6/26/2012

Research Strong Basis for New Irrigation Tax Credit Legislation

AUBURN, Ala. — A bill the Alabama Legislature approved in May to provide tax incentives to farmers who adopt irrigation technology is expected ultimately to increase crop yields and quality, boost farm income, energize the state’s economy and create jobs, Auburn University research has indicated.

The Agricultural Irrigation Systems Tax Credit legislation that Alabama Gov. Robert Bentley signed into law May 14 was sponsored by House Agriculture and Forestry Committee Chairman Chad Fincher, R-Semmes, with Senate Agriculture, Conservation and Forestry Committee Chairman Tom Whatley, R-Auburn, putting forth a companion bill in the Senate.

The new law provides that farmers who install new or improve existing on-farm irrigation systems to take advantage of Alabama’s abundant groundwater, surface water and rainfall resources can receive a one-time state income tax credit totaling up to 20 percent of the cost, to a maximum of $10,000.

Behind the legislation is a decade of collaborative and comprehensive research conducted through the Alabama Agricultural Experiment Station at Auburn University in cooperation with the Alabama Cooperative Extension System, the University of Alabama in Huntsville, the University of Alabama and Alabama A&M and Tuskegee universities. Those studies have shown the economic benefits of using irrigation on Alabama crops, said Sam Fowler, director of the Auburn University Water Resources Center.

“We feel confident, based on those years of research, that we have the potential to do a lot more irrigation in Alabama,” Fowler said. “We have 2.5 million acres of prime farmland in Alabama that could be irrigated, but less than 120,000 acres of that land is actually irrigated.”

Compare that to Mississippi and Georgia, each of which reports about 1.5 million acres of crops under irrigation.

A major increase in irrigated acreage here in the next few years would have a tremendous fiscal payoff, the bills’ sponsors said.

“Studies have shown that 1 million acres of irrigated land in Alabama could provide a boost in our agriculture industry equal to the same economic impact as two auto plants, or 26,000 jobs,” Fincher said. “This bill, which was a direct product of the Joint Legislative Committee on Water Policy, should encourage more farmers to tap into the state’s bountiful water resources in an effort to boost farm production.”

The Senate’s Whatley agreed.

"This tax credit will enable agriculture producers to invest in infrastructure that will increase production, and in turn, increase economic output,” Whatley said. “That is what we are doing: making the economic environment friendlier to job creation and economic growth.”

Co-sponsors of the House bill included Alan Boothe, R-Troy; David Sessions, R-Grand Bay; Phil Williams, D-Huntsville; A.J. McCampbell, D-Linden; Richard Laird, D-Roanoke; Mark Tuggle, R-Alex City; and Elaine Beech, D-Chatom. The Senate version was co-sponsored by Arthur Orr, R-Decatur; Gerald Dial, R-Lineville; Clay Scofield, R-Guntersville; Paul Bussman, R-Cullman; Dick Brewbaker, R-Montgomery; Billy Beasley, D-Clayton; and Jerry Fielding, D-Sylacauga.

In a survey AAES researchers conducted in 2011 to determine the major barriers to irrigation in Alabama, the top obstacle was concern that the steep investment required to install, operate and maintain an irrigation system would not be cost-effective. Six out of 10 farmers surveyed, however, said they would be more likely to add irrigation if a cost-share program were available.

Studies have shown that irrigation can significantly increase yields of all row crops and horticultural crops as well as hay and forages. Alabama imports $1.4 billion worth of grain a year — 120 million bushels of corn and 60 million bushels of soybeans — to support the state’s poultry and other animal agriculture industries. Thus, higher soybean and corn yields could lower production costs for those producers.

Bill Batchelor, Auburn College of Agriculture dean and AAES director, called the incentive program a win-win for farmers and citizens of Alabama.

“It is clear from the research our multi-university team has conducted that irrigation is a critical tool to increase farmer income and mitigate farmer risk,” Batchelor said. “It will lead to more jobs and economic growth in our rural economy.”

A number of Alabama farmers already are adopting state-of-the-art-irrigation strategies. Dee River Farms in west Alabama, for instance, recently installed a high-tech irrigation system to support its 10,000-acre operation. In addition, a new variable-rate irrigation system installed at the AAES’s E.V. Smith Research Center in Shorter is allowing researchers to develop ways farmers can water their crops more efficiently and effectively.

Farmers who are considering irrigation installation in response to the new tax incentive are urged to talk with their local Alabama Cooperative Extension System representatives, said ACES Director Gary Lemme.

“Alabama farmers now have an opportunity to transform their production systems, yield goals and profitability through the adoption of irrigation technology,” Lemme said. “Extension is committed to providing farmers with the research-based information necessary for them to decide if irrigation is right for them and what type of systems will enhance the sustainability of their farm operations.”

On Wednesday, Aug. 15, Alabama farmers, policymakers and water-use experts are invited to gather at the Alabama Department of Agriculture and Industries Richard Beard Building in Montgomery to discuss irrigation’s huge potential for enhancing farm production and for revitalizing rural economies in the state during the first Alabama Irrigation Initiative Summit. For more information and to register, visit http://www.aaes.auburn.edu/water/conf/2012/.

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Auburn University College of Agriculture
Alabama Agricultural Experiment Station
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