Farmageddon: A Farmer's Story of Collapse in Year One

Phase 1: Fall 2024 - The Loans and the Living Expenses

A new farmer named John buys a 300-acre farm in Van Wert, Ohio. To do this, he takes out a complex set of loans designed for a farm's unique financial cycle.

• The Long-Term Debt:

• A 30-year, $3,000,000 mortgage for the land.

• A 7-year, $300,000 equipment loan for a tractor and combine.

• These require fixed monthly payments totaling $14,660, starting immediately.

• The Annual Operating Loan (The Key to Survival):

• John gets pre-approved for a $200,000 operating loan for the 2025 season. This is the cash he will use to run his farm and his household for the entire year.

• How the money is budgeted: The loan is designed to cover two things:

1. Farm Expenses: All the costs for seed, fertilizer, fuel, and labor.

2. Family Living Expenses: This portion of the loan is specifically budgeted to cover the family's groceries, utilities, and, most importantly, the $14,660 monthly mortgage and equipment payments.

• In short, John will be using borrowed money to pay the bank its monthly loan payments, with the plan to pay everything back after his first harvest.

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Phase 2: Winter 2024-2025 - The Storm Gathers

In January, the new administration's policies create a perfect storm of financial problems that attack John's budget from all sides.

• Policy #1: Tariffs & Trade War (The Price Problem): A trade war causes the export market for John's future crop to vanish. This creates a massive supply glut, causing the projected price of his harvest to collapse from a profitable $14/bushel to a disastrous $9/bushel.

• Policy #2: Immigration & Border Shutdown (The Cost Problem): A border shutdown creates a severe labor shortage. His projected labor costs double from $15/hour to $30/hour.

• Other Factors: The trade friction also raises the price of fertilizer, and a predicted perfect growing season threatens to make the supply glut even worse, pushing prices down even further.

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Phase 3: Spring & Summer 2025 - The Squeeze and Default

The crisis hits when John's expenses are at their highest. He takes out the $200,000 operating loan to pay for the massive upfront costs of planting.

• The Bank's Response Begins:

• March: With his cash from the operating loan already spent on planting, John misses his first $14,660 payment. The bank sends an automated notice.

• April: He misses the second payment. A loan officer calls personally, and his credit score is damaged.

• June (90 Days Delinquent): The bank sends a formal "Notice of Default" by certified mail. This is a legal warning that the foreclosure process is next.

• August (120+ Days Delinquent): The file is handed over to the bank's attorneys, who are now legally cleared to sue John.

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Phase 4: October 2025 - The Collapse

John completes his harvest, but the income is a disaster. It's not even enough to pay back the $200,000 operating loan.

• Total Default: He is now in default on all his loans.

• The Bank's Final Move: The bank's lawyers file a foreclosure lawsuit to take possession of the farm.

• The Government's "Solution": In early October, with John and thousands of other farmers facing ruin, the Trump administration proposes a new, multi-billion dollar taxpayer-funded bailout to address the very crisis its policies created. John's only hope to save his farm is now a government check.

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The Two Endings: A Difficult Choice

Scenario 1: The Bailout Happens

The government passes the multi-billion dollar aid package. Farmers like John receive direct payments.

• For the Farmer (John): John gets a government check, stops the foreclosure, and keeps his farm. However, his massive debt remains, and he has now learned to expect government help, potentially creating a cycle of dependency.

• For the Bank: The bank gets paid and avoids a major financial loss. This may encourage them to approve risky loans in the future, assuming the government will rescue them again.

• For the Economy: The immediate farm crisis is stopped. However, the national debt increases, and the American taxpayer foots the bill to fix a crisis caused by a specific government policy.

Scenario 2: No Bailout Happens

The government does not pass an aid package, leaving the market to work on its own.

• For the Farmer (John): The foreclosure proceeds. The bank takes the farm and all the equipment. John and his family lose their home, their business, and their life savings, and he is left bankrupt.

• For the Bank: The bank is forced to sell the farm at a loss. If this happens with many farmers, the local bank could become financially unstable and stop lending to the community.

• For the Economy: A wave of farm foreclosures could trigger a rural recession. Property values could crash. The market would eventually correct itself, but only after thousands of families are financially ruined and many rural communities are devastated.

