The Beginning Farmer Tax Credit Program will provide $59 million in tax credits over 10 years to people who sell or rent agricultural land, livestock, equipment or other assets to beginning farmers to help reduce startup costs for aspiring farmers.

The state is providing $59 million in tax credits over 10 years to people who sell or rent agricultural land, livestock, equipment or other assets to beginning farmers to help reduce startup costs.

The Beginning Farmer Tax Credit Program, which was announced Tuesday, was established under the Pennsylvania Tax Code to provide those tax credits.

“With our average farmer being 59 years old, we can't grow and thrive without attracting new leaders to feed us in the future. These tax credits will combine with PA Farm Bill investments to provide incentives to current farmers and tear down barriers faced by aspiring farmers,” said state Agriculture Secretary Russell Redding.

The Department of Community and Economic Development, with the departments of Agriculture and Revenue, will allocate up to $5 million in tax year 2020, and up to $6 million annually through the 2030 tax year for credits of 5 percent of the lesser of the sale price of fair market value of the agricultural asset, up to $32,000; or 10 percent of the gross rental income of the first, second and third year of the rental agreement, up to $7,000 per year.

“The program provides a benefit to landowners who help new farmers get started,” said state Sen. Elder Vogel, R-47th, chairman of the Senate Agriculture and Rural Affairs Committee. “We know that the No. 1 concern facing them is finding affordable farmland. None of our neighboring states offer a similar tax credit program, so this is a great way to show that Pennsylvania is serious about preserving its agricultural legacy.”

Tough to start

Andy Gaver, a conservationist with the U.S. Department of Agriculture's Natural Resources Conservation Service in Butler County, said starting an agricultural business without much startup money, credit or inherited land is challenging.

“A lot of it is having enough credit or collateral to get the ball rolling because its so expensive to start out. Many of them don't have land passed down to use for collateral,” Gaver said. “It's tough to get the ball rolling.”

The USDA offers programs that back loans taken out by beginning farmers and provide advanced payments to underserved farmers, he said.

Traditional dairy or cash grain farms are expensive to start. A lot of startups begin by producing and selling specialty products such as vegetable and seasonal grass-fed beef on a small scale, so they can begin making money, he said.

Derek Kellogg of Slippery Rock did just that three years ago when he started Glacial Till Farm on two acres near Kellogg Farms, his family's large-scale beef operation, where he's worked since he was 4.

“It's all on a small scale with no riding tractors, just two-wheel tractors. All human scale,” Kellogg said.

He grows leafy greens such as spinach, kale and lettuce, and root vegetables such as turnips, carrots and beats. Some are sold at farmers markets, but most are sold through the Northwest Growers Co-op's community supported agriculture program, in which customers order boxes of a week's worth of vegetables and produce, and local farmers fill the orders.

Kellogg, 36, said he wanted to start his own operation and was interested in growing produce, but didn't have a lot of startup money.

“I have experience in large-scale farming and farming in general, but I wanted to start my own business. I chose (the) veggie thing because I was interested, and there's not a large up-front cost to get started,” he said.

Beginning farmers must decide which type of lifestyles they want to live because raising cows or other animals requires daily care and attention, while plants are a little more forgiving, he said.

“My advice to a beginning farmer is go work somewhere for a year. Whatever you think you want to do, go try it out. If you were young and want to start, that's what I would do,” Kellogg said

Starting a large-scale operation like Kellogg Farms would be an enormous undertaking.

“If you wanted to start my family farm,” he laughed, “we have millions of dollars of equipment in that field. We've been working on that farm for four generations to get it to that level.”