Curtis A. Raasch has walked through the fire and come out the other side. At least he's pretty sure he's coming out the other side. Well, more than 50 percent sure.
Early this year, Raasch, who farms more than 700 acres about six miles northeast of here, was preparing his income tax returns. The numbers added up to potential disaster and, unless he made major changes, the possible end to 15 years of success as a corn, soybean, cattle and hog raiser.
Raasch, 42, is an ebullient and articulate man whose account of his experience sometimes makes it sound like an educational process, but there are times when his tone and intensity reveal how profoundly shaken he was.
"I would have had big personal problems in the spring, but I had to be on the tractor putting in the crops," he said. "But while I was doing it, I was thinking that it could be my last time putting seed in the ground. We have experienced a high degree of success in the past and always knew where we were going. The warning clouds were there, but we had optimism and hope for returning profitability in agriculture and had not made any major changes. . . . "
The personal problems came to a head in July.
"I was under terrific emotional strain, I was losing weight and I couldn't sleep," he recalls. "My boys could tell that something was wrong. I wasn't eating my meals, and we talked about the possibility of the boys not going out for athletics this year so they could ride the school bus. [The oldest of four is a high school senior on the basketball and wrestling teams; another is a sophomore.] That way they wouldn't need to drive home after practice, so that would save the cost of gasoline.
"We lost $8,000 feeding cattle this summer, and one evening in July the oldest boy excused himself from the supper table and said he had something to do in his room. Well, I knew better and I let a little time go by. When I went up to see him, he was in tears and said, 'It's not right, Dad! It's just not right!'
"That reminded me of what an image I am to my family and that I had better take action. It was time to turn this problem into a challenge."
The first thing that he and his wife, Carol, did was to heed advice to farmers, many of whom are undergoing their worst times since the Great Depression, to seek help and not try to go it alone out of a sense of pride.
"Like everyone else, pride was a problem for us," he says. "Like everyone else, we thought we were the only ones who had the problem. We began to work at shedding negative attitudes and pessimism and turned to friends and associates with positive mental attitudes. We had to get rid of the mental set that everything was going to hell in a hand-basket."
In August, Raasch put his operation through a Farm Aid computer study, a program of the Iowa Cooperative Extension Service. This study worked out a five-year cash-flow analysis, figured his net worth, broke his operation into its separate parts -- corn, cattle, hogs, soybeans -- and told him what should be strengthened, what had been neglected and what should be eliminated.
He turned to friends and a discussion group of other young couples in the Presbyterian Church. He also formed a professional support group consisting of his banker, veterinarian, a farm records manager from the Iowa Farm Bureau and a retired agricultural marketing expert from Iowa State University.
He also began a marketing plan based on an intense study of the commodity markets, enabling him to make more intelligent decisions to help make maximum long-term profit rather than betting hopefully -- and often futilely -- that the markets will keep going up.
He negotiated lower interest rates on some of his loans. His wife went back to work as a part-time Spanish teacher at the high school, and his sons worked out a way to earn extra money for gasoline so they could drive the old family pickup to school.
Raasch's problems are drearily familiar here in Sac County and throughout the rest of the Farm Belt. What is different to many is his hope for a happy ending.
About 40 farmers have been forced off their land in the county this year, two in Odebolt's township. Floyd Schnirring, the county extension agent, figures that another 120 are in serious trouble.
Together, they account for 15 percent to 18 percent of the nearly 1,000 farmers in the county. Three banks in Sac County -- one here in Odebolt -- have failed this year, primarily because of bad loans to farmers. Eleven have failed statewide so far in 1985.
This area is particularly vulnerable to farm economy woes because there are relatively fewer large towns and there is less economic diversity than in the eastern half of the state. It is also a big cattle and hog feeding area and the meat industry has been hard-hit in recent years.
There is little prospect that the economic picture will improve in the next few years.
Land is a glut on the market, which means it will continue to drop in value, and the country is wallowing in farm surpluses.
In addition, the banks, which in the words of Iowa State University Professor Neil E. Harl have been "more forebearing than foreclosing," are under increasing pressure as more farm loan portfolios turn bad.
According to Schnirring, many failures have been of "the smartest, most progressive and aggressive young farmers," many of whom got financially overextended by modernizing their operations.
"I sure hated to lose him," Schnirring says repeatedly as he goes through his files. "Here's the best dairy farmer in the county, but the burden of his interest payments forced him out."
Schnirring, a farmer himself, was recently hospitalized for stress because of his concern over fellow farmers.
"Being an extension agent isn't any fun anymore," he says.
