Agritourism businesses can receive $1,000 tax credit under new law
Illinois agritourism businesses can receive up to $1,000 back on liability insurance costs in 2022 and 2023 under new legislation.
The Agritourism Liability Tax Credit aims to lessen the essential cost for working farms opening their operations to the public. Agritourism includes businesses like pumpkin patches, apple orchards, petting zoos, hayrack rides, corn mazes and more.
Raghela Scavuzzo, associate director of Food Systems Development for the Illinois Farm Bureau and the executive director of the Illinois Specialty Growers Association, said the industry grew at a rate of roughly 7% over the last few years.
“We have more and more people wanting to use this to bring the next generation on to the farm,” she said at a news conference on Thursday in Morton. “Urban farms are using this to continue to be a successful business. If insurance is a prohibitive cost, we will not see that continue to grow.”
There is an inherent risk in allowing members of the public on a working farm.
“When someone comes onto the farm, you can tell them to not stick their arms out on a hayride,” said Scavuzzo. “But if they got scratched, they can still sue, we've had that happen.”
Scavuzzo claimed this can lead to a near doubling of liability insurance costs for these businesses. Even with the risks, advocates for agritourism believe it plays an important role.
“Local food is a trend that is not going to go away,” said Jackie Sambursky, chief of the Illinois Department of Agriculture Bureau of Marketing and Promotion. “ I think it's something that we'll continue to see. For years and years and years to come in that transparency, of being able to be on a farm where you might be grabbing some food that you're going to eat is really cool. I hope that it encourages people to grow their own food.”
Owners of agritourism businesses also see a benefit for the community and the farmers when the public has a comprehensive understanding of where their food comes from and how a family farm works.
“I really feel like there's an incredible number of teaching and education opportunities here,” said John Ackerman, owner of Ackerman Family Farms in Morton. “People have a lot of questions and that makes us feel good that they feel comfortable.”
He hopes the tax credit is a sign of more legislation in the future.
“Not only does it help for this particular cost, but it also kind of gets a foot in the door for us to be recognized as a viable important business in the state of Illinois,” he said. “We're hoping someday we get more protections from actual, you know, injuries and deaths that could occur at a working farm when you open it up to this many people.”
According to Mark Raney, associate director of state legislation for the Illinois Farm Bureau, those further protections aren’t out of the question and other states could serve as an example.
“They have some sort of protection enshrined in their law,” he said “And so what that means is, if you're a patron coming to one of their farms, you are acknowledging there are risks that the owner can't do anything about.”
He used examples like a branch falling on someone during apple picking, or stepping in a divot and twisting an ankle, as situations that owners of agritourism businesses shouldn’t be held liable for.
“It's not reasonable to think that the owner of that business could, you know, inspect every inch of their property every single day, and protect you,” he said. “We're out in nature, like that stuff happens.”
Raney also acknowledged that $1,000 probably won’t fully cover the liability insurance cost for most agritourism operations. Still, Ackerman said the tax credit helps ease some upcoming economic anxieties for agritourism businesses, such as the rise in minimum wage.
“Our single biggest expense for the agritourism side of our business is labor, and it will virtually double in a five or six-year period,” he said. “That's a hard expense. I hope we get a tax break regarding that. There was talk of it before, I hope that's something that's in the works.”
The tax credit is currently in effect for the next two years, but Raney said the Farm Bureau will be tracking how many businesses take advantage of the credit as a metric of the program’s success.
“This is a good program they can take advantage of. Hopefully that will spur more growth” he said. “We’ll have to see.”
The application for the tax credit is live now here. Sambursky said she expects business owners will have to wait for about a month for their application to be processed.