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Full-Circle Fiasco, Stamp Farms Update

January 9, 2013
By: Ben Potter, AgWeb.com Social Media and Innovation Editor google + 
Mike Stamp
Mike Stamp and Stamp family entities prepare to liquidate.  
 
 

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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FEATURED IN: Top Producer - January 2013

 
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COMMENTS (24 Comments)

GEORGE - DOWLING, MI
Big Mike D. Stamp (BK auction) to be held Thur. 3-28 at 10am near Decatur, MI. Only includes rolling stock, including 2 snowmobiles (must have been needed to "run the water lines" in Winter months here in MI. Auctioneers ph 1-800-527-8243 and comment is "Please arrive on Time!, will be done in approx. 1 hour". The rolling stock power units and pu's even have Stamp Farms signs on doors so you can (drive with pride). Bid high, bid often and own a piece of Mike's history.
4:13 PM Mar 19th
 
Clarence - Armstrong, IA
The bigger they are the harder they fall. This may be a good lesson for some folks at Wells Fargo! It obviously was not well underwritten, do your due diligence! (No more country club for you for a while buddy.)
8:05 AM Mar 14th
 
splined
Reasonable limits on fci subsidies and fci investment/profit guarantees would go a long ways in reducing the crony capitalistic aspects of fci. Also bankers would not be so busy driving smaller producers out of business when pursuing wild goose chases such as Grabanski, Rosentreter, and Stamp. As most of us who are farming know just about every community has a few individuals very similar to these people pursing every dollar that they can find from bankers over eager to grow loan volume based on the open ended nature of federal crop insurance.
7:04 PM Mar 12th
 
splined
Insane government spending on larger farmers has a profound psychological effect on larger farmer's spending. Small town USA main street has been melting down for decades due to the exodus of small farmers from rural America caused by discriminatory government farm programs. For decades Congress has spent billions insuring and guaranteeing the financial durability of a specific group of farmers which has the utmost probability of greatest profitability, the largest farmers. This immoral spending has come at the expense of smaller farmers who are adversely harmed economically by the increased costs of production caused by this outrageous spending larded on the most profitable group of farmers. The multimillion dollar investment/profit guarantees targeted at those with the largest profits is capitalized into substantially higher land and other farm input costs. Congress is providing billions in help for those who need the help the least. At the same time they are financially kneecapping smaller farmers who are the least financially viable! These operators watch as their financial health is afflicted with overwhelming and suffocating expenses caused by the discriminatory targeting of perpetual and overwhelming prosperity to the most prosperous. The money larded on the wealthiest has quickly flowed back to reelection campaigns. Congressmen are not ignorant â?“ money targeted poor individuals, of course does not flow back in great quantities.
7:02 PM Mar 12th
 
KENNETH - WORTHINGTON, MN
swmnag,
I thought it sounded like crying but pissing and moaning (your words)are perhaps more accurate.Read my comments again,you are taking it out of context and putting words in that are not there.I don't like the way farming is going but we have to adapt or get out.Keep up the good work with the letters,my point with the 80s comment was 30 yrs. later and its business as usual with the lenders.You can't fix Stupid!Yes you can help the blind,with a tax deductible contribution.Don't forget the Golden Rule and God Bless America--Please!!!!
1:13 PM Feb 21st
 
swmnag - Marshall, MN
Kenneth, I am not whining about large ag, nor did I say that we should have 3 farms per quarter. If you look at what I suggested per the math, it was 1000 to 2000 acre farms. However,what I am saying is that large ag operators are not beneficial to rural America in the long run. I am sorry you can't see that, I can't help the blind. You are also willing to rent your land to whoever you please, I didn't say you can't. You don't have to support anyone if you don't choose to. However, I have every right to piss and moan as a American tax payer that subsidized Stamp farms through all his corporate shells to maximize his government subsidy and his crop insurance premium subsidy, and ran the rents up for everyone around him and then he goes broke. As for the 80's, just because it was done that way, doesn't make it right.
8:52 AM Feb 21st
 
swmnag - Marshall, MN
Kenneth, I am not whining about large ag, nor did I say that we should have 3 farms per quarter. If you look at what I suggested per the math, it was 1000 to 2000 acre farms. However,what I am saying is that large ag operators are not beneficial to rural America in the long run. I am sorry you can't see that, I can't help the blind. You are also willing to rent your land to whoever you please, I didn't say you can't. You don't have to support anyone if you don't choose to. However, I have every right to piss and moan as a American tax payer that subsidized Stamp farms through all his corporate shells to maximize his government subsidy and his crop insurance premium subsidy, and ran the rents up for everyone around him and then he goes broke. As for the 80's, just because it was done that way, doesn't make it right.
8:52 AM Feb 21st
 
KENNETH - WORTHINGTON, MN
Stop the crying SWMnag and others,this isAmerica,ya all are free to pursue your dreams,livestock has went the same way-BIG-yes wouldn't it be great to have 2-3 familys on a sec. of land like when I grew up,milked a few cows,farrow to finish some hogs ,a few chickens,no malls open Sun.,no electronic devices and the list goes on and on,facts are we have to expand to survive,if ya all want to worry,worry about Obama's plans for this Country,the H.S.O.A.and McDonald's efforts to control how you raise livestock,the E.P.A. /green energy on and on.Even the Amish have had to change their way of thinking,yes ,they rent to big farmers and only farm enough the old way to feed their livestock.How is Stamp Farms any diff. than farmers in the 80s,I saw over leveraged farmers get up to $400-600,000 write offs,then went out and bid up cash rent,the little guy got sold out,why?? Because it was best for the lenders.Wells Fargo will just recover their loss from current and future clients.
I rent to a large farmer as I can't play Santa Clause to a beginning farmer,my land taxes have sky rocketed since Dayton eliminated our homestead clause along with the crazy land prices,but because I still have some freedom to do as I want,I can sell if I don't like it!! We all live by the Golden Rule--those with the Gold rule!!
2:52 PM Feb 20th
 
swmnag - Marshall, MN
Bingo Rustyplanter. You hit the nail on the head. I have fired off letters to the head of RMA, my Senators, and Representatives. I have only heard back from one of them with a phone call. I will keep trying. Best that the rest of you do the same. Stamp Farms could have easily been 27 to 43 productive farms instead of 1 failure (depending on how many acres he actually farmed).
8:25 AM Feb 13th
 
swmnag - Marshall, MN
Bingo Rustyplanter. You hit the nail on the head. I have fired off letters to the head of RMA, my Senators, and Representatives. I have only heard back from one of them with a phone call. I will keep trying. Best that the rest of you do the same. Stamp Farms could have easily been 27 to 43 productive farms instead of 1 failure (depending on how many acres he actually farmed).
8:25 AM Feb 13th
 



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