If economists and sociologists were to draw a composite of the Iowa farmer who inadvertently got overextended and was facing a change of course or eventual bankruptcy and foreclosure, they'd come up with Curt Raasch.
He is a native of Odebolt who, in addition to working his 700 acres, shares labor and equipment with his brother for planting and harvesting on a similar-sized operation. He graduated from Iowa State (as did his wife) in 1966 and taught high school agriculture in Boone for five years before renting 160 acres near here to start farming.
He steadily expanded, renting a piece of ground here, buying one there. In 1981 he made the move that almost took him under.
He already had bought 23 acres of a 147-acre spread owned by an old family friend who died that year. He bought the other 124 acres at $3,000 an acre, the peak price for farm land in this area.
"I was 37, and it was time for me to buy land. I conferred with my parents, my banker and officials of the Land Bank," he recalls. "We knew there was a risk but that I should be able to work through it. What sticks in my mind was how far off on the projections we were. The rules of the game got changed on us."
This was because of the unanticipated explosion of interest rates, the Reagan administration's success in driving down inflation -- which in turn has driven down land prices -- and the collapse of the booming export market of the late 1970s. Interest rates went up three points just as Raasch was closing the deal. Instead of paying 8.75 percent as he originally expected, he is paying 13.5 percent on land.
The higher-than-expected interest on land and operating capital, combined with declining profitability, finally engulfed him.
"You just can't work hard enough to pay that high interest over a long period of time," Raasch says.
So he went looking for help.
He didn't have to look further than to his friend and neighbor a mile to the north, Jim Meyer, who farms more than 800 acres and has run the local Farm Aid program on the side for the last year. During the year Meyer has advised about 80 farm families. "I emphasize families," he says. "I'm really disappointed if the wife doesn't show up, because I think they should work in partnership." Meyer's wife, Madeline, handles many of the business and record-keeping functions of their operation.
The Farm Aid analysis has a dual purpose -- to make the operation more efficient and to rebuild the morale of the farm family.
"These families have been bombarded by so many negatives that they've lost confidence in themselves and in farming as an occupation," Meyer said. "Our purpose is to show most of them that if they do what they say they can do, they'll be all right. We want to settle them down, tell them to keep their dobber up and build their morale and confidence. Then they can go in and do the necessary sales job on the banker on the program for them that we work out."
Because banks now are basing credit on cash flow rather than land value -- where inflation caused so much trouble -- Meyer's first step is to determine if the operation has a positive cash flow, which is money remaining after living expenses and payment of long-term interest. Most do, so they have something to work with. Meyer then analyzes each facet of the operation and has the farmer keep separate records for each.
On Meyer's farm, this resulted in his getting out of the cattle-calf feeding business and his rotating corn and soybeans, which has a beneficial effect on the soil. He also cut his fertilizing costs by $20 an acre by making more intensive soil tests, which results in his fertilizing only the areas that need it, and using liquid manure from his hog operation.
As a result of Meyer's analysis, Raasch also hired a soil specialist to make his fertilizing more cost-efficient. And Raasch found that the quality of his hog litters could be substantially improved by better sanitation and a medicine that kills internal parasites and lice.
His biggest accomplishment, however, was refinancing a portion of his debt with the Farmers Home Administration at a lower interest rate, which gives him some financial breathing room.
He also pays $40 a month for a comprehensive commodity report from a Chicago Board of Trade broadcast, which he calls up on a computer screen. Advised by his marketing consultants, he is learning to sell portions of his production when prices will allow him a profit, rather than hold on in the hope that they'll rise. Part of this marketing discipline is determining what profit margin is acceptable and taking that profit, instead of holding back and hoping for a "killing."
Knowing the market also gives Raasch the option to buy market "insurance."
For instance, he participates in the government loan program for soybeans, which guarantees him $4.96 a bushel. If, however, enough farmers join the program, which requires that they hold their beans off the market, the price could rise another 50 cents. On the other hand, Raasch fears that the federal government might try to drive the support price down to $4 a bushel to make soybeans competitive in the world market.
For a few cents a bushel, he can in effect buy a "straddle" that would enable him to sell at the higher market price if it goes up or to keep the $4.96 in the event the government tries to drive the price down.
"My first reaction was to find a home run solution that would wipe the problem clean with one swipe," he says. "Now, as I see one little improvement it motivates me to make another."
That's the spirit Jim Meyer and Floyd Schnirring like. "The only way to have farming as a way of life is to become better businessmen," Meyer says. "We need to spend an hour in the office every now and then."