Full-Circle Fiasco, Stamp Farms Update

January 8, 2013 09:02 PM
 
Mike Stamp

Stamp family entities hit roadblock

Many farmers struggle with the need to get bigger to gain efficiencies and create a sustainable business. The pressure to grow has never been stronger, as market prices gyrate, land sells within 24 hours and opportunities scream by at the speed of light.

That pressure trampled Stamp Farms, Stamp Farms Trucking, Stamp Farms Custom Ag and Royal Star Farms—all owned by the Stamp family of Decatur, Mich.—which filed for Chapter 11 bankruptcy on Nov. 30, 2012. Estimated liabilities exceed $50 million, with more than 200 creditors cited in the filings. Monsanto was the largest creditor listed, with a $3.9 million claim.

Mike Stamp is a self-described "full-circle farmer" who revitalized the local rail line and purchased and upgraded Northstar Grain, a historic feed mill and grain storage facility. Featured in our November issue as a Top Producer of the Year (TPOY) finalist, Stamp’s investments allowed area farmers to increase their shipping options, improving margins.

It wasn’t until Stamp requested to up his operating loan that "irregularities" were found during an audit. This audit and later court documents revealed trouble, which Stamp had gone to great lengths to conceal.

Wells Fargo Bank filed a restraining order with the U.S. District Court for the Western District of Michigan, which was granted Dec. 7. The order states that Stamp Farms was selling grain and other collateral to Southstar, Eaststar and Weststar Farms, as well as Backroads Land Company—all Stamp family entities.

Wells Fargo charges that Stamp Farms harvested earlier than usual and sold the grain to the entities listed above. Southstar received more than $500,000 worth of Stamp Farms’ grain, and received cash advances of about $700,000 last year to make improvements to the operation. Another $4 million was used to buy property, which was titled in the name of various third parties and sold. Wells Fargo has also requested digital assets so it can access computer records.

Top Producer Managing Editor Julie Douglas traveled to Decatur to learn more. Area farmers said the recent events with Stamp Farms and Northstar Grain have the community split. Stamp was well-liked and known to be good to work with, said one local farmer.

Finalist, but No Winner. When Stamp applied for the TPOY award, he submitted financials as part of the process. While the numbers passed the selection committee’s scrutiny, Stamp’s debt-to-assets ratio left him highly leveraged. In the end, his achievements carried the day, and Stamp was named a finalist. Top Producer profiles each finalist, and Stamp was no exception.

"The more leveraged you are, the more exponentially good life can be when things work," says  Danny Klinefelter, a Texas A&M University Extension economist who consults with thousands of producers. "On the other hand, it’s exponentially bad when things go wrong."

Others offer valuable insights on avoiding excessive risk during periods of growth. "Growing  pains not handled can become growing cancers," says Iowa farmer Chris Barron, who writes Top Producer’s Business Matters column and serves as a Top Producer of the Year judge.

Indiana farmer and 2011 Top Producer of the Year award winner Jim Kline agrees. "Everyone aspires to be successful," he says, "but how you get there absolutely matters."

No one knows how long this will take to resolve, but the Top Producer team will continue to follow the story and provide updates at www.TopProducer-Online.com/Stamp.

Timeline of Stamp Farm's fall

Nov. 30: Stamp Farms, Stamp Farms Trucking, Stamp Farms Custom Ag and Royal Star Farms—all owned by the Stamp family of Decatur, Mich.—file for Chapter 11 Bankruptcy.

Dec. 7: Temporary restraining order filed with the U.S. District Court for the Western District of Michigan, alleging grain fraud.

Dec. 14: Wells Fargo’s complaint is dismissed. The reasons are not known at this time, but an update will be posted online.

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Anonymous
1/10/2013 12:24 PM
 

  You should desolve 'Top producer'. Who wants to go to a convention were the Top producers nominate themselves. I have been there and it is all about big egos. It promotes big farming and the young bucks want to do it. The problem is that you guys cant pick them!! First Illinois Family Farms and now Stamp. It is promoting a bad style of Farming. Growth at all costs and greed. Breaks down the community, and eliminates multiple farms. Everyone can not get bigger, and the bigger they get, the fewer magazines you will sell. Promote Harmony not greed. Stop the madness, Disolve Top Producer!!!​

 
 
Anonymous
1/10/2013 12:29 PM
 

  I was at the convention when Illinois Family Farm spoke on the stage. He made everyone feel small and it turns out he was a fake! Your self nominating process is weak at best and is promoting bad business managers. But all this 'junk' positive or negative sells magazines! Remember when margins are good in agriculture you will get more poor managers stepping forward.

 
 
Anonymous
1/10/2013 12:29 PM
 

  I was at the convention when Illinois Family Farm spoke on the stage. He made everyone feel small and it turns out he was a fake! Your self nominating process is weak at best and is promoting bad business managers. But all this 'junk' positive or negative sells magazines! Remember when margins are good in agriculture you will get more poor managers stepping forward.

 
 
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