Texas law allows beekeepers with between 5 and 20 acres to apply for special valuation appraisal (commonly called ag exemption) on their land. As of 2016, many counties are valuing beekeeping production value per acre at around $1300. This value is based on three potentially flawed inputs. The three inputs used to create the production value are the average pounds of honey per hive per year, the bulk cost of honey per pound in Texas and the average cost of production per hive per year.
There are three important concepts about agricultural appraisal that you must understand before talking to the county appraiser.
First, the numbers used in appraising land bear no resemblance to what you might report to the IRS for your beekeeping business. The appraiser is only interested in income and expenses that happen before honey is bottled. Income is based on bulk price for honey and not the price you might get for your honey at a farmers market. Expenses include all the costs and labor that precede the bottling of honey. Unlike what you might report to the IRS, labor is included as an expense for agricultural appraisal. The major expenses you should report include the cost of replacing winter and summer colony loss (this one expense is currently over $60 per hive), the cost of labor of extracting honey, the labor of hive checks, the cost of sugar syrup and pollen substitute, depreciation of your woodenware and suit and tools, cost of replacing queens, cost of Varroa treatments and other pest management. Expenses that are not applicable are costs of bottles, labels, and marketing including farmer’s market booth fees. These are business expenses not related to the appraisal of land.
The second concept is that there is no requirement in the law for you to make a profit or even strive to make a profit. The only requirement is production.
The third concept that is vital to getting agricultural appraisal is showing production in a way that sets you apart from a hobbyist. You can show this by keeping a log of your time working bees, keeping records of pounds of honey extracted and expenses (those before bottling), or anything that increases your credibility as a beekeeper including setting up a bank account, attending conventions, classes or group meetings. Show proof that you work your bees in a prudent manner.
It is important that you educate your county agricultural appraiser. He or she cannot possibly know as much about beekeeping as you do. The links on this page are meant to help you educate yourself on Texas Agricultural Appraisal law and help you educate your county appraiser with sources of information that help them in calculating a correct value for your land.
Resources
I will be adding links and information to this post. If you are working toward agricultural appraisal for beekeeping, check this post and please take the Texas Beekeepers Association Survey here: https://www.surveymonkey.com/r/SD7L2V2
or email us at tx.bee.ag@gmail.com
These are the slides from a presentation on 6/18/2016 at the TBA Summer Clinic: Beekeeping Land Valuation – Slides, TBA Summer Clinic 2016
Unlike IRS reporting, labor is clearly included as an expense item in the appraisal of agricultural land. The US Bureau of Labor Statistics publishes farm worker average hourly rates. The 5 year average of 2010 through 2014 that would be appropriate to use is $11.14 per hour. The report is available here: http://www.bls.gov/oes/current/oessrcst.htm
The Texas Beekeeping Journal published an article on agricultural appraisal income available here: http://texasbeekeepers.org/wp-content/uploads/2016/06/TBA-Journal-May-June-2016.pdf
The manual that county chief appraisers must follow in appraising agricultural property is an interesting read. It is important for us to understand what the appraiser needs to know about our beekeeping production. The Agricultural Appraisal Manual can be found here: http://comptroller.texas.gov/taxinfo/proptax/pdf/96-300.pdf
Harris Co. created a model that many other Texas counties have adopted. The second page describes how productivity value for beekeepers is derived. This same formula (but not for beekeeping) can be found in the appraiser’s manual above on page 53. Harris County Degree of Intensity for Beekeepers work is here: http://comptroller.texas.gov/taxinfo/proptax/resources/beekeeping/harris.pdf
One obvious flaw in the Harris Co. model is the price of honey. They use the price of bottled and cased honey by the pound. This is clearly incorrect according to the Agricultural Appraisal Manual. They should be using the USDA bulk price of honey in Texas. For the year 2016, the five year average price the counties should be using is $1.94 per pound. This number alone cuts the appraised value by more than half. Bulk honey price can be found here: http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1191
Smaller beekeepers in 2015 extracted an average of 31.3 pounds of honey per hive. USDA reported on it here: http://usda.mannlib.cornell.edu/usda/current/Hone/Hone-03-22-2016.pdf
Even though the 31.3 pounds of honey is for beekeepers with less than 5 hives, our initial surveys are showing that beekeepers in Texas with less than 12 hives are extracting less than 30 pounds of honey per hive, so we have more in common with the less than 5 hives group than with commercial beekeepers.
It ‘should be’ moderately easy to “request public information” from any county appraisal district. Send your request to the “Officer for Public Information or the chief administrative officer” of the appraisal district. Using the words “Request for pubic information” and sending it to the “Officer for Public Information or the chief administrative officer” “triggers an obligation under the Public Information Act”. You can mail it by the postal service or fax it or email. You can find contact information by searching a county appraisal district’s website for “contact”. You can expect a ‘prompt’ reply. ‘Prompt’ is relative to the ease of providing the information you request. The contact information list of CADs can be found here: http://comptroller.texas.gov/propertytax/references/directory/cad/