Support and Grow Indiana Agriculture

The State That Works:
Support and Grow Indiana Agriculture

Policy Goal: Support and grow our state’s agricultural economy through trade promotion, agricultural innovation, skills development and a competitive tax structure for Hoosier farmers.

Vision Plan Goals Served:

• Goal #2: Attracting new investment in Indiana, with emphasis on manufacturing, agriculture, life sciences and logistics

Policy Steps:

• Task the Indiana State Department of Agriculture (ISDA) to vigorously promote, in Congress and overseas, the opening of additional markets for Indiana agricultural products
• Embrace and support the creation of a Food and Agriculture Innovation Corridor in Indiana
• Support coordination between the ISDA, the Department of Education (DOE), and our educators on the development of agricultural curriculum in our schools
• Support a permanent fix to the soil productivity factor issue in the agriculture land assessment formula
• Benchmark and improve the competitiveness of our agricultural tax structure

Rationale:

International trade is a core strength of Indiana’s economy, particularly our agricultural sector. With today’s global market and the State’s valuable goods and commodities, Indiana is well-aligned to prosper in exports. In total, Indiana exported nearly $29 billion in 2010.^[1]

The value of Hoosier agricultural exports grew at an average annual rate of 8.2 percent from 2000 to 2010, exceeding U.S. average rate of 7.6 percent in current dollars.^[2] Hoosiers exported $3.4 billion worth of agricultural commodities and processed goods in 2010. The ripple effects spurred an additional $2.2 billion in economic activity in the state.^[3] In total, Indiana is the 8th largest agricultural exporter in the United States and leads in the Midwest with $16 billion in gross state product.^[4] Over 18,000 farm jobs and $620 million in income are directly tied to Indiana agricultural exports.^[5]

Growth in Indiana’s agricultural exports value has outpaced all growth of other non-agricultural exports combined. Non-agricultural exports saw a 90 percent increase from 2002 to 2010 while agricultural exports increased 133 percent during that same time (see Chart 1).

The Indiana State Department of Agriculture (ISDA) has the unique ability to lead efforts to promote agricultural trade because of its direct relationships with producers and commodity organizations, agricultural businesses, foreign governments, the Indiana Economic Development Corporation (IEDC), Food Export – Midwest Association and the United States Department of Agriculture (USDA). In a Pence Administration, ISDA will work with these groups as well as our Congressional delegation and our trading partners to ensure that foreign markets remain open and that we open new markets for our farmers, including continuation of agricultural trade missions and new methods of promoting Indiana agriculture worldwide.

Indiana also has an opportunity to lead the nation in agricultural innovation. BioCrossroads recently announced an initiative to create a Food and Agriculture Innovation Corridor in Indiana.^[6] This effort seeks to harness and leverage existing resources such as Purdue University, Dow AgroSciences, Elanco, and the Indiana State Department of Agriculture, in support of a goal of making Indiana a nationally-recognized center of technological development and commercialization in the agricultural sector. This initiative presents tremendous economic opportunity and, if executed correctly, could do for Indiana agriculture what the Research Triangle did for North Carolina’s research and development sector.

The ISDA should be tasked to serve as the chief liaison to this effort, with support from the Indiana Economic Development Corporation (IEDC), Governor’s Office, and Lieutenant Governor’s Office. ISDA, which serves as the lead economic development arm in the agriculture sector for the state of Indiana, should make support of this initiative a top economic development priority, and should stand ready to be a full partner in this effort. Partnership will be the key ingredient to beginning and sustaining this effort, and all public institutions, from ISDA to our universities, should stand ready to fully engage and work with the private sector.

A key factor in growing our agricultural sector is the development of the next generation of agricultural workers. Nearly 20 percent of the Hoosier workforce is employed in the agriculture sector, and the skills required by that sector are increasingly focused on math and science skills.^[7]

To ensure that Indiana’s educational efforts are fully supportive of these efforts, we would seek to ensure that agriculture is represented on the newly-created Indiana Works Councils, as they seek to develop a new, demand-driven career, technical and vocational curriculum for our high schools.^[8] FFA, Purdue and Ivy Tech should assist DOE in specific curriculum development. We would also ensure, as the opportunity arises, that at least one member of the Education Roundtable is a representative of the agricultural sector. With these two steps, we will have better coordination between our agricultural community and our educators in the design of the curriculum and programs needed to boost the skills for the future of our agricultural industry.

Agricultural land is assessed for property tax purposes based on a special formula that takes a number of factors into account, including something called the soil productivity factor.^[9] This factor takes the productivity of a farmer’s soil into account for purposes of property tax assessment – the higher the soil’s productivity, the higher the value of the property.

Recently, the Department of Local Government Finance (DLGF) requested new soil productivity factors from the USDA.^[10] The new factors, when plugged into the agricultural land assessment formula, have led to a general increase in the assessed value of agricultural land. Specifically, according to estimates by the Legislative Services Agency (LSA) and reported by Professor Larry DeBoer at Purdue University, the new soil productivity factors would increase property taxes by 18.5 percent on agricultural land in 2013.^[11]

In 2012, the General Assembly appropriately delayed the implementation of the new soil productivity factors.^[12] A Pence Administration would work with key stakeholders to develop a permanent solution to the soil productivity factor issue in order to protect our farmers from a significant increase in their property taxes.

Moving forward, it would be advisable to take a broader look at the competitiveness of our agricultural tax structure. Even apart from the soil productivity factor, assessed value for agricultural land has been on the rise in recent years.^[13] To make Indiana the state that works for farmers, we need to give Indiana the most competitive agricultural tax structure in the Midwest. We will seek to benchmark our agricultural tax structure compared to other states, and then work with key stakeholders and the General Assembly to make any necessary changes to enhance our competitiveness.

Back

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[1] Indiana Chamber of Commerce, Indiana Vision 2025: A Plan for Hoosier Prosperity; pg 29.
[2] Indiana Business Research Center, Cultivating Trade:  The Economic Impact of Indiana’s Agriculture Exports, April 2012, located at http://www.ibrc.indiana.edu.
[3] Id
[4] Id
[5] Id
[6] See BioCrossroads, Food and Agricultural Innovation: 21st Century Opportunities for Indiana, located at http://www.biocrossroads.com/Documents/Reports/Food-and-Agricultural-Innovation-Report-2012.aspx.
[7] Id.
[8] The Indiana Works Councils will be comprised of employers and educators in each region of the state and be tasked with the goal of studying the availability of career, technical and vocational education, and empowered to recommend changes to the statewide career and technical curriculum. See http://www.mikepence.com/issues-Vocational-Education/.
[9] See Frequently Asked Questions: Agricultural Land Base Rate for 3/1/2012, located at http://www.in.gov/dlgf/files/111230_FAQ_-_Agriculture_Land_Base_Rate_-_March_1_2012.pdf. [10] See Soil Productivity Factor Update, located at http://www.in.gov/dlgf/files/120202_Soil_Productivity_Factor_Update.pdf.
[11] See Larry DeBoer, Why Farm Land Assessments Will Continue to Rise, located at http://www.agecon.purdue.edu/extension/pubs/paer/pdf/PAER4_2012.pdf.
[12] See Soil Productivity Factor Changes, located at http://www.in.gov/dlgf/files/120316_Soil_Productivity_Factor_Changes.pdf.
[13]  See DeBoer, supra note 11, Figure 1.