On Tuesday evening, Minnesota Gov. Mark Dayton signed 10 budget bills that included a first-of-its-kind beginning farmer tax credit. Authored by state Rep. Nels Pierson and Sen. Mike Goggin, the bill supports the transition of land to young and beginning farmers through a tax credit incentive.
“This bill offers a win-win solution for the future of farming in Minnesota. This is also the first bill to include an incentive for the sale of farmland, making it a historic win,” says Matthew Fitzgerald, an organic grain farmer and co-founder of the Central Minnesota Young Farmers Coalition (CMNYFC).
“Less than 4 percent of Minnesota farmers are under the age of 35 and access to land is the No. 1 barrier to getting started,” says co-founder and conventional hops farmer Eric Sannerud. “This bill offers a tangible way to address pressing problems.”
Through the bill, landowners receive a state income tax credit when they sell or rent land or agricultural assets to a beginning farmer. The credit equals 5 percent of the sale price or 10 percent of the cash rent, or 15 percent for a cash share agreement. In turn, the beginning farmer must take a farm management course to qualify for the tax incentive and would be eligible for a tax credit covering the full cost of training. The tax credit is effective in the 2018 tax year and is funded at $12 million for the 2020-21 biennium. The funds are available on a first-come-first-served basis. Finally, the sunset for the credit is 2023 with the Rural Finance Authority issuing a report on the effectiveness of the credit no later than Feb. 1, 2022.
Beginning farmer and CMNYFC co-leader Andrew Barsness talked about the organizing effort to pass the bill: “Young farmers across the state worked hard to see this pass. We organized, testified and worked with the authors to get a good piece of legislation. For many of us, this was our first time getting political. This effort showed that by working with a broad coalition and staying focused on practical solutions, beginning farmers have a voice and power.”
The bill had bi-partisan support in both Minnesota’s Senate and House of Representatives. Additionally, the CMNYFC worked with major agricultural groups including Minnesota Farm Bureau, Minnesota Farmers Union, Land Stewardship Project and the Minnesota Catholic Conference.
“More beginning farmers on the land mean stronger communities for Minnesota,” says Rachel Brann, a beginning cut-flower farmer. “This bill helps all farmers—big or small, rural or urban, conventional or organic.”