Proposed Farm to Glass legislation: A boon to Michigan farmers?

HB 5275 provides tax incentives for brewers, cider, wine and mead makers to purchase Michigan-grown products.

According to the 2013 Demeter Group Investment Bank Report, “State of the Craft Beer Industry 2013”, the U.S. craft beer sector grew by 13.9% from 2009-2011. While craft beer currently represents only 13.7 percent of overall beer production in the U.S. it is projected to increase to 15 percent by 2020, if current growth rates continue. The report also ranks the state of Michigan as the #1 “high growth state” in terms of increase in number of breweries.

The January/February 2014 Michigan Beer Guide offers support for growth in Michigan, and notes that 164 craft brewery licenses have been approved in Michigan, up from 128 in 2012. The collective potential for economic development in the craft beer, wine, mead, and cider sectors has caught the eye of elected officials in Lansing.

Michigan House Bill 5275 “Farm to Glass” legislation was introduced on February 4, 2014, by Representative Douglas Geiss (D) of Taylor, Mich., with several co-sponsors. From January 1, 2015-December 31, 2019, The bill would offer a tax credit for wine, beer, mead or cider that is manufactured and sold in Michigan between January 1, 2015-December 31, 2019 if it meets the following qualifications: Beer must be produced with at least 20 percent of its hops grown or produced in Michigan and at least 40 percent of the other ingredients. Wine, mead or cider must be made with at least 40 percent of its ingredients grown or produced in Michigan. Beginning in 2020, the percentages increase, further spurring the growth of the brewing and winemaking industry in Michigan.

Loosely modeled after legislation in New York, The bill has the potential to increase Michigan production of hops, barley, cider apples, wine grapes and honey. The proposed Michigan law offers: $0.08 per gallon tax credit for the first 500,000 gallons produced and sold; $0.04 per gallon tax credit for the next 14,500,000 gallons produced and sold; and no credit allowed after 15,000,000 gallons. While the credits are not as favorable as those in New York, they offer a real opportunity for Michigan farmers to help supply these growing sectors.

For example, Michigan growers are leading the charge across the Great Lakes Region particularly in relation to hops production. A Michigan State University Extension survey found that Michigan will have nearly 400 acres of hops planted by spring 2014, representing over $5 million in investment. Michigan currently has eight hop processing operations representing over $3 million in infrastructure investment.

In support, the Michigan State University Upper Peninsula Research and Extension Center is taking the lead on statewide malting barley cultivar trials, and the MSU Northwest Michigan Horticulture Research Center has been conducting hard cider apple cultivar trials for several years. For more information visit the Michigan State University Ag BioResearch webpage.

For more information please contact Rob Sirrine or visit the MSU Hops Production Website.