Value-added agriculture offers farm businesses the opportunity to reach new customers, access new markets and increase profitability. With a growing demand from Ontarians for fresh, local and nutritious products, value-added production remains a vital element in Ontario’s food value chain. On-farm processing and retail is a significant contributor to economic growth in the agri-food sector and incentives can continue to boost this growth. Unfortunately, larger production value-added facilities are faced with an industrial/commercial tax rate resulting in a burden for farmers.
Prior to 2018, producers were taxed at the full industrial/commercial tax rate which changed when optional sub classes were introduced. If municipalities chose to implement these sub classes, value-added properties were taxed at only 25% of the industrial/commercial rate. What dramatically lowers the benefit of this optional tax class is this rate is only applied to the first $50,000 of assessment value. This insinuates that only small on-farm processing and retail can benefit, disincentivizing larger producers who grow and expand to keep up with demand. Additionally, there has been very little uptake in this optional sub class because it only provides minimal benefits for farmers.
There is tremendous opportunity for our sector to contribute to economic recovery and growth through on-farm processing and retail by creating more jobs and revenue. OFA believes that if at least 51% of the product is grown and value-added by the same farmer, and at least 90% of the product is grown in Ontario, it should simply be considered an extension of the farm business and taxed at no more than 25% of the residential property tax rate.
In the recently announced fall economic statement, the government announced an increase in the cap from $50,000 to $100,000. While this is a positive change and a move in the right direction, it does not yet achieve the overall benefit that Ontario on-farm producers, processors and retailers require. To fully incentivize farm value-added activities, the removal of the assessment cap is needed. OFA continues to advocate to have the assessment cap removed.