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Agriculture is one of the most dynamic and innovative economic sectors in New York state. With typical ingenuity, growers are tampering with conventional business models, using the latest research to battle pests and mitigate against the impact of climate change.They’re also keeping an eagle eye on the fracking debate, converting dairy farms to grow hops to meet the needs of the brewing boom, and looking to renewable energy to save on their power bills.In a series of reports running this week, the Innovation Trail team looks at some of the current challenges and opportunities for the state’s producers.

Farmers' property taxes rise as land values increase

Joanna Richards

Agriculture is one of the most dynamic and innovative economic sectors in New York state. All this week, the Innovation Trail team is reporting on some of the current challenges and opportunities facing upstate farmers.

One of those challenges is property taxes. Agriculture is a land-intensive industry, so rising property taxes can mean much higher costs for farmers. And taxes have been rising, thanks mostly to increases in the production value of farmland.

John Peck steps out of the small barn on his dairy farm. Behind him, about 30 barn cats maneuver around – and sometimes under – 60 milk cows. The Peck Homestead Farm, in the town of Champion in Jefferson County, has been run by the Peck family for about 200 years.

But now, Peck says he's as close as one year away from potentially selling off his herd or renting some of his land to a larger operation. And that's because his expenses are going up. Peck said part of that is taxes.

“This farm pays in taxes now, between the two parcels, close to $20,000 a year in taxes – school, town, county, fire district. And it affects us a lot, because we're a small farm,” he said.

Peck said his taxes have gone up between $7,000 and $8,000 in the last 10 years.

This is why: farmers in the state of New York can choose how their land is assessed – either like regular homeowners, based on local market conditions, or using a state assessment of their crop production capabilities; how they actually use their land. The state's assessment uses a really complicated formula that relies on data from the USDA about crop sales, as well as a rating system based on farmland soil types.

By and large, the state's calculations reduce farmland values for taxation purposes. State law also caps the amount a farmer's land value can go up per year at 10 percent. But recently, many farmers have been hitting that limit every year.

This trend in land values is linked to rising prices for corn and soybeans driven by erratic weather patterns and demand for ethanol. The economic orthodoxy is: if farmers can make more money selling their crops, their land value also increases and so does their tax bill.

But Jay Matteson, the agricultural coordinator for Jefferson County, said most farmers aren't making more money on their corn and soybeans.

“Corn and soybeans are a big part of the feed that farmers have to feed their cows,” he explained. “And so the feed prices have been going up dramatically as well.”

Matteson said most dairy farms grow some of their feed and buy the rest. That can amount to a double whammy for farmers, who are paying more for their stock feed, and paying more in taxes as their land increases in assessed value. Peck said it's tempting many farmers to sell.

Some legislators are proposing a solution. Assemblyman Ken Blankenbush, a Republican from Black River, in Jefferson County, and many of his colleagues want to lower the cap on rising agricultural land values from 10 percent to 2 percent per year.

This would help put the brakes on tax increases for New York's challenged farmers, where “the average property tax per farm acre is $26.21,” Blankenbush said. “The national average is $6.75. So, when our farmers are competing with other farmers in other states, there's a distinct disadvantage.”

Blankenbush and county Agricultural Coordinator Matteson said everyone should care about boosting small farms in the state. Farmers spend more of their income in their local communities than most other industries, and they help to preserve green space.

But for Peck, the dairy farmer, the issue is more personal. His farm is the only place he's ever lived – he points to a 19th century stone house where he was born, then to a similar home about a mile down the road where he lives now. He said there's no better place to raise children. Keeping his farm in business isn't just about making a living, it's about preserving a way of life.

“Two hundred years of this farm being in the family – [selling] it would probably kill my mother, who's still alive. And I don't know, it would probably kill me,” he said.

 

Reporting by the Innovation Trail is supported by the Corporation for Public Broadcasting. Visit innovationtrail.org.