When Farm Debt Goes Bad: Garvick’s Farms, Inc v. Agricultural Commodities, Inc

Updated: Jul 2, 2020

Silos (Photo by Edwin Remsberg).
Silos (Photo by Edwin Remsberg).

This post should not be considered legal advice.

Happy New Year, everyone! Hope you had a restful and happy holiday season.

I want to start off 2016 looking at an issue that is not always an easy topic to discuss: farm debt. USDA projected that farm debt would grow by 6.3 percent in 2015. In periods of declining prices, producers often borrow against equity to cover input costs. But borrowing capital can come with consequences. And what happens if you become unable to pay off the debt? The Court of Special Appeals of Maryland recently dealt with this issue in Garvick’s Farms v. Agricultural Commodities, Inc.

In Garvick’s Farms, the farm purchased inputs from Agricultural Commodities, Inc. (AgCom), and had been a good customer from the late ‘70s or early ‘80s to 2000. In 2001, the farm and AgCom entered into a promissory note, loan agreement, guaranty signed by the farmer, and a deed of trust. This security package was to mature in 2002 (that is, this is the date the debt was to be repaid by). The loan was not paid back in 2002, and AgCom continued to extend credit to the farm. Farm had trouble paying back the loaned funds until 2012.

At trial, the circuit court found that the parties knowingly extended the maturity date (the 2002 date) and the farmer still owed money. The circuit court also concluded the claim was not barred by the four-year statute of limitations. The farmer appealed.


On appeal, the Court of Special Appeals had to consider two issues:

Man operating a tractor (Photo by Edwin Remsberg).