STATE—New legislation signed into law on July 2, will provide tax credits to farmers who sell or rent property and resources to new farmers looking to break into the agriculture industry.
Act 65, formerly Senate Bill 478, allows up to $32,000 to be credited for farmers who sell agricultural assets (land, livestock, facilities, buildings and machinery used to farm) and up to $7,000 per year for up to three years for those who rent said assets to beginning farmers.
The bill passed both houses in the General Assembly without a single no vote and is set to go into effect in two months. It is set to expire at the end of December, 2029.
According to the legislation, the tax credits are awarded on a first-come, first-served basis. Re-certifications for years two and three of a rental agreement have first priority.
For 2020, the Pennsylvania Department of Revenue (DOR) may allocate up to $5 million in tax credits, expanding up to $6 million starting in 2021.
“The facts clearly show the ‘graying’ of Pennsylvania’s farming industry. That is an issue that we need to quickly address as a state,” said Senator Elder Vogel (R-47 Beaver, Butler, Lawrence counties), the bill's primary sponsor, in a press release.
Statistics from Vogel's office note 41 percent of Pennsylvania's 7.7 million acres of farmland is managed by a farmer who is 55 years old or older.
Eleven percent of that 41 percent is likely to change hands in the next five years.
Farmers over the age of 65 outnumber farmers under 35 years old by a ration of four to one.
“I have heard throughout the state that the top hurdle facing new farmers is finding affordable farmland,” Vogel added. “The tax credits provided under this new law will reward landowners who help new farmers get started. None of our neighboring states offer a similar tax credit program, so this is a great way to show the agriculture community that Pennsylvania is open for business.”
Wayne County Commissioner and dairy farmer, Brian Smith, stated the legislation “...is a pretty decent bill...” but only, “ ...a portion of the equation.”
Smith noted the tax credit incentive helps build a relationship between those who already own farms and those looking to start their own, and gives the latter group access to assets such as land and equipment which can be difficult to come by when starting out.
Noting the bill is “a useful tool...,” the farmer/commissioner explained beginning farmers need to make sure they have a sustainable business model to keep their operation going long term.
In order to qualify, the legislation states beginning farmers must intend to farm in Pennsylvania and can't have received federal gross income related to agricultural production “for more than the 10 most recent taxable years.”
Beginning farmers also need to demonstrate experience or relatable skills in their intended operation and can't be a partner, member, shareholder or trustee of the seller, nor married to someone who is, states the legislation.
Both the landowner and the hopeful farmer need to apply for certification through DOR.
For beginning farmers
Those looking to break into the agriculture industry in Wayne County can gather a lot of information on how to do so from the Penn State Extension Office (648 Park Street, Honesdale).
“There are many opportunities for education and help starting a new farm,” said Extension Educator, Chelsea Hill. “But you need to ask.”
The Extension has a wealth of resources online to help new farmers break ground in the industry, said Hill.
Additionally, the Extension office works alongside The Stourbridge Project, Wayne Tomorrow! and other entrepreneurial associations to connect beginning farmers with the right resources to start and grow their agribusinesses.
Hill also advised new farmers keep an ear out for local workshops from organizations such as The Cooperage Project, Willow Wisp Farm and Lackawaxen Food Hub.
“There's more support out there than you expect,” said Hill.
Looking at the state of the current markets, Hill noted livestock farming is a good industry to break into in Wayne County, particularly sheep and goats which are on the rise.
More information about how to break into the agriculture industry is available by calling Hill at 570-253-5970 extension 4110.
Online resources are available at: https://extension.psu.edu/wayne-county.
Information about entrepreneurial resources and workshops for starting a new business are available from The Stourbridge Project by calling Sue Shaffer, Executive Director, at 570-253-5334.
—Information from a press release was used in this story.