Land taxes per cow going up in South Dakota
July 22, 2015
Across South Dakota land taxes have been increasing the past few years. But on the western side of the state we have seen an unsustainable increase. Previously, property taxes were based on land production. Currently, the land taxes are based on land classification, for example Class 1-5, with Class 1 being the highest quality of soil in South Dakota. Class 1 is normally located in the southeastern part of South Dakota. As you move west the quality of the soil decreases. In Central South Dakota, Land Classification may range from Class 2-4. In the Western part of South Dakota we have mainly range pasture with some areas of cropland which is primarily classified from Class 3-5.
Currently, Class 3 in Eastern South Dakota is taxed the same as a Class 3 in Western South Dakota even though the land may be range land. In my mind, two of the biggest flaws in this logic are weather (rainfall) and carrying capacity. When you compare the same Class 3 land in Eastern South Dakota and Western South Dakota, you will see a considerable difference in carrying capacity per acre. There are many areas on the Eastern side of the state where 4 acres would supply ample forage for a cow/calf pair for the summer. But in some of the Western areas of South Dakota, it may take up to 30 acres. For example, I have seen a rancher run cattle on Range A, his total tax expense per cow for that pasture was $45.80. This pasture/range was never broken into crop and was considered Class 3. Range B, was in a rotation, same group of cows, and listed as a Class 5 and the pasture production was almost identical to Range A. When we add up the cost of taxes per cow it totals $25.32. In 2014 the average cost for taxes per cow was $10.62. So why such a wide spread of taxes per cow? There are many factors to consider but the largest consideration would be climate. In South Dakota, climate/rainfall varies from East River to West River. The second main factor is AUM yield. The number of acres it takes to manage a cow calf pair will vary vastly from across the state. It may take you only 4 acres per cow/calf on the East side and up to 30 acres in the west.
This article was not written to criticize where you are located but rather to look at how ranchers/producers are going to pay for land taxes. If you are a rancher, your cattle are going to have to pay for the taxes. If you are a crop producers then either your corn, wheat or any other crop will have to do the same. No matter where you live, your land taxes are an increasing expense per animal or per acre. Ranchers and producers need to realize that with the increase of taxes, it will affect the bottom line. Part of the South Dakota Farm Ranch Management Program is to help ranchers and producers become aware of these issues. If you have any questions please feel free to contact David.Koupal@mitchelltech.edu or call 1-800-MTI-1969.