(Credit to Pioneer Press)
Farm of failed dreams
Bankruptcy ends a Hmong-American family's quest for success on a poultry farm in the Ozarks. Other families with the same story have sued, alleging real estate agents and banks misled them.
BY LAURA YUEN
Pioneer Press
Pao Vang, right, waits as his wife Jada Lo Vang reads through the latest bankruptcy papers they received about their farm and eight chicken houses.
BEN GARVIN, Pioneer Press
Pao Vang, right, waits as his wife Jada Lo Vang reads through the latest bankruptcy papers they received about their farm and eight chicken houses.
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* Poultry farmers urged to research first
STILWELL, Okla.
The newspaper ad promised expansive land for chicken farming. After reading it, Pao Vang and Jada Lo Vang of Fridley chased the American Dream all the way to the Ozarks.
Three years after arriving on the eastern edge of Oklahoma, their dreams have been dashed. The bank is foreclosing on their farm, and they are living in a relative's back yard in a tent.
The Vangs say the poultry business has taken everything they have worked for. They and more than a dozen Hmong-Americans, including others from the Twin Cities, have filed for bankruptcy protection.
They are representative of the other Hmong families who have struck out for the Ozarks in the past six years now facing financial collapse. At least six of those farmers have sued, alleging that bankers and appraisers led them into signing questionable real-estate deals.
Many believe they overpaid for their farms and blame appraisers for inflating values by up to 45 percent, their attorneys say. Exaggerated income projections from the banks made it unlikely the farms would generate enough money to pay off the debt, the attorneys add.
The number of disastrous outcomes has compelled farm advocacy groups to caution Hmong-Americans in Minnesota who may be tempted to join the industry after hearing about the farms by word-of-mouth and ads in Hmong publications. Those monitoring the situation estimate about half of the Hmong farmers could be facing difficulties.
"There's a myth out there that poultry farming is success," said Laura Deaton Klauke, who has recently counseled growers in Northwest Arkansas through the Rural Advancement Foundation International-USA. "I've yet to see a poultry millionaire. If anyone tells you it's a big money-maker, they are lying."
LOSSES IN SECOND YEAR
Pao Vang, 39, and his wife Jada Lo Vang hoped the chicken business would rescue them from working overtime in factories and driving school buses in Minnesota. They moved to Oklahoma in the summer of 2003 with their six children, now ages 5 to 18. The couple put down $120,000 from a retirement fund and their life savings for a $680,000 investment: eight chicken houses on 60 acres of wooded land.
They had a few good flocks at first but began losing money in their second year. After falling behind on their mortgage, the couple lost a contract with Tyson Foods to raise its chickens. The family saw the last of their broiler hens leave the farm in March.
The Vangs moved out of their home in early April. "We have no house, no place to live," said Jada Lo Vang, 37.
"I thought we should have never come down here," said the couple's oldest son, Kou Vang.
Tyson officials say contract poultry growers, including many of the new Hmong farmers, are vital to the company. "We want them to succeed," said spokesman Gary Mickelson. "That's why we have a system in place to help. In addition to supplying the chickens and feed, we also provide technical assistance to support their efforts to operate efficiently."
Agricultural groups in the tri-state region of Arkansas, Oklahoma and Missouri estimate 500 Hmong-American families have settled there, with most raising chickens and turkeys.
Their enthusiasm to own land, become self-sufficient and return to their farming roots became obvious to Sean Brister, a Fayetteville, Ark., attorney whose firm represents several Hmong. Some potential buyers were old enough to have tended the fields in the hills of Laos before the Vietnam War. Even after postwar persecution pushed them into refugee camps and, eventually, to states like Minnesota, many Hmong remain tied to agrarian and family ideals.
"They'll do anything it takes to get the farm," Brister said.
That hunger led the buyers to buy farms at inflated prices, he said. Although Brister and his colleagues stopped short of pointing to a conspiracy, they blame players in the real estate business, from appraisers who pumped up property values to banks that inflated cash-flow projections.
North Carolina-based RAFI-USA, along with Minnesota groups like the Farmers' Legal Action Group and the Minnesota Food Association, were alarmed last month when they began to investigate the loan documents signed by a couple of dozen struggling Hmong-American farmers in Arkansas.
"Even if the farmer did a superb job raising chickens and was the best in the country, they were not going to make their mortgage payments," said Klauke, of RAFI-USA.
In some cases, sellers refused to show properties to buyers before closing, Klauke said. Others misrepresented the conditions and ages of chicken houses, which can affect production rates. By the time families filed for bankruptcy, they typically owed the banks $500,000 or more.
The Hmong-Americans' keen interest in poultry farms — while others were fleeing the business — drove up already soaring land values, Brister said. Their desire for land and the crush of mortgage documents that weren't in their native language made them easy targets.
"You don't see a lot of turnover for these poultry farms but for this rush," said Brister's colleague, Mark Henry of the Henry Law Firm in Fayetteville.
PAYING TOO MUCH
Most of the families who have filed for bankruptcy protection financed their purchases through bank loans guaranteed by the federal Farm Service Agency, which generally pays 90 percent of the loss if borrowers default. The arrangement encouraged banks to lend money that they ordinarily wouldn't, Henry said.
Jim Radintz, who heads the loan-making division for the FSA, said his agency would monitor the outcome of the recent allegations. If it turns out that a deal-broker participated in fraud or misrepresentation, he said the agency could deny a portion or all of a claim.
In fiscal year 2005, the FSA guaranteed 188 loans for Asian-American farmers in that tri-state region, worth $72 million. How many of those loans were for Hmong-Americans isn't known.
A host of outside factors — including the rising cost of propane and natural gas — has made it difficult for all farmers, Radintz noted.
However, he has heard from FSA staffers in the Ozarks who suggested that Hmong farmers were paying too much for their farms, but still were determined to purchase the land.
"A lot of these folks may have been unsophisticated in business matters, and they relied on people who were more motivated by profit," he said.
The Hmong now headed for financial ruin generally had built comfortable lives in the United States. Tria Xiong, 38, said he enjoyed decent benefits after working 19 years as a Postal Service clerk in Milwaukee. Enticed by opportunities in the Ozarks, he and a cousin both bought turkey farms.
Tria Xiong and his wife put about $85,000 of their own money in.
"When you talk to the sellers and the bank, they said … every year I will have $42,000 in pocket (after paying off mortgage, utilities and other expenses)," said Tria Xiong of Oark, Ark., who filed for Chapter 12 bankruptcy reorganization. "I say, 'Well, that's good.' Well, you never make anything."
He and his cousin have sued their lenders and appraisers. Tria Xiong said he fears he paid hundreds of thousands of dollars too much for his 78-acre farm, which he bought for $700,000 in 2003.
Defendants in Tria Xiong's case — a Clarksville, Ark., man who appraised Tria Xiong's property and an official with Simmons First Bank in Russellville, Ark. — declined to comment.
As for Tria Xiong, the father of five said if he can't stay on his farm, he will follow other failed farmers to Tulsa, Okla., to work in factories in the same jobs they had hoped to escape.
Laura Yuen can be reached at lyuen@pioneerpress.com or 651-228-5498.