Estimated cost and economic impact of a dairy tax credit in Georgia
Several southeastern states have launched initiatives aimed at stabilizing or growing their local dairy industries. One such state is South Carolina, which in 2005, enacted the South Carolina Dairy Tax Credit program. This program offers South Carolina’s dairy farmers a tax credit (or tax rebate if no state income tax is due) of up to $10,000 on their first 500,000 pounds of milk produced during the year and up to $5,000 on each additional 500,000 pound increment. This credit is available when the Appalachian Federal Milk Marketing Order price for milk falls below South Carolina’s 3-year average cost of production plus the average cost of transporting milk into the state. In order to assess the potential cost and economic impact of a South Carolina style diary tax credit program in Georgia, the University of Georgia’s Center for Agribusiness and Economic Development was asked to simulate the afore mentioned tax credit calculations based on Georgia’s milk production and associated production costs using sample calculations provided by the South Carolina Department of Agriculture.