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Volume 4 - Opinions of Counsel SBEA No. 23

Opinions of Counsel index

Agricultural exemption (gross sales requirement) (start-up farming operation) - Agriculture and Markets Law, §§ 305, 306:

Even though there were no sales of agricultural products, a “start-up” year may be counted as a year of use for agricultural production where there is evidence of tangible farming activity. If $20,000 in gross sales were generated in the second year, the two-year average of $10,000 gross sales would be satisfied.

We have received an inquiry regarding the two year average gross sales requirement of sections 305 and 306 of the Agriculture and Markets Law (Agricultural Districts Law). A farmer initiated a start-up farming operation and in the first year no income was derived. Agricultural production with a gross sales value of at least $20,000 was generated in the second year. We are asked whether the farm would qualify for an agricultural value ceiling assessment in the third year.

In order to qualify for an agricultural value ceiling assessment, the applicant must meet the following statutory requirements:

1. The land must be 10 or more acres in size used in agricultural production.
2. The land must be used in commercial agricultural production for at least two years preceding the application