What to know about Shapiro’s proposed $10.3M agriculture innovation program

This story was produced by the State College regional bureau of Spotlight PA, an independent, nonpartisan newsroom dedicated to investigative and public-service journalism for Pennsylvania. Sign up for our north-central Pa. newsletter, Talk of the Town, at spotlightpa.org/newsletters/talkofthetown.

BELLEFONTE — An open-ended pitch by Democratic Gov. Josh Shapiro to give millions of dollars to Pennsylvania’s agriculture industry to make it more innovative is stoking skepticism and hope among lawmakers and farmers.

Shapiro wants to use $10.3 million to create a grant program that would promote savings throughout the agriculture sector by giving companies access to better equipment, technology, and state resources. In his budget pitch, he cited a methane digester that turns waste into energy on a Juniata County farm as an example of the kinds of efforts the grants could support.

The state Department of Agriculture, which would administer the program, has yet to specify what kinds of projects could get funding, and likely won’t release details unless the proposal is included in the budget, longtime agriculture secretary Russell Redding said during legislative hearings last month.

The funding would also potentially create two new staff positions at his agency to help farmers find existing programs for conservation and innovation. The bulk of the funding would go to farmers, Redding said at an event in Lancaster County with Shapiro in early February. Shapiro is proposing $599.8 million overall to fund the agency.

Pennsylvania has roughly 49,000 farms, according to the 2022 Census of Agriculture released last month by the U.S. Department of Agriculture, which conducts the review every five years. The most recent count reflects a 4,100 decrease since 2017.

Agriculture remains one of Pennsylvania’s top industries, though it faces challenges as Pennsylvania’s veteran farmers age and younger ones deal with financial barriers like rising supply and equipment costs. Climate change also makes it hard for farmers to plan long-term.

Pennsylvania already has grant and loan programs that support agriculture research, startup costs for young farmers, and business development. The methane digester mentioned in the governor’s budget address received funding from existing public programs.

Redding said the innovation proposal would complement those efforts.

“We have talked about having a fund such as this for a long time,” he told state senators. “We’ve got ag research funds. We’ve got DCED economic development programs and other things that we’ve done, but nothing that carries the label of innovation.”

Industry stakeholders told Spotlight PA they welcome the help.

Innovation enables farmers to “fine-tune their businesses,” said David Smith, executive director of the Pennsylvania Dairymen’s Association.

Projects and equipment that shore up farm operations and reduce waste can vary in price and resources to build.

New Morning Farm in Fulton County uses a forced air system for faster cooling and better produce storage. The system, which cost a few hundred dollars, has a blower that pulls chilled air from a refrigerated area, and it’s easy to replicate at facilities of different sizes, said Adam Mihalik, the 95-acre farm’s field manager.

The biggest challenge was finding research to design the system, he told Spotlight PA.

“I don’t need a grant for a $200 project,” Mihalik said. “I need access to the information.”

Still, Mihalik doesn’t oppose the state spending money on a program that would help farmers find ways to optimize their work, especially smaller operations. Getting access to better cooling systems for produce storage “would be an enormous aid” to farmers’ bottom lines, he said.

Republican lawmakers say the governor’s $48.3 billion overall spending plan is fiscally irresponsible; however, agriculture investments have received bipartisan support.

It’s hard for farmers to spend thousands of dollars on one piece of equipment. Another grant opportunity that could offset costs and enhance profits is something state Sen. Elder Vogel (R., Beaver) supports, he told Spotlight PA.

He chairs the state Senate Agriculture and Rural Affairs Committee and also operates his family’s farm in Western Pennsylvania.

Other lawmakers, like state Rep. Dan Moul (R., Adams), want to know what efforts would qualify for innovation dollars before backing the proposed spending. He also wants the administration to demonstrate a clear need before lawmakers approve the program.

“I don’t want to hear the agriculture secretary saying, ‘Give me this taxpayer money, and we’ll figure out how to spend it later,’” Moul told Spotlight PA. “That’s not how government is supposed to work.”

The Commonwealth Foundation opposes the proposed innovation program. Andrew Holman, a policy analyst for the conservative think tank, said he thinks that most farmers probably wouldn’t benefit from the dollars. He argued that the funds would likely go to private businesses or individuals based on their “political savviness.”

The Commonwealth Foundation supports adjusting farming-related taxes and regulations rather than giving the industry more funding. It argues that Pennsylvania should increase its cap for net operating loss carryover, which allows businesses to deduct one year’s losses from profits in future years. Pennsylvania’s cap is lower than the federal limit.

State Rep. Mike Sturla (D., Lancaster), who promoted the innovation proposal alongside Shapiro and Redding, said his dad worked as a farm equipment engineer. Sturla sees the proposal as a chance for Pennsylvania to encourage practices that boost agriculture productivity in an “environmentally sound way,” Sturla told Spotlight PA.

He also serves on the Chesapeake Bay Commission, a tri-state legislative body that works on water restoration, and said he thinks investments in more innovative agriculture could mitigate runoff that pollutes waterways.

Sturla’s open to having grant applicants explain how a piece of equipment or technology would increase production or decrease pollution. But he says lawmakers should trust the farmers making the requests.

“One, you become limited. It’s not an innovative thing. Then, we, as the legislators, are the innovators. I’ve been there long enough to know that’s not the case,” Sturla said of lawmakers setting rigid requirements. “I trust the entrepreneurial innovation of farmers and those businesses that are surrounding it to say, ‘Get creative here, guys, and we’ll help fund it.’”

Orchardists in Adams County have said using mobile platforms — as opposed to ladders — would allow them to manage tree fruit more efficiently. Ben Wenk, a seventh-generation farmer at Three Springs Fruit Farm, said he’s interested in the equipment, but the more than 300-acre farm isn’t ready for it.

“You have to plant your orchards to match the technology,” he said.

Three Springs is considering vertical integration to adapt to the agriculture industry shifting toward processed goods and “agritainment,” or activities that make farms a place to visit. When his grandpa ran the farm decades ago, they would load their products onto a truck, drive a short distance away, and get a return on those goods, Wenk said.

“Those types of business models are slowly drying up in terms of their viability,” he said. “Returns are not what they used to be.”

Now, their apples go to a local processor where they are turned into juice, sauces, or cider and sold at retail stores nationwide, Wenk said. Although grants to increase efficiency could help, he said to “really move the needle,” farms need resources to grow specialty crops.

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