COMPREHENSION ASSESSMENT - Farmageddon: A Farmer's Story of Collapse in Year One (reading)

TEXT - Farmageddon: A Farmer's Story of Collapse in Year One

Farmageddon: A Farmer's Story Comprehension Assessment

The Farmer's Story: A Comprehension Quiz

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1. In Phase 1, the timeline states that John's monthly mortgage and equipment payment was $14,660. How was he expected to make this payment before his first harvest?

A) He was given a six-month grace period by the bank.

B) He had to get a separate part-time job to make the payments.

C) The money was budgeted as part of his annual operating loan from the bank.

D) He was not required to make payments until after the harvest.

2. In Phase 2, two government policies created a "perfect storm." What were the immediate impacts of these two policies?

A) Higher crop prices and lower labor costs.

B) Lower crop prices and lower labor costs.

C) Higher crop prices and higher labor costs.

D) Lower crop prices and higher labor costs.

3. What was the primary purpose of the $200,000 annual operating loan?

A) To act as a down payment for the farm's mortgage.

B) To cover the costs of seed and fertilizer only.

C) To pay for all farm expenses AND the family's living expenses for the year.

D) To be put into a savings account as an emergency fund.

4. Which of the farmer's loans was structured to be paid back in a single lump sum after the harvest?

A) The 30-year mortgage on the land.

B) The 7-year equipment loan.

C) The annual operating loan for seed and fertilizer.

D) All of the loans were due after the harvest.

5. In Phase 2, how did the new tariff policy directly impact the farmer's potential income?

A) It increased the price of his crops by making them more valuable.

B) It caused a trade war, which erased his export market and led to a price collapse.

C) It had no effect on crop prices, only on imported goods.

D) It provided a government subsidy that guaranteed him a high price.

6. How did the new immigration policy directly impact the farmer's costs?

A) It created a labor surplus, which made it cheaper to hire workers.

B) It provided government-paid workers for the farm.

C) It created a severe labor shortage, which caused the cost of labor to double.

D) It did not affect his labor costs.

7. The "Weather Paradox" in the timeline describes a situation where a perfect growing season was a curse. Why?

A) The good weather made the fertilizer less effective.

B) It increased the farm's property taxes.

C) It increased the crop yield, adding to the domestic supply glut and pushing prices even lower.

D) It attracted pests that destroyed the crops.

8. Which of the following best summarizes the "perfect storm" that hit the farmer in the winter of 2025?

A) His income went up, but his costs went up even more.

B) His costs went down, but his income went down even more.

C) His potential income went down while his projected costs went up.

D) His income and his costs both stayed the same.

9. In Phase 3, what was the very first sign that the farmer was in financial trouble with the bank?

A) He received a "Notice of Default."

B) He missed his first monthly payment in March.

C) The bank's lawyers called him.

D) He sold his harvest at a loss.

10. What did the bank's "Notice of Default" signify?

A) It was an offer to lower his monthly payments.

B) It was a simple reminder that a payment was late.

C) It was a formal legal warning that the foreclosure process was about to begin.

D) It was a notice that his interest rate was going up.

11. When did the bank's lawyers get involved in the process?

A) The day the farmer signed for the loans.

B) After the first missed payment.

C) After the farmer was more than 120 days delinquent.

D) After the government proposed the bailout.

12. The bank's final move to file a foreclosure lawsuit means it is legally trying to do what?

A) Send the farmer to jail for not paying his debts.

B) Take legal ownership of the farm and equipment to sell them.

C) Ask the government to pay for the farmer's loans.

D) Forgive the farmer's debt.

13. In the "Bailout Happens" scenario, what is the most likely consequence for the U.S. economy?

A) The national debt decreases.

B) The farm crisis is stopped, but the national debt increases as taxpayers fund the solution.

C) The banks all fail.

D) Food becomes much cheaper for consumers.

14. In the "No Bailout" scenario, what is the most likely consequence for the local bank?

A) The bank makes a large profit from selling the farm.

B) The bank could become financially unstable if it has to sell many farms at a loss.

C) The government would shut the bank down.

D) The bank would forgive all the farmer's debts.

15. The "Bailout Happens" scenario describes a potential "cycle of dependency." What does this mean for the farmer?

A) He becomes dependent on good weather to have a successful harvest.

B) He learns to expect government help instead of changing his business to deal with new problems.

C) He becomes dependent on one specific crop and cannot diversify.

