Starting this year, Virginia farmers will be able to take advantage of the Food Crop Donation Tax Credit to donate surplus food crops to non-profit food banks.
American agriculture policies have always disincentivized feeding the hungry. The Department of Agriculture has made it a practice to pay farmers, not
to grow during a given season in order to artificially inflate the price of certain crops. By reducing the amount of food that is grown, the federal government was able to manipulate the price to ensure that farmers make enough money to provide for their family. The result was that food became more expensive and there was less of it to go around.
In 2014, the practice of providing direct subsidies to farmers for not growing crops was scaled back. Instead of paying as much out in direct subsidies in order to inflate food prices, the government now helps the farms by subsidizing other business costs like insurance. The result, however, is the same. The Virginia Legislature has come up with a way to incentivize farmers to donate their crops to help feed the hungry. Starting this year, farmers who donate eligible food crops to any of Virginia's non-profit food banks will receive up to a 30 percent tax break. With all of the incentives out there to grow less food, this Virginia program does the opposite.
Virginia Department of Agriculture and Consumer Services Commissioner Sandy Adams explained the new program in depth.
Increasing healthy food access for all Virginians helps strengthen our communities and our economy. Local growers are often faced with more product than they can sell and food banks need more fresh options. We encourage Virginia farmers to take advantage of this tax credit. It’s a win-win for everyone.”
It is not uncommon for Virginia farmers to end up with more food crops than they can sell. Much of this surplus usually goes to waste. The way the market is designed, there can be more risk than reward to growing extra crops. Virginia's new Food Crop Donation Tax Credit flips that logic on its head. Starting this year, Virginia farmers will now be allowed to use Form FCD-1 to apply for a tax credit that is equal to 30 percent of the market value of all grains, fruits, nuts, and vegetables that they donate. The tax credit is capped at $5,000 per farm per year. If this tax credit exceeds the taxes owed to the state of Virginia in a given year, it can be carried over for up to five tax years until the credit is used. The total amount paid out by the Food Crop Donation Tax Credit in a given year will not exceed $250,000, meaning that up to 50 farms can claim the maximum $5,000 tax credit.
Food banks in Virginia are excited at the prospect of getting more donations. Leslie Van Horn is the Executive Director of the Federation of Virginia Food Banks, an organization that represents the more than 2,000 non-profit food pantries and feeding programs in Virginia.
Sourcing food locally can help the agricultural industry,” she explains. “It reduces food waste and helps give incentives to growers and producers to donate their bounty. But most importantly, it gives food-insecure individuals across the Commonwealth access to food they need to thrive and prosper.”
The Federation of Virginia Food Banks reports that food donations in recent years are down by as much as 50 percent, but food assistance requests are up by almost the same amount. Food pantries and feeding programs are forced to do more with less.
The Commonwealth of Virginia has a food insecurity rate of 11.8 percent. That means that more than 900,000 Virginians don't know where they'll get their next meal. The Federation of Virginia Food Banks estimates that it would need an additional $406,935,780 in donated food every year to fully meet the state's food needs. This new tax program will not cover all of that, but it will make a dent. Based on the credit's cap and the 30 percent valuation applied to donations made, the Food Crop Donation Tax Credit could bring in an additional $833,000 worth of food into the Virginia food pantry system every year. While the Food Crop Donation Tax Credit won't completely solve food insecurity in Virginia, the program could revolutionize how states approach tackling hunger issues.
What do you think? Should the cap be raised to let more farmers donate food in Virginia? Let us know in the comments below!