickiup
Reservoir
97
Crescent
Lake
N
31
10 miles
Capital Press graphic
“habitat conservation plan,” or
HCP, for the spotted frog that’s
due in 2019. At that point, the
current deal is expected to ex-
pire.
“It will be many differ-
ent features but they all build
around increasing winter fl ows
over time,” which provides
frogs with the opportunity to
reach overwinter habitat, she
said.
Increased fl ows will be
supplemented with habitat
restoration work aimed at re-
turning the system’s rivers to a
more natural state.
Over the 70 years of reser-
voir operations, heavy water
fl ows released from reservoirs
during summer have “scarred”
river beds, making channels
deeper, said Moran. As a result,
water doesn’t reach adjacent
wetland vegetation, cutting off
spotted frogs from habitat.
Meanwhile, what vege-
tation does grow along river
banks is fl ooded, she said. “It
comes up so high, everything
gets inundated.”
Habitat restoration work
aims to reconnect the river
fl ows with nearby habitat. The
HCP will also include control
of bull frogs, which preys on
spotted frogs and compete for
habitat, and treatment of reed
canary grass, an invasive spe-
cies.
Due to a healthy snow-
pack last winter, the settlement
wasn’t seriously damaging to
irrigators in 2017, said Ken
Rieck, general manager of the
Tumalo Irrigation District, a
defendant in the case.
On average, the district
stands to lose about half the
stored water that would usu-
ally be available for irrigation
due to the agreement, he said.
This year, it only lost about 20
percent, but in a “bad year,”
the loss could reach 80 per-
cent.
“We really didn’t get the full
effect we could have,” Rieck
said.
Under the settlement, water
that would normally be stored
in Crescent Lake for the dis-
trict’s irrigation system is being
redirected into winter stream
fl ows for the spotted frog.