D) He becomes dependent on the bank for all of his financial advice.

Comprehension Assessment - 41-90 Second Pizza - Loan Officer Role Play

Loan Officer's Analysis Quiz

First, enter your information. Then, complete the analysis quiz.

Student Information

First Name

Last Name

Period

Analysis Questions

1. According to the business proposal, what is the primary operational model of the business?

A full-service, dine-in restaurant with a large menu.A take-and-bake pizzeria with a streamlined menu, open only on weeknights.A delivery-focused ghost kitchen operating 7 days a week.A food truck that moves to different locations in Van Wert.

The plan is built on the efficiency of a take-and-bake model, a small menu, and a Monday-Friday schedule to keep costs low.

2. What is the projected Net Operating Profit per month during the first year of operation?

$9,325$1,000$2,860$6,465

This is the calculated profit after subtracting the Cost of Goods Sold and all monthly Overhead from the Total Sales.

3. Based on the Year 1 projections, does the business's monthly profit of $2,860 cover the bank's monthly loan payment of ~$1,000?

Yes, the profit comfortably covers the loan payment.No, the business is projected to lose money.No, the profit is less than the loan payment.Yes, but only because of the owner's capital injection.

A profit of $2,860 is more than double the required loan payment of ~$1,000, leaving a surplus.

4. What is the single biggest financial advantage of the business model as proposed for Year 1?

The business will have very high daily sales.The business has no labor costs because it is a solo operation.The business gets its ingredients for free.The business does not have to pay rent.

By eliminating employee wages, the business removes what is typically the largest single operating expense for a food establishment.

5. What is the primary problem this business claims to solve for its customers?

The high cost of restaurant food.The lack of healthy food options in Van Wert.The scheduling difficulty of having a hot meal when a family's schedule is chaotic.The long wait times for pizza delivery.

The entire concept is built around solving the '5 PM Chaos' by allowing customers to bake the pizza on their own schedule.

6. What is the strategic reason given for being closed on weekends?

To save money on electricity and other utilities.Because the owner wants to have weekends off.To specialize in the 'weeknight rush' and create scarcity, similar to the 'Chick-fil-A' model.Because it is illegal for take-and-bake businesses to operate on weekends.

The proposal explicitly states it's a specialist in weeknight meals and that being closed on weekends creates urgency for customers.

7. From a banker's perspective, what is the most significant risk associated with the applicant, John Robertson?

He is asking for too much money.His marketing plan is too aggressive.He has a background in construction, not business management.He does not have any of his own money invested.

A banker would see a lack of direct experience in finance, marketing, and management as a significant risk, despite the applicant's work ethic.

8. How does the business plan to connect with the local Van Wert community?

By offering the lowest prices in town.By using a generic, national brand name.By naming its signature pizzas after local landmarks like the Lincoln Highway and The Quarry.By being open 24 hours a day.

This strategy of 'hyper-local branding' is designed to create an authentic connection with the community's identity and history.

9. According to the proposal's long-term outlook, what is the applicant's stated goal for the business in Year 10?

To sell the business and retire.To franchise the business across Ohio.To keep it as a small, one-person operation.To use the profits to open a second location in a nearby town.

The 10-Year Outlook explicitly states a vision to replicate the successful model in a town like Delphos.

10. Which statement best describes the primary trade-off the bank must consider when evaluating this loan?

The applicant's high-risk, high-profit model vs. a safer, low-profit model.The immediate risk of a new, solo venture vs. the potential of a profitable, multi-location business in the future.The high cost of premium ingredients vs. the lower quality of standard ingredients.The ethics of lending to a business that will compete with other local restaurants.

This captures the core dilemma: Should the bank bet on the promising 10-year vision despite the significant risks of the one-person operation in Year 1?

11. What specific strategy does the applicant use to increase the average sale per customer?

Offering a 'buy one, get one free' deal every day.Placing a curated cooler of high-demand drinks and snacks near the checkout.Requiring a two-pizza minimum for all orders.Selling merchandise like t-shirts and hats.

The 'Van Wert Fuel' Cooler is explicitly designed to be a key profit center by encouraging impulse buys of high-margin items.

12. If a banker's primary goal is to minimize risk, which of the applicant's weaknesses would be the most compelling reason to DENY the loan?

