Contracts provide protection

Days of handshake deals are over, experts say

By CAROL RYAN DUMAS
Capital Press

BURLEY, Idaho -- Hay growers were advised to make deals with signed contracts and upfront payments -- not handshakes -- at the Idaho Hay and Forage Association conference Feb. 16 in Burley.

"The fundamental question is what do you know about the broker or buyer," said Dawn Justice, president and CEO of the Idaho Bankers Association. She said a hay producer needs to make sure they aren't risking their own business by making a deal.

Growers and other members of the panel all urged producers to resist the traditional handshake agreement and have an ironclad, signed contract.

"We keep hearing these horror stories, and I can't believe in this day and age we still continue to do this," said Mike Larson, of Buhl. "A hay contract puts you in first position."

Wilson Grey, University of Idaho extension livestock economist, said extension educators have always advocated having a written agreement.

"Good intentions are not going to pay the bills, so protect yourself," Grey said.

Jim Blanksma of Mountain Home said growers who have dealt with buyers for years might feel bad about asking for a contract, but there are ways to do it.

"Bankers are willing to be a higher authority," he said. "They can't tell you what to do, but you can say 'the banker thinks this is a good idea.'"

"You can say 'my lawyer insists.' If for some reason they won't do it, you have to question the deal," said Jay Kiiha, an attorney with Boise-based Capitol Law Group.

Larson told growers to get paid up front and spell out in the agreement a specific date for pickup or delivery and when the remainder of the sale will be paid.

"Are you getting 85 percent up front? If not, you're in trouble," Larson said. "There is no reason you should not be getting paid in advance before a truck ever leaves your farm.

"And when is the other 15 percent due? Dairies are dragging it out. When will hay be removed from your farm? If the buyer leaves it sitting, it's costing you money," he said.

"The important watch word in this climate is to act like a businessman first and a farmer second," Kiiha said.

Justice said growers need to understand the seriousness of extending credit.

"You're taking the role the bank takes," she said. If the deal goes bad the grower's credit can be damaged.

Glenn Meyer of Filer said he thinks banks, and not dairymen, will be calling the shots on how much they'll pay for hay soon.

Online help

For a copy of a standard hay contract, go to Idaho Hay and Forage Association: www.idahohay.com and click "forms."