Reducing the cost of innovation

What pork producers should know.

March 27, 2024

3 Min Read
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By Isabella Rivera, SwineTech

As the pork industry nears the end of 2024’s first fiscal quarter, producers around the country are examining the finances of their facilities. But what should a producer know about leveraging the costs they’re already putting into their facilities? Particularly with so many facilities using innovative practices and technologies to overcome obstacles like labor shortages and high input costs to production, industry leaders should be aware of all potential opportunities for them to capitalize on prior investments.

Working within a system: Opportunities for tax credit and grants

It’s that time of year: tax season. As producers are headed toward tax deadlines, the costs versus profits of running a facility become especially apparent, but for farmers seeking to improve their facilities via innovative products and research, there may be unique avenues available for them to earn credit, such as the R&D tax credit.

This program is often associated with tech companies seeking to improve their efficiency, but it is truly designed to increase technical jobs available in the U.S. and, in fact, covers many businesses, including those in the agricultural sector, for work they are already doing.

Pork producers may qualify for this credit provided that they are:

  1. Aiming to reduce technical uncertainties in their facilities.

  2. Using significant experimental methods in their work.

  3. Experimenting based on a hard science process.

  4. Aiming to improve their systems of operation and/or create a new product.

For example, producers working toward improved nutrition formulations, barn design, swine genetics and biosecurity protocols could all have their research qualify. Similarly, producers that have invested in unique technologies such as PigFlow, a data management and point-of-care platform, to track and streamline the operations of their facilities could qualify as well.

Additionally, for the many producers that are invested in their communities, another relevant program may be an Urban Agriculture and Innovative Production Grant from the USDA, which seeks to support food production and access across different environments within the U.S. Producers can receive this grant for activities such as researching the growth and sale of nutritious food as well as implementing emerging technologies and practices to address infrastructure and production needs.

Looking further into the future and the systems surrounding agriculture, the USDA has announced a goal of increasing food production by 40% by 2050 while simultaneously halving the environmental footprint of agriculture in the United States. To meet this goal, it has announced the Agriculture Innovation Agenda, which intends to align public and private agricultural research funding and the use of innovative technologies to make U.S. agriculture more sustainable.

Understandably, the proposition of “sustainability” measures can seem daunting—and potentially like a drain on a producer’s resources. However, these practices, aside from aligning with market demands, such as research suggesting that 61% of consumers rate sustainability as an important purchase criterion, can be economically advantageous for producers.

For instance, research demonstrates that precision feeding can reduce waste on a farm and subsequently reduce protein and phosphorus intake and greenhouse gas emissions on swine farms. However, at the same time, it lowers production costs while increasing individual nutrient efficiency for an animal, meaning a producer can pay less to bring a better product to market. Precision feeding and other innovative systems of production that are already widespread in the pork industry support the goals of the AIA while also providing economic payoff for producers.

Alternatively, as part of its promotion of climate-smart agriculture initiative, the USDA is also offering various funding opportunities, including grants, loans and partnership programs, for farming operations to implement solutions, practices and products that make their processes more sustainable.

Pork production is an enterprise that must evolve to keep up with the demand for high-quality protein, but producers don’t have to finance that shift all by themselves. By carefully calculating the advantages they already have from relying on innovative and eco-friendly management, producers can identify unique sources of funding to support their operations as the year moves forward.

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