Collapse Insurance a Must for Today?s Poultry Farmer

Whether or not collapse insurance for poultry houses is available could well determine the future of some family farm operations.

Some insurance companies so fear the frailty of poultry houses that they will not write collapse insurance. This plays a big role in loan decisions.

The installation of snow poles are required for houses built before 1990 by those insurance agencies that will write collapse insurance. But even some of those poles have had to be reinforced with stronger base plates.

Arkansas loan institutions are well aware of the danger of poultry houses collapsing. In January 2001, 17 Arkansas counties — particularly in southwest Arkansas at Tyson Foods Inc. complexes — suffered severe ice storm damage. An estimated 10.5 million chickens were killed and about 700 houses were destroyed.

The Natural Resource Conservation Service released a record $2.8 million to aid Arkansas poultry growers to repair the destruction left behind. Additional aid came from Gov. Mike Huckabee, who declared 29 counties a disaster area. That prompted further federal relief.

Most banks have adjusted their policies following several disasters over the last couple of decades and now require collapse insurance for all poultry-house loans.

Collapse insurance covers snow and ice problems. Basic coverage covers wind damage.

“A loan on [poultry] houses for anything over 12 to 15 years old is a real problem if they don’t carry collapse insurance,” said Greg Reed, president of Arvest Bank of Prairie Grove. “Probably the largest single loss in the area of poultry houses is collapse. And the problem with that when it comes is that it doesn’t hit just one house but usually 50 or so.”

A poultry house will cost between $95,000 and $150,000 or about $6 per SF to build and will hold 20,000-25,000 birds. The average poultry farm has four houses.

The last major damage Northwest Arkansas poultry houses experienced came in a 1989 snow and ice storm that leveled about 400 houses.

Roy Fears of Farris Insurance Agency in Springdale said about 95 percent of all poultry houses today in Northwest Arkansas carry collapse insurance.

“A lot of farmers with a house 20 years old won’t even insure them anymore if they don’t owe any money on the house,” Fears said. “If they can’t get collapse insurance, they figure that nothing else is going to happen to them anyway.”

Fears said farmers wanting collapse insurance must have the reinforcement snow poles.

“There are no negotiations about it,” Fears said. “That’s the biggest change. Every house we write gets inspected. And the inspectors really go over it. It used to be a formality. But now they go in there and look at the base plates and the electrical boxes and really go over it.”

All of the poultry houses are subject to annual inspection.

Farris Insurance writes the majority of poultry house insurance for George’s Inc. of Springdale.

The consequences if an owner doesn’t obtain collapse insurance can be tough on a small poultry farm.

“We’ve turned down some loans because they could not get collapse insurance,” Reed said.

Tyson Foods spokesman Ed Nicholson said Tyson growers are independent contractors using their own property, therefore it is up to each individual farmer to handle his or her poultry house insurance.

Some people in the poultry industry feel that the structural safety of the houses could stand serious improvement.