Requirements to Transfer Crop Insurance

We all realize how important it is to get the next generation involved in production agriculture. One area in which parents should involve their sons and daughters is crop production in order to prepare them to take over the crop operation at some time in the future. At that time, it would be a great benefit for the new persons to be able to utilize and transfer the yield production history on any of the land that their parents operate. In order to be eligible to transfer the prior history, the new persons must have participated in the operation and in the establishment of the approved yields of the specific acres to be transferred. To meet this requirement, the new persons must have: 

1. Participated in management decisions

                                AND

1. Have performed physical activities necessary to produce the crop on that same acreage. 

In other words, sons and daughters can only transfer mom and dad’s yield history for specific acres as well as specific years in which they were physically involved with producing the crop and active in assisting with management decisions in producing the crop. So, in order for the next generation to take advantage of the strong production history built up by their parents, it is important for parents to get the kids involved early in the operation and document their involvement.

 By: Pat Brennan, Vice President

Citizens Bank Minnesota Partners With Farm Service Agency Lending Programs

Citizens Bank Minnesota assists borrowers who utilize Farm Service Agency Lending Programs.  This assistance can range from beginning Farmer Loans to FSA Guaranteed Operating and Real Estate Loans.  Citizens is a Certified Lender with the Farm Service Agency which means that the application process is streamlined with minimal paperwork.  We have several lenders trained to walk you through the process.  A current popular lending partnership that the Bank has with Farm Service Agency is the Beginning Farmer Down payment Loan Program.  This program enables a beginning farmer who has less than 10 years experience to purchase a farm with favorable loan terms.  Terms and conditions of the loan program are as follows: 

1. Loan funds must be used to purchase farm real estate.
2. Purchaser must have at least 5% cash down.
3. The Bank will finance 50% of the purchase price with a 1^st mortgage on the property with the loan begin repaid over a 30 year period.  Interest rates are at the Bank’s normal rates and terms.
4. The Farm Service Agency will finance 45% of the purchase price at an interest rate fixed for 20 years. 
5. The borrower must qualify as a beginning farmer, which means that he cannot have operated a farm for more than 10 years and he does not own a farm greater than 30% of the median size farm is in his county.
6. The beginning farmer may be required to be enrolled in an Adult Farm Management Program. 

In addition to the Beginning Farmer Down payment Loan Program, Citizens can also provide Farm Service Agency guaranteed operating and farm ownership loans.  Guaranteed loans cannot exceed $1,119,000.00.  Loan purposes can be for annual operating needs, equipment purchases, real estate purchases or debt refinance.  Our Bank lending officers fully understand the Farm Service Agency loan programs.  We are here to assist you in filling out the necessary Balance Sheets, Cash Flows and Application forms.  Our Certified Lending Status makes the application process much easier than applying directly with the Farm Service Agency.  Citizens will be happy to assist you.

By: Kevin Yager, Vice President

Minnesota State Rural Finance Authority Lending Programs

Citizens Bank Minnesota is an approved lender to participate with the Minnesota Rural Finance Authority Loan Programs.  The State loan programs are established to help individuals who farm in Minnesota and offers affordable financing at reasonable rates and terms.  The State offers multiple lending programs ranging from buying a farm, building livestock facilities or restructuring existing farm debt.  The State of Minnesota participates with the local lender in providing the credit needs to Minnesota farmers. 

The most popular program is the Basic Farm Loan Program which is used to purchase farmland.  The farmer must be a resident of Minnesota.  They must be a full time farmer or intend to become a full time farmer.  The loan applicant’s maximum net worth is $409,000.00.  The local Bank is the primary lender and finances 55% of the first mortgage on the property with the Bank’s normal rates and terms.  45% of the loan will be financed by the Rural Finance Authority up to a maximum of $300,000.00.  The farmer applicant works with the lending officer at our Bank to fill out the application and loan documentation requirements.  All loan payments are remitted to the Bank and the Bank forwards the State’s portion of the payment to St. Paul.  The State requires the borrower to be enrolled in Farm Management Classes and obtain all necessary State and County permits.

The Minnesota Rural Finance Authority also has an Agricultural Improvement Loan Program.  This loan program is for any physical improvement to the farm operation and a first real estate mortgage is required on the entire farm.  The State of Minnesota participates at 45% of the first mortgage to a maximum of $300,000.00. 

The Minnesota RFA has a livestock expansion loan program which finances the construction of new efficient livestock facilities.  To be eligible for this program, the farmer applicant cannot have a maximum net worth exceeding $772,000.00.  The State of Minnesota will participate at 45% of the mortgage amount to a maximum of $400,000.00.  The farmer must be a full time farmer and have all necessary feedlot permits.

The Livestock Equipment Pilot Loan Program is to purchase livestock related equipment.  Equipment purchased will be security for the loan.  RFA will participate at 45% of the equipment loan amount up to a maximum of $40,000.00. 

The State of Minnesota’s Restructure II Program is to provide restructuring for existing agricultural debt only.  A first real estate mortgage is required.  The RFA participates at 45% of the first mortgage amount to a maximum of $400,000.00.  The maximum net worth of the loan applicant cannot exceed $772,000.00 and the operation must have a positive cash flow.

 As you can see, there are a variety of lending programs through the State of Minnesota which are available for our farm customers.  Our experienced Bank lending officers and staff can assist a loan applicant in preparation of the financial statements, cash flows, and application and make the process very easy for you.

 By: Kevin Yager, Vice President

Young Farmers Getting Started

There is no doubt that in the current environment, it takes help “to get started”.  The help can come from different areas and help can be defined in different ways. 

Help from a parent, grandparent, family member or from a friend of the family can give you the start that you need.  This help can be defined in various ways, such as:

1)     Monetary – Cash for a down payment or inputs
2)     Favorable rent terms on land, buildings or equipment
3)     Use of machinery or equipment to plant or harvest crops and care for livestock
4)     Gift of livestock and feed to get your own herd started
5)     Exchange of labor for offsetting any of the above expense items
6)     Utilizing any government programs that are available to beginning farmers
7)     Working with Citizens Bank staff for financial advice, support and future success 

When deciding how to get started, look at what will create a return on your investment (profit), not a draw or straight cost to you.  Ask yourself, “How do I make money if I do this?” An example would be buying a new pickup for $30,000 – $40,000.  This purchase might cost you $750 in monthly payments.  Is there a way to make money with that pickup? 

If you are able to run a piece of ground, hopefully you would have profits at the end of the first year to “leap frog” you into the next crop year; or if you start with some breeding stock, you should have more numbers of livestock one year from today. 

To be a young farmer getting started, you need to take care of your credit, ask yourself the profit question, and with some help, you can be a success story! 

Tim Hoscheit, Vice President