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Legislation seeks farmland incentives for new Michigan farmers

During a hearing before the Senate Finance Committee on Wednesday, Michigan Farm Bureau Legislative Counsel Rebecca Park and Mitch Kline, chairman of the organization’s state level Young Farmers Committee, testified that the legislation would address a major roadblock for beginning farmers — access to farmland.
Date Posted: February 17, 2022

Proposed legislation in Lansing, if approved, could make it easier for young farmers in Michigan to get a toe-hold in production agriculture by providing sellers and landlords a tax incentive for doing business with beginning farmers.

Introduced by Sens. Kim LaSata, John Bizon, Roger Victory and Curt VanderWall, Senate Bill 697 calls for amendments to the state’s "Income tax act of 1967," to provide a 5% tax credit to the seller based on the fair market value or the sales price — whichever is less — up to a max of $32,000.

For those interested in retaining ownership of farmland but wanting to rent the ground, landlords would receive a tax credit of $10 per acre as an offset to annual rental income for the first three years of a rental contract, capped at $7,000 per year.

During a hearing before the Senate Finance Committee on Wednesday, Michigan Farm Bureau Legislative Counsel Rebecca Park and Mitch Kline, chairman of the organization’s state level Young Farmers Committee, testified that the legislation would address a major roadblock for beginning farmers — access to farmland.

Kline, who farms with wife Brandie near Scotts in Kalamazoo County — raising corn, wheat, soybeans and hay — shared his first-hand experience in starting from scratch with nothing more than a desire to farm.

With no farm to inherit, Kline began mowing lawns for a neighbor at the age of 14 as compensation for ground rent to get started. He said the proposed tax incentives to landowners would have made his start in production agriculture a much easier climb, noting the capital-intensive nature of farming requires an adequate land base.

According to Park, six other states currently offer similar programs to bring landowners and new farmers together.

“The program is meant for someone wanting to get into ag with no family farm to inherit,” Park said. “To be clear, the tax credit goes to the established farmer, not the beginning farmer, as an incentive to consider taking on a new farmer just getting started.”

The proposed Michigan program would be capped at $5 million annually in state budget expenditures.

For landowners, a certificate would be required from the Michigan Department of Agriculture and Rural Development covering basic information confirming state residency, the owner of ag assets, and taxpayer-related information. 

To qualify as a beginning farmer, the producer would have to meet the following criteria:

  • A resident of the state.
  • Seeking entry or have started farming within the last 10 years.
  • Intends to farm within Michigan.
  • Not a family member of the established farmer they’re intending to rent or purchase farmland from.
  • Have a net worth of less than $800,000.
  • Provides a majority of the day-to-day labor and management of the farm.
Rebecca Park headshot

Rebecca Park

Legislative Counsel
517-679-5346 [email protected]