Ontario Farmers Food Bank Donations Tax Credit

The sum of it: Ontario farmers who donate their product to local food banks and community food programs (including school nutrition programs) will now receive a non-refundable tax credit worth 25% of the fair market value.

The credit was introduced by Sarnia-Lambton MPP Bob Bailey in 2010, included in the Local Food Act which received Royal Assent in Nov. 2013. Farmers can even claim donations retroactively provided that the donation was made since Jan. 1 2014.

Eligible products include: fruits and vegetables, dairy and eggs, grains and meat, nuts, mushrooms and more. This quite often means excess produce or ones that don’t fit the esthetic requirements of retail grocers such as oddly shaped pumpkins etc.

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It got me curious, how does this impact our farmers?

Some US states such as Arizona, Colorado, and Califonia offer similar tax credits (California currently sits at a 10% rebate). However, I found it difficult to get any tangible information on the actual impacts or costs of such programs. In short, I ended up with more questions than answers.

What I know:

This tax rebate is more in recognition of donations that were already being made, as opposed to actively trying to encourage an observable increase. This assumption is based on the fact that it would barely cover harvesting and transportation costs, and that farms are still divided from commercial companies who are able to write off donations and sponsorships at 100%. I also know that it can be difficult to make donations to food banks as they do have very high standards, I’ve heard of (a friend of a friend) being unable to donate second day bread from a bakery.

Similarly this policy excludes grocery stores and restaurants, perhaps because these industries can’t donate for fear of being sued would a sickness occur.

My Questions:

1. Can or will this be extended from simply helping food banks to providing for regular school programs, old folks homes, and hospitals?

2. If farmers have and always will donate excess produce, are we better off installing a mandatory minimum wage rate in accordance with quality of life rates? In connection, how much will this rebate cost tax payers in comparison to competing policies? Would the policy have a greater impact if we were to include the restaurant and grocer industries?

3. What about Ontario’s biggest agriculture sector, the dairy industry? The policy states that the product must be “processed…to the extent necessary for the product to be legally sold” Ie. The milk will have had to be pasteurized before it can be donated or turned into a dairy product to be donated. Thus increasing the production cost.

4. Is there a yearly limit to the amount that can be claimed?

My 2 Cents:

Despite some of my reservations and critics I’m actually thrilled that this policy has finally come into effect! I think it’s a great way to recognize the contributions of farmers to our communities and highlight the need for fresh produce in food banks. It’s a step in the right direction.

As it briefly addresses food waste in the fields, it was also linked to food waste in the home. One thing I came across while looking into this policy is that expiry dates aren’t actually legally regulated and that they are really just a guide to ‘peak freshness’. Keeping this in mind, you might choose to look more at the actual quality of the food product as opposed to the printed date on large batches.

Some of the more informative sites on the subject include:

http://www.ontla.on.ca/web/bills/bills_detail.do?locale=en&Intranet=&BillID=2754

http://www.fin.gov.on.ca/en/credit/cfpdtc/

http://www.omafra.gov.on.ca/english/about/info-taxcredit.htm

http://www.agcanada.com/daily/ont-farmers-to-get-tax-credit-for-donated-food

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