The Minnesota Agro-Forestry Cooperative (MAFC), Minnesota Dept. of Agriculture (MDA), Central Minnesota Community Foundation (CMCF) and WesMin Resource Conservation and Development (WesMin RC&D) are announcing the start of an innovative low-interest loan program that will assist landowners with growing hybrid poplar trees for commercial harvest.
Studies by the University of Minnesota and other groups show that these fast growing trees can be used for biomass energy production in as little as 5 years, and for pulp or solid wood products in 10-15 years. The crop looks promising for the future and has several potential markets.
Hybrid poplar plantation near Alexandria, Minnesota (Photo courtesy Dean Schmidt, WesMin RC&D).
Through a collaborative effort, the Agroforestry Advance Loan Fund (AALF) was created to give producers cash to establish the crop and also pay annual expenses during the 10 to 15 years prior to harvest. The program differs from the Conservation Reserve Program (CRP) because it is a low-interest loan that must be paid back to the fund. The program encourages productive conservation which allows planting, growing and harvesting of an alternative crop that also provides environmental benefits.
The minimum plantation size required is 10 acres; however, larger tracts are encouraged. Producers can borrow up to $150/ac at only 4 percent interest in the first year for planting the trees. Annual payments for maintenance expenses thereafter are based on the average "soil rental rate" similar to those for CRP in the local area. Loans will be paid back to the fund through proceeds from harvest of the trees. Landowners can borrow up to 70 percent of the estimated value of their tree crop at harvest, not to exceed a maximum of $75,000 per loan or a lifetime limit of $150,000.
The Minnesota state legislature has appropriated $219,000 to start the program. It is hoped that more funding will be added since landowner need exceeds the funding now available. Landowners interested must sign up quickly due to limited funding. The first sign-up period is from Dec. 1, 2004 to Feb. 1, 2005. Landowners may choose to plant in either 2005 or 2006. Participants in the AALF must also be members of the Minnesota Agro-Forestry Cooperative (MAFC) which will help them find markets for their trees when harvested.
For questions about the MAFC, contact Dennis Gibson, 2030 10th Ave. NE, Montevideo, MN 56265, Tel. 320-269-8103. A brief history of MAFC is posted here (PDF file).
By Dean Schmidt
WesMin RC&D, Alexandria, MN