Iversen: Landowners should decide best use of property
It was really discouraging to see several state agencies and ag groups recently testify in opposition to Senate Bill 1039. This bill would have allowed non-crop land, regardless of soil classification, to be assessed at non-crop land rate. And their reasoning and logic is even more discouraging.
Let’s start with the Corn Growers and a membership that already has one of the best “revenue based,” federally subsidized, multi-peril crop insurance program. This safety net makes it virtually impossible to not profit or at a minimum break even on their farmable acres. Not to mention they also have price adjustment insurance when commodity prices go up or down and prevent plant insurance when it is too wet to plant. In fact, there are so many acronyms for USDA programs for farmable acres, I can’t keep them all straight.
In their testimony they stated that some landowners with grass might see their grass-land assessment go down but it could cause their house insurance or commercial property assessments to go up. Are you kidding me? What about landowners whose income is solely reliant on their grassland acres? And contrary to some beliefs, it does take more than an acre or two to carry a cow in some parts of our state. Asking to have your land be assessed for tax purposes at its intended use is not a huge ask. While $5-6 an acre tax assessment doesn’t sound like a lot to some, grasslands cannot generate the kind of income farmland can. $30 an acre can be considered a good year, and when it takes 18-20 acres a year to run a cow it becomes a substantial expense. A $5-6 an acre tax assessment can be an effective rate of 16-20 percent! Can you imagine if the same rate were applied to farm ground? And when drought persists and stocking rates have to be cut back by 15-25% this is compounded even further.
Ranches that rely on cows and grass for their income are not afforded the same safety nets as their farmable acres. Occasionally there may be an indemnity payment, but these are not tools one can rely on when borrowing money to buy land or operate it. There are no lifelines to depend on when their costs exceed the value of their salable products.
Next let’s examine the South Dakota Retailers’ opposition to the bill. Again the argument was made that “owner occupied” and “commercial” property owner’s taxes might increase by “several hundred dollars.” It just so happens I have both. First off, commercial properties have the ability to pass increased costs on so I don’t shoulder the whole burden. And second, I am much better off paying a few hundred more on my dwelling than I am paying farm ground assessment tax on my grazing lands which could be an additional $2 an acre. When it takes 20 acres to run a cow year round that’s $40/head!
Finally let’s look at Farm Bureau testimony. It was stated that “technology and risk mitigation measures continue to make cropping in undesirable regions more possible.” Is this what we want? Till up more native range and plant more corn? Is this the definition of “sustainable”? Apparently it is because the only way to stay sustainable is to stay profitable. Maybe this is the answer I have been searching for. Sell my cows and plant corn in my undesirable and highly erodible Class 3 and 4 soils. It shouldn’t matter that I enjoy cows and I like native pastures and fields of grass, and that my cattle can naturally improve the rangeland by grazing, treading and dropping manure (fertilizer) with no need for chemicals, fuel, and little to no loss of topsoil. What really matters is using my soils to their greatest potential, according to someone else’s definition of “greatest potential.” Thank you Farm Bureau for helping me reach this conclusion.
Doesn’t it make more sense for the property owner to decide what to grow or produce regardless of its soil classification? What if someone told you your soil would be better suited for hemp production rather than wheat and therefore assessed at a higher tax rate, or that your house on main street in Spearfish would be better suited for a commercial business so it will be taxed as such, or than your farmland outside of Sioux Falls would be better suited for a Walmart parking lot and is therefore going to be assessed as such?
Mellette County Rancher
Outtagrass Cattle Co. cartoon by Jan Swan Wood for the Sept. 24, 2022, edition of Tri-State Livestock News
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