The business name is not creative enough.The sales projections might be slightly too optimistic.The business model relies entirely on one person with no backup.The long-term expansion plan is too ambitious.

This represents a 'single point of failure.' An illness or injury to the owner would immediately halt all business operations and revenue, making it impossible to repay the loan. This is a massive risk.

Final Step: Record Your Decision

Your quiz score has been submitted to the spreadsheet. Now, proceed to the official loan committee form to record your final decision ("APPROVED" or "DENIED") and provide your justification.

Go to Final Decision Form

41-90 Second Pizza - Loan Officer Role Play

Loan Proposal

The 419 Slice Co.

Primary Source Document

Applicant: John Robertson, Sole Proprietor

Business Name: The 419 Slice Co. (Take-and-Bake)

Location: Van Wert, OH

Loan Amount Requested: $60,000

Owner's Capital Injection: $15,000

Business Concept & Personal Statement:

My name is John Robertson. For the last ten years, I've worked as a construction worker here in Van Wert. I know what a long, hard day feels like, and the last thing I want to do when I get home is figure out a complicated dinner. I see my friends and coworkers struggling with the same "5 PM Chaos" every single day.

My business, "The 419 Slice Co.," is my practical solution to that problem. It's a take-and-bake pizzeria with a simple, efficient model. A parent can stop in, be in and out in under 90 seconds, and have a fresh, high-quality pizza to bake at home when their family is finally ready to eat. I plan to be the sole employee to start, handling all the work myself to keep costs down and ensure quality. I know how to work hard, and I’m ready to build this business from the ground up.

We will only be open Monday through Friday. This is a strategic decision for two reasons. First, on weekends, families are more likely to go out for a sit-down meal or have time to cook themselves. We are specialists in the weeknight rush. Second, being closed on weekends creates scarcity and urgency—a "Chick-fil-A" model. If people want our convenient, high-quality pizza, they know they need to get it during the work week.

Our Signature Products:

• The Lincoln Highway All-Meat: A nod to the famous road that runs through our town.
• The Quarry Classic: A deluxe pizza named after the local landmark.
• The "Van Wert Fuel" Cooler: A curated cooler with high-demand energy drinks (Celsius®, Monster®), sodas, and snacks (Takis®, Doritos®).

Projected Financials - Year 1 (The Startup Phase)

• Projected Sales: A conservative target of 25 pizzas per day.
• Total Monthly Sales: $9,325
• Total Monthly Costs (COGS + Overhead): $6,465
• Net Operating Profit: $2,860 per month.
• Loan Repayment Plan: The requested loan will have a payment of approximately $1,000 per month. The business's projected profit comfortably covers this payment and provides a livable salary for me as the owner. My $15,000 in personal capital will serve as a robust safety net.

5-Year Outlook (The Growth Phase)

By Year 5, The 419 Slice Co. will be an established and popular local brand. The goal is to transition from an owner-operator to a business manager.

• Projected Growth: The daily sales target will grow to an average of 45 pizzas per day.
• Hiring: I will hire two trusted part-time employees to handle daily operations.
• Projected Net Profit: ~$5,300 per month.
• Impact: The business is now a reliable local employer and a highly profitable enterprise. The original $60,000 loan will be nearly paid off.

10-Year Outlook (The Expansion Phase)

By Year 10, the business will be a cornerstone of the local food scene, ready for expansion.

• Vision: The operational model in Van Wert will be perfected and highly efficient.
• Expansion Plan: I will use the accumulated profits from the Van Wert location to fund the opening of a second "419 Slice Co." in a nearby town, such as Delphos.
• Long-Term Impact: The business will have created a proven, profitable, and repeatable model, employing 4-5 people across two locations.

Key Strengths:

• Exceptional Profit Potential: The initial owner-operator model is highly profitable, creating a strong foundation for future growth.
• Clear Long-Term Vision: The applicant has a realistic and compelling plan for growth.
• Hyper-Local Brand: The business is authentically designed for the Van Wert community.

Key Weaknesses / Risks:

• Extreme Owner Dependency (Single Point of Failure): If I get sick or injured, the business closes.
• Lack of Formal Business Experience: My background is in construction, not management or finance.
• Unproven Projections: The sales targets are educated guesses and are not guaranteed.

Pizza Business #2 (beta)

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Classwork #9 - 10.20.2025

Read Study Guide

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