From Farmers to Food Banks
Posted: August 5, 2014
Categories: GoodFoodBites / News from Sustain Ontario / Ontario Food Policy
The Community Food Programs Tax Credit has been published in the Ontario Gazette and thus officially proclaimed. The amendment of the Taxation Act comes into force August 15th. For information on how a bill comes into force, you can refer to this glossary of terms. Farmers may apply for tax credits based on donations for the 2014 Growing Season.
Last Fall (2013), the Local Food Act (LFA) was passed in Ontario. Being the only legislation of its kind in Canada, the Act (also known as Bill 36), is aimed at “fostering successful and resilient local food economies and systems throughout Ontario, increasing awareness of local food in Ontario, including the diversity of local food, and encouraging the development of new markets for local food,” (Legislative Assembly of Ontario, 2013 ). The LFA was not solely about contributing to the agricultural economy, rather it included commitments to increase access to fresh food and to food literacy. One of the key commitments to increasing fresh food access included an amendment proposed by MPP Bob Bailey for a Food Bank Tax Credit for farmers, since changed to include Community Food Programs with input from Sustain Ontario and members (see Sustain’s previous blogs). The Bill has defined a Community Food Program as:
“A person or entity that:
(a) is engaged in the distribution of food to the public without charge in Ontario, including as a food bank,
(b) is registered as a charity under the Federal Act, and
(c) satisfies the other conditions that are prescribed by the regulations”
According to the brief FAQ on the OMAFRA website, although the tax credit has not yet come into effect, registered charities may begin to issue tax receipts for donated ‘agricultural products’ (this excludes those corporations that are not involved directly in farming). A tax credit differs from a tax deduction in that the value of the donated good is subtracted directly from the farmers’ income rather than deducted from the taxes they have to pay. The FAQ also clarifies that only registered farm businesses (farms with a min. of $7000.00 revenue are required by law to register their business annually with Agricorp) who donate are able to use the tax credits.
While many Canadian farmers struggle to make a living, as much as 25-million pounds of fresh produce is wasted every year in Canada as of 2010, according to the Ontario Association of Food Banks (see the recent Globe and Mail article on food waste.) Whether it is tilled under in farmers’ fields or it is turned away by retailers because it doesn’t make the grade, the value of fresh produce can suffer from the whims of weather and markets and the costs of harvesting, handling and transport are not always worth the final price. While there are many farmers who donate produce that they can’t sell despite the costs they incur, or allow for the produce to be gleaned, there is little incentive or capacity for fresh, healthy, whole foods to be donated in a timely way.
And yet many people cannot afford or access fresh produce. Food Banks Canada (FBC) states that “Food banks acquire and share 64 million kg of food to those in need every year” and the Ontario Association of Food Banks (OAFB) estimate that approximately 400,000 people are assisted through food banks on a monthly basis. In many cases, while food banks and community food programs try to obtain fresh and healthy food through donations or even purchases, there are limitations to the quantity of fresh produce available and they often lack the capacity to store and handle those quantities they receive or need. Fresh, healthy foods are also often the most expensive foods available and it is well documented that poor health and poverty are interrelated.
A Review of Similar Policies in the US
The idea of a tax credit for farmers stems from similar bills in the United States. A number of states, including California, Kentucky, Michigan, Texas, Virginia, Maryland, Colorado, Ohio and Oregon have integrated some form of tax credit legislation into their existing policies. Just last April, Oregon, for example, had reinstated their crop donation tax credit after it expired in 2011. The newly amended Senate Bill 1541 offers a 15% tax credit (a 5% increase from the last credit) to farmers who donate to food banks in Oregon. According to the Public News Service, the state previously offered a 10% tax credit to help offset planting and harvesting costs of donated food to the Oregon Food Bank and other similar organizations. This year, the Oregon Farm Bureau petitioned for a 25% tax credit but the government instituted a 15% compromise.
Some US farmers argue that while this is a start, 15% isn’t enough to cover all the necessary expenses. In an article from the NW News Network, John Zielinski, an orchardist from the Salem area echoes the same sentiment, suggesting that 25-30% would be a more adequate amount.
In Colorado, a Bill that proposed a 25% tax credit has also been introduced. House Bill 1119, also known as the Colorado Charitable Crop Donation Act, was put forward by Durango’s State Senator, Mike McLachlan, as a result of trying to curb the current food supply shortage at food banks in Colorado. In a comment about the lack of nutritional value of many processed foods, McLachlan believes that the tax credit would give the food banks greater “freedom to prepare the food in a healthier way.” The act however, does not include any other businesses outside of farming and will have a cap of $5000.00 per grower. In Kentucky, a more modest House Bill 141 was introduced into Senate by Tina Garland, the Kentucky Department of Agriculture’s Farm to School coordinator. The Bill, which offers a tax credit of 10% to Kentucky farmers, was supported by the Kentucky Association of Food Banks and the Kentucky Horticulture Council from its inception in 2012 and combined with the Senate Bill in 2013. Farmers can begin claims from January 1st 2014. This Edible Agricultural Product Donation Tax Credit is regarded as being separate from the deduction that’s allowed to taxpayers for any general donations they may already make to charitable organizations.
Tax Credits in Ontario–Questions Raised:
While there are many examples of polices that connect food access and farmers in the US, many of these policies stem from a long history of institutionalized charity and stigma associated with Food Stamps, along with a questionable amount of farm subsidies. Does this kind of policy fit within the Ontario context?
A tax credit in Ontario raises a number of important questions:
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- How will a tax credit benefit the majority of farmers whose income bracket is not high enough for them to have to pay taxes in the first place? What kind of farmer does this benefit?
- Does this simply institutionalize food banks and donations further rather than trying to address the underlying issues of poverty?
- What about community food programs, like the good food box, that actually prioritize paying for the food they receive? How will they and the farmers they work with benefit?
- How will community food programs properly handle donations if they are already lack the infrastructure to properly store and handle fresh produce?
- Will Ontarians receiving fresh produce be able to use it without adequate food skills and/or equipment?
While Sustain Ontario and its members are thrilled that the Local Food Act has been passed and that there are steps being taken to connect food access to food production, we have not yet had an opportunity to discuss these complex questions in more detail as an alliance.
Tell us your thoughts in the comments below or consider contributing a guest blog.
If you are interested in further conversations on policies to promote food access, we are forming a food access peer learning circle. Be in touch with carolyn@sustainontario.ca to join.