The food donation tax credit for farmers will be valued at 25 per cent of the fair market value of the products they donate, the Liberal government said Monday.
The tax credit — the only one of its kind in Canada — will help farmers donate more fresh produce to their local food banks, it added.
Ontario farmers who have donated agricultural products to an eligible community food program in the province on or after Jan. 1 this year will qualify for the credit.
Corporations that carry on the business of farming in Ontario may also claim the credit on their 2014 corporate income tax return.
Ontario's agri-food sector contributes $34 billion to the province's economy and supports more than 740,000 jobs. The program is part of the government's strategy aimed at building a stronger agri-food industry.
The government estimates that one-third of the 375,000 Ontarians served by a food bank every month are children.
The Ontario Association of Food Banks welcomed the new tax credit, saying everyone in the province should have the opportunity to enjoy local food.
"Many food bank clients do not receive the recommended daily servings of fruits, vegetables, and protein, which causes additional strains on one's health and well-being," the association's executive director, Bill Laidlaw, said in a statement.
"A balanced diet with local, fresh, and nutritious foods will help improve the health of food bank clients as well as the health of communities across Ontario."
Neil Currie, general manager of the Ontario Federation of Agriculture, also praised the initiative, saying Ontario's farmers have a long tradition of donating their products to charitable causes.
"We believe this credit will both honour that tradition and help motivate others to donate."