A2896

An Act establishing a beginning farmer loan program, and supplementing Title 34 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. As used in this act:

“Agricultural improvement” means any improvement, building, structure, or fixture that is suitable for use in farming and is located on agricultural land.

“Agricultural land” means land suitable for use in farming.

“Authority” means the New Jersey Economic Development Authority , established pursuant to section 4 of P.L.1974, c.80 (C.34:1B-4).

“Beginning farmer” means a person with a low or moderate net worth, as determined by the authority, pursuant to standards established by rule or regulation, who wishes to engage in farming and has never farmed before, who has engaged in farming in the State for 10 years or less as of the effective date of this act, or who qualifies as a first-time farmer pursuant to 26 U.S.C. s.147(c)(2).

“Beginning farmer loan program” or “program” means the loan program established by the authority pursuant to this act.

“Depreciable agricultural property” means personal property that is suitable for use in farming and for which an income tax deduction for depreciation is allowable in computing federal income tax under the federal Internal Revenue Code.

“Farming” means the cultivation of land for the production of agricultural crops, the raising of poultry, the production of eggs, the production of milk, the production of fruit or other horticultural crops, grazing, the production of livestock, aquaculture, hydroponics, the production of forest products, or other activities designated by the Department of Agriculture pursuant to rules and regulations.

2. a. The New Jersey Economic Development Authority, in consultation with the Department of Agriculture, shall develop and administer a beginning farmer loan program to facilitate the acquisition of agricultural land, agricultural improvements, and depreciable agricultural property by beginning farmers.

b. A beginning farmer seeking a loan pursuant to the beginning farmer loan program shall apply to the authority, in a form and manner prescribed thereby, and include, in the application, all the information the authority deems to be necessary to effectuate the provisions and purposes of this act.

c. In order to receive a loan under the beginning farmer loan program, the applicant shall:

(1) establish that the applicant is a beginning farmer, for the purposes of this act and the loan program established pursuant thereto, and is a material and substantial participant in farming activities;

(2) be a resident of the State;

(3) propose to use the loan moneys to engage in the purchase of agricultural land, agricultural improvements, or depreciable agricultural property located in the State;

(4) have sufficient education, training, or experience to engage in the type of farming for which the loan is sought;

(5) if the loan is for the acquisition of agricultural land, have access to adequate working capital, farm equipment, machinery, or livestock;

(6) if the loan is for the acquisition of depreciable agricultural property, have access to adequate working capital or agricultural land;

(7) use the agricultural land, agricultural improvements, and depreciable agricultural property purchased with the loan moneys only for farming activities conducted by, or under the direction of, the beginning farmer; and

(8) satisfy any other criteria established by the authority.

d. The authority shall review completed applications for a beginning farmer loan and approve those applications that meet the requirements of this act and the rules and regulations adopted pursuant thereto.

e. A beginning farmer loan under this section shall be issued pursuant to a loan agreement executed between the beginning farmer and the authority. The loan agreement shall provide for the loan to bear interest at rates and terms deemed appropriate by the authority, and shall contain other terms and conditions as may be deemed by the authority to be necessary and appropriate to effectuate the purposes of this act and the rules and regulations adopted pursuant thereto.

f. The authority, in its discretion, may, at any time, require a recipient of a beginning farmer loan to submit an audited financial statement to the authority in order to ensure the beginning farmer’s continued viability.

g. The authority, either through the adoption of rules and regulations, or through the terms of the loan agreement executed pursuant to subsection c. of this section, may establish terms and conditions governing the incidence of default by a recipient of a beginning farmer loan.

h. The authority may participate in, and cooperate with, programs of the Consolidated Farm Service Agency in the United States Department of Agriculture, the Federal Land Bank, or any other agency or instrumentality of the federal government, or with any program of any other State agency in the administration of the beginning farmer loan program.

3. The New Jersey Economic Development Authority, in consultation with the Department of Agriculture, shall adopt rules and regulations , pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), as necessary to effectuate the purposes of this act, including, but not limited to, rules and regulations establishing the maximum allowable net worth at which a person will be deemed to be a beginning farmer, for the purposes of this act, using data compiled by the National Agricultural Statistics Service in the United States Department of Agriculture.

4. This act shall take effect immediately

STATEMENT

This bill would require the New Jersey Economic Development Authority (NJEDA), in consultation with the Department of Agriculture, to develop and administer a beginning farmer loan program to facilitate the acquisition, by beginning farmers, of: (1) agricultural land or agricultural improvements (i.e. improvements, buildings, structures, or fixtures that are suitable for use in farming and located on agricultural land); or (2) depreciable agricultural property (i.e., personal property that is suitable for use in farming and for which an income tax deduction for depreciation is allowable under federal law).

Under the bill, a “beginning farmer” is defined as a person: (1) with a low or moderate net worth, as determined by the NJEDA, who wishes to engage in farming and has never farmed before; (2) who has engaged in farming in the State for 10 years or less as of the effective date of this act; or (3) who qualifies as a first-time farmer pursuant to 26 U.S.C. s.147(c)(2).

To qualify for, and receive, a loan under the beginning farmer loan program, an applicant would need to:

(1) establish that the applicant is a beginning farmer, as defined in the bill, and is a material and substantial participant in farming activities;

(2) be a resident of the State;

(3) propose to use the loan moneys to engage in the purchase of agricultural land, agricultural improvements, or depreciable agricultural property located in the State;

(4) have sufficient education, training, or experience to engage in the type of farming for which the loan is sought;

(5) if the loan is for the acquisition of agricultural land, have access to adequate working capital, farm equipment, machinery, or livestock;

(6) if the loan is for the acquisition of depreciable agricultural property, have access to adequate working capital or agricultural land;

(8) satisfy any other criteria established by the authority.

The bill requires that an NJEDA-approved loan to a beginning farmer be issued pursuant to a loan agreement executed between the beginning farmer and the NJEDA. The loan agreement is to provide for the loan to bear interest at rates and terms deemed appropriate by the NJEDA, and may contain any other terms and conditions deemed by the NJEDA to be appropriate for the bill’s purposes. The authority would further be authorized, either by regulation or through the terms of the loan agreement, to establish terms governing the incidence of default by a beginning farmer loan recipient. The bill also authorizes the NJEDA, at any time, to require a beginning farmer loan recipient to submit an audited financial statement in order to ensure the beginning farmer’s continued viability.

Lastly, the bill authorizes the NJEDA to participate in, or cooperate with, programs operated by the United States Department of Agriculture Consolidated Farm Service Agency, the Federal Land Bank, or any other federal or State agency, for the purposes of administering the beginning farmer loan program.