Credit given for helping farmers
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Property owners in Pennsylvania have a new financial incentive to help beginning farmers access the tools they need to get their start in agriculture.
The Beginning Farmer Tax Credit provides an income tax credit for selling or leasing agricultural assets such as land, livestock, facilities and equipment to a beginning farmer. The program, administered by the Pennsylvania Department of Community and Economic Development, officially started in July but the application window just opened Monday.
The Pennsylvania Farm Bureau played a central role in developing and advocating for the 2019 law that created the program.
"Our members wanted to bring this program to Pennsylvania after learning how other states have successfully used similar programs to assist the next generation of farmers," said PFB spokesman Liam Migdail.
"I would encourage Pennsylvania farmers and property owners to look into and help spread the word about this new opportunity to help new farmers get established," PFB President Rick Ebert said. "We often hear that access to land and equipment are among the greatest barriers faced by beginning farmers, especially those who did not grow up in agriculture. The Beginning Farmer Tax Credit will help beginning farmers who are passionate about their work grow their operations and secure the future of our industry."
The average age of a Pennsylvania farmer is 56½ years old, which means that the future of Pennsylvania's number one industry will depend on more young farmers coming into the business and taking over ownership of farms or beginning their own. Only 13.2% of Pennsylvania farmers are younger than 35, while 28.7% are 65 or older, Migdal said.
"The challenge is that beginning farmers face significant obstacles to getting their start, some of which are access to land, equipment and capital," Migdail said.
Property owners can claim a credit equal to 5% of the sale price or fair market value -- whichever is lower -- of an asset sold to a beginning farmer, up to a maximum of $32,000. For rental agreements, the credit is equal to 10% of gross rental income for the first, second and third years of the rental agreement, up to a maximum of $7,000 per year. The program is capped at $5 million for the 2020 tax year and $6 million for 2021 tax year.
The credit will encourage family farms to bring the next generation into ownership roles by providing financial assistance to help with that transition, Migdail said.
"For example, a farmer could claim the credit for selling land, equipment or other assets to a grandchild who plans to take over the operation. Bringing the younger generation into an ownership role will help encourage those younger farmers to remain in agriculture and take over the operation, while the tax credit will assist with the associated costs," Migdail said.
Anthony Rice recently became a part owner of the family business, Clover Creek Cheese Cellar LLC of Williamsburg. He thinks the program is a good idea.
"Anything to help the older farmers to pass things on and get younger farmers started is a good thing. There are a lot of families who don't have anyone to pass their farm on to; hopefully this program will help pass farms on to people who will continue to operate them," Rice said.
The credit also will benefit farmers who are starting new operations from scratch.
"These farmers often face even steeper hurdles accessing the land and equipment they need to begin their operations. A farmer who is just starting out may not have the resources to offer as competitive a price for a sale or lease as a more established farmer. The tax credit gives the beginning farmer a competitive advantage (or at least puts them on equal footing) by giving the seller or lessor a financial incentive for working with them. Beginning farmers are also working to build their reputation, so the tax credit could give landowners an incentive to take a chance on working with someone who is less established," Migdail said.
Rice enjoys farming but admits not everyone is cut out to be a farmer.
"I enjoy the variety. It is something different every day. You have to be skilled at a lot of things. With cheese, you can be at a farmers market one day, and other days working with cows, building fences or doing construction work at the barn,' Rice said. "You don't farm to make money, you farm because you love animals and the land.You don't want to jump in and then find out you don't enjoy it."
Mirror Staff Writer Walt Frank is at 814-946-7467.