Kentucky launched a new program last week offering incentives for farmers for selling their property to beginning farmers, described as an effort to further sustain the agriculture industry.
The Kentucky Selling Farmer Tax Credit program (KSFTC) was announced by Gov. Matt Bevin and will begin to accept applications on Dec. 16.
The change allows a farmer wishing to sell his land to qualify for a tax credit provided they sell the land to a new or beginning farmer who intends to continue using the land for agriculture production.
Eligible selling farmers could receive tax credits up to 5% of the purchase price of qualifying assets, with a $25,000 cap per calendar year and a $100,000 lifetime cap.
"This looks like a pretty good opportunity for keeping land in farms," Brandon Sears, an agent with the Madison County, said. "This is big."
Sears said this incentive could help address two primary issues in the agriculture industry, including ensuring that farmland remains as farmland as opposed to being developed and enticing a younger generation of farmers to take part in the agriculture industry.
"The challenge of aging farming population and transition of Kentucky agriculture over for younger or beginning farmers, the next generation if you will, that has been a big challenge," Sears told The Register. "This seems to be a way that existing farm owners could seek out beginning farmers to purchase their property for the benefit of tax registration."
And while this is seen as a positive move for commonwealth agriculture, there are some exemptions and stipulations for both potential buying or selling farmers.
For example, a beginning farmer cannot have previously owned any agricultural land for a period exceeding 10 years. Also, beginning farmers must commit to managing and operating a for-profit farming business a minimum of five years after purchasing eligible agricultural land.
Likewise, selling farmers cannot have more than 50 full-time employees and must be the legal owner of the agricultural land and assets being sold to beginning farmers. Sales involving immediate family members do not qualify for tax credit consideration.
According to Sears, this incentive, to some degree, allows existing farmers to seek out beginning farmers to be able to receive tax credits.
"This is a great effort. Something like this is something we need to bring young folks into the ag industry," he said. "This may not be the only option. We may need more down the road. But I think this is a really good start. I am encouraged to see it."
And while he said the list of exemptions and regulations is fairly lengthy, he believes they are relatively standard and that some guidelines are necessary.
"From what I can tell, the incentives and guidelines, they seem reasonable, and that they will be used for a reasonable purpose," he said. "It is exciting, I am glad to see something being done."
According to Sean Southard, director of communications for the Dept. of Agriculture, he hopes this initiative will be taken advantage of on both sides.
"By the year 2050, the world will need to find a way to feed two billion more people than currently live on the planet. I think the best case scenario with this new initiative is that we see people on both sides take advantage of it, and that Kentucky can play a special role in producing the food and fiber to feed and clothe those people long into the future," Southard said.
Rep. Bart Rowland, R-Tompkinsville, carried the amendment, which was actually a Senate bill, on the Kentucky House of Representative's floor on the behalf of a Senate sponsor.
Reach Taylor Six at 624-6623 or follow her on Twitter @TaylorSixRR.