New tax credits aim to boost meat processors

Jill Wood: Tax credits will provide an economic boost for the meat processing industry.

A Missouri tax credit program started in early 2018 to aid meat processors is on its way to $1 million in credits issued statewide.

The Meat Processing Facility Investment Tax Credit Program is administered through the Missouri Agricultural and Small Business Development Authority. Meat processors that construct, improve or acquire buildings or equipment used exclusively for meat processing are eligible to apply for the tax credits.

The state authority has issued 20 tax credits to companies totaling $839,589 since January 2018.

“We’ve been impressed by the number of producers that have responded,” said Jill Wood, executive director of the state authority.

Springfield-based pet food ingredient provider International Dehydrated Foods LLC is among the companies that were issued tax credits. The company was able to take the tax credits for improvements to its meat processing facility in Monett, said Christy Burnett, senior accountant with IDF. She said the company would apply the credits, meant to stimulate investment in the agriculture industry, in the tax years 2017-19.

Company spokeswoman Chantel Gebhard said processing and manufacturing equipment was purchased for the Monett facility, 700 S. Chapel Drive. More than $1 million was spent in 2017, and over $2 million in 2018 for qualifying expenses, equating to the company being able to claim the full $75,000 in credits for both years, she said.

According to legislation that went into effect last year, Missouri-based meat processors can save on their tax bills by claiming 25% of the amount paid in a tax year for modernizing or expanding their facilities. No more than $75,000 can be claimed per year, Wood said, and the tax credit may be carried forward up to four years.

She declined to furnish the full list of companies approved for the Department of Agriculture-issued tax credits by press time.

“We are continuously improving our efficiencies and production through modernization and expansion, and these types of credits certainly aid in our ability to achieve those results faster,” Gebhard said via email.

IDF and sister company American Dehydrated Foods LLC was founded in 1978 by William Darr and operate headquarters at 3801 E. Sunshine St. Together, they have 11 manufacturing sites and two technical centers in North America. According to past Springfield Business Journal reporting, company officials signed an agreement in January to sell for $900 million to Germany-based Symrise AG, a global supplier of fragrances, flavors, food and cosmetic ingredients. Gebhard said the transaction had not closed as of July 10.

Meat processing plants have been holding steady over the past several years, said Niki Cloud, executive secretary of Carthage-based Missouri Association of Meat Processors. She said approximately 120 processors operate in the state, the same level as 2015.

According to the North American Meat Institute, a total of 835 federally inspected livestock slaughter plants were in operation nationally in fiscal 2018, while another 3,773 plants processed red meat, but don’t slaughter. In addition, 2,979 federally inspected poultry slaughter and processing plants were operating in the U.S. in fiscal 2018.

Wood said the state financial incentive can help at least maintain the volume of plants in Missouri, particularly if operators ever consider moving out of the state.

“There’s definite economic benefit that’s going to come from this, not only for the producers but the users of the meat processing industry,” she said.

Wood said the tax credit programs her department oversees are the result of legislation that started in 2016.

“Everything that we do is legislatively statute driven,” she said, noting the tax credit is among the few that benefits agriculture.

The program got its start with Senate Bill 665, which was signed into law by then-Gov. Jay Nixon, she said. Gov. Mike Parson sponsored the bill when he was a senator.

“It’s kind of like the financial arm of the Department of Agriculture,” Wood said of the authority, which reviews and approves loan applications for the programs, and sets related policy and direction.

Wood noted the tax credits are retroactive, as companies can claim them on expansions or improvements performed since Jan. 1, 2017. The credit can be applied in tax years 2017 to 2021. The state charges a $100 application fee and tax credit issuance fee of 3%.