Investor's $250,000 Raises Hopes for Troubled Dairy Farm

Kansas dairy producer strives to bring his farm out of bankruptcy by finding additional funding streams.

PHIL ANDERSON, The Topeka Capital-Journal

TECUMSEH, Kan.— As he led a tour at his 106-acre family dairy farm during a fall festival Saturday morning, Tim Iwig was cautiously optimistic about the future of his business just east of Topeka.

Iwig, who is striving to bring his farm out of bankruptcy by finding additional funding streams, said an investor — a woman from the Topeka area — recently came forward with $250,000.

That financial commitment is helping Iwig breathe a little easier.

But monetary challenges remain, and Iwig said he needs another individual or "a group of investors" to step forward with an additional quarter-million dollars to get the business in position to branch out with additional retail outlets, which he said is the key to the farm's long-term viability.

"We plan to open three more stores," Iwig said. "We're looking at west Topeka, west Lawrence, Overland Park and Manhattan."

Some of the new dairy stores could incorporate such features as locally grown produce and meat, as well as drive-through lanes for customer convenience.

The multigeneration Iwig family farm has been raising cows since 1910. In 2005, it branched out into processing and bottling milk and selling it at local retail stores.

Iwig said his farm's milk products are worth the extra costs, as they are produced in small batches with a low-heat pasteurization process. The result, he said, is tastier milk products. Iwig's dairy sells the milk in reusable milk bottles, which also contribute to the taste.

For several years, Iwig's milk products were offered at larger grocery stores, such as Dillons. However, Iwig's products now are sold exclusively at three small outlets run by the business.

A store in Lawrence was closed after customers complained it was out of the way and had poor parking access.

In 2010, the dairy, which has about 65 milk cows at present, sold more than $200,000 worth of shares to help repay past debt. The cash infusion helped alleviate financial woes.

Then came the drought of 2011 and 2012, which doubled and tripled the cost of cattle feed as corn and hay prices went through the roof.

The added feed costs were a dagger to Iwig's farm at a time when it least could afford it. Iwig on Saturday lamented that grain farmers were eligible for federal crop assistance related to the past two years of drought, yet dairy farmers like himself weren't eligible for the funding.

In November 2012, the farm filed for Chapter 12 bankruptcy reorganization in an effort to avoid liquidation.

The dairy listed $696,053 in assets and $1,177,573 in liabilities at the time of the filing, with $677,222 of the liabilities going to Kaw Valley Bank for a loan that purchased equipment and 120 cows of various types.

Thanks to near-normal precipitation in 2013, corn and hay prices have gone back down, easing for the moment Iwig's concerns over high grain prices.

But the need for financial help continues. In September, the dairy announced plans to raise $650,000 in 45 days through online donations to pay off debt as the business worked to exit bankruptcy.

Donation options ranging from $5 to $10,000 at Indiegogo.com are marked to save increments of square feet on the 108-acre farm. Donors also can get naming rights to new calves.

As of Saturday, $5,850 had been donated through the Indiegogo.com website.

Pledges were to be used to pay creditors and proceed with the planned expansion of new stores.

Paul and Annie Stevens, of Lawrence, were among visitors at Saturday's fall festival. The couple frequently purchases milk at the Iwig store in North Lawrence.

Annie Stevens told Iwig that she wanted to help "spread the word" about the dairy and encourage others to purchase products from Iwig.

"It's the heart and soul of what the Midwest is all about," she said. "Small family farms that produce milk that doesn't have to travel across state lines."

She said there is a noticeable difference in the way Iwig milk tastes.

"I'd much rather have this milk," she said. "It tastes so much better."

Besides a tour of the bottling plant, the free fall festival included a bonfire, horse-drawn wagons rides, a chain saw wood carver, pony rides, milking demonstrations, bluegrass music and food items made fresh on a grill.