The talk was too common across Minnesota in early March. Farm roofs – for livestock or for machinery storage – collapsed beneath heavy snow loads.
Few things are as devastating as seeing a roof come down on the farm.
Added on to that is many farmers did not have snow collapse insurance coverage on their buildings.
Said one farmer who wanted to stay anonymous, they would have appreciated it if their insurance agent had given them a call to at least offer coverage this year. Instead, many farmers didn’t find out until their roofs had come down that they had inadequate or no insurance to pay for the building as well as what was inside.
Agricultural buildings normally are not required to be built to carry a specified snow load – because the risk of damage or injury from collapse is considered to be lower. The weight of the snow can vary greatly as well – with light fluffy snow weighing about 7 pounds per cubic foot, while compacted snow may weigh 20 pounds or more, according to information from North Dakota State University.
Back on March 1, Ken Hellevang, NDSU Extension ag engineer, recommended that home and ag building owners check their insurance policies, because roof failure due to snow is not covered in all policies.
Unfortunately, many Minnesota buildings came down from the snow. Anecdotal reports suggested more than 100.
“It does sound like there was a lot of farmers that didn’t realize that they didn’t have coverage or were surprised at how little it was insured for,” said Ryan Roles, Minnesota Department of Agriculture Rural Finance Authority (RFA) senior loan officer.
Depreciation of older farm buildings may have also had a role in low coverage rates in the insurance policy.
To help farmers that had no or inadequate insurance to rebuild, Gov. Tim Walz and the Rural Finance Authority Board cleared the way, on March 18, to make disaster recovery funds available.
“There was nothing for excessive snowfall in the (disaster recovery fund) statute,” said Roles. “So we went in and added it.”
As of April 1, Roles had taken many phone calls about the program, but they hadn’t received any applications for the program yet.
“Farmers are still trying to see what insurance will cover and then trying to get a bid to see what it would cost to rebuild something,” he said.
The Disaster Recovery Loan Program can be used to help clean up, repair, or replace farm structures and septic and water systems, as well as replace cropping inputs, feed, and livestock.
In the right situation, this program could offer farmers quite a savings on interest. RFA participation in a qualifying loan is limited to 45 percent of the principal amount up to a maximum of $200,000. The interest rate on the RFA portion cannot exceed 4 percent, but it’s currently set at 0.0 percent.
The main qualifier for the program is the farmer must have received the majority of their income from farming over the past three years.
Roles gave the following as an example of how the program would work: a new shed would cost $100,000, and insurance will pay $50,000. He did say they expect some applications from farmers without any insurance payment.
In the case of $50,000, the farmer goes to their local lender. There are almost 400 bank branches in Minnesota participating with the RFA.
The farmer would get a $27,500 loan from their bank and a $22,500 loan from the Rural Finance Authority. The RFA loan would be at 0 percent interest for up to 10 years. If a farmer wanted to pay off the loan quicker, they would need to pay both the bank loan as well as the RFA loan at the same speed.
“Especially for the livestock folks (who lost buildings) it’s kind of a dire situation,” he said. “You really need to get a roof back over those animals – but anytime you can get a lower payment, especially in a tough farm economy like it’s been the last few years…getting a portion at 0 percent just helps get that payment lower.”
Some farmers may be able to use the program to update their operations – which could lead to greater profitability. A farmer who has used a hoop barn that came down, may be able to afford a pole barn. Maybe a farmer can add a drive through feed lane or maybe an improved watering system.
Roles also encourages farmers to take a look at the RFA’s other programs, which are listed at https://www.mda.state.mn.us/funding?field_category_target_id=All. There are many low interest loan programs – as well as grant programs – that can help many types of farmers.
“A majority of what we do is help beginning farmers buy farms,” he said. “We also finance a lot of new livestock buildings, and so they all work the same way where we partner with a lender. We’ve got different loan programs for different purposes that are out there.”
To learn more, feel free to call Ryan Roles, RFA Senior Loan Officer, at 651-201-6666, or email him at Ryan.Roles@state.mn.us.