New bill to help beginning farmers in Ohio

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Ohio beginning farmer tax credit
Ohio state Reps. Susan Manchester, R-84, and John Patterson, D-99, have introduced a bill to grant tax credits to farmers who sell or rent land, livestock or facilities to beginning farmers. (Screenshot from live video news conference.)

Updated April 11, 2019

SALEM, Ohio — A new bill was introduced April 10 to give incentives to established and beginning farmers in Ohio. This bill will allow income tax credits for established farmers who sell or rent their agriculture assets to beginning farmers.

A beginning farmer is defined as an individual just starting to farm or who has been operating a farm for 10 years or less. An agriculture asset is defined as agricultural land, livestock, facilities or equipment.

H.B. 183 was unveiled by Reps. Susan Manchester, R-84, and John Patterson, D-99, during a news conference. (Link downloads .pdf of bill language.) There is currently one cosponsor, Rep. Jon Cross, R-83, and the bill has been assigned to the House Agriculture and Rural Development Committee.

Similar actions

The legislation is patterned after a similar bill in Minnesota which began in 2018. Since then, 446 established farmers have received $2.3 million in tax credits, and 386 beginning farmers have participated in the program, receiving $375,000 in educational tax credits, according to Matt McDevitt, agricultural finance supervisor at the Minnesota Department of Agriculture.

According to Jenna Beadle, Ohio Farm Bureau’s director of state policy, prior to Minnesota’s final bill, most beginning farmer bills covered just the lease of land. Minnesota’s legislation expanded the tax credit to include the sale, rental or lease of agricultural assets.

A similar bill was introduced March 26 in Pennsylvania, Senate Bill 478.

The why

“The number of farm families has shrunk over the years,” said Patterson during the news conference.

He said this bill will help those established farmers who are looking to retire but do not have a successor.

The average age of a U.S. farmer is 58, according to the U.S. Census of Agriculture, and more than 31 percent of principal farm operators were 65 or older.

“There is a need to help the next generation of farmers get started in a very capital-intensive industry,” Manchester said. “It will set beginning farmers up for success by giving them the opportunity to farm and learn best practices through a financial management program.”

Participating beginning farmers must complete a financial management program, as identified by the state department of agriculture. (Scroll down to see additional eligibility requirements.)

Tax credit

The credit to the owner of the agriculture asset will be as follows;

  • Five percent of sale price;
  • Ten percent of gross rental income received from each of the first three years of the rental agreement;
  • Fifteen percent of the cash equivalent of the gross rental income received from each of the first three years of the share rental agreement;

These credits must be claimed for the taxable year during which the sale of agricultural asset occurs. For rent of share rent agreements the credit must be claimed for the three taxable years of the agreement.

The bill has the support of Ohio Farm Bureau, Ohio Dairy Producers Association and Ohio AgriBusiness Association.

“We are very excited about the bill,” said Beadle.

She said Ohio Farm Bureau has been working to create policy for young farmers, identified as part of the Trends and Issues Conference.

Beginning farmer qualifications

  • A Ohio resident.
  • Be looking to start or have been farming within the last 10 years.
  • Not be related to the owner.
  • Have a total net worth of less than $800,000.
  • Provide the majority of labor and management of the farm.
  • Have farming experience and or knowledge.
  • Proof that farming will be a significant income for individual.
  • Participate in financial management program which is to be approved by the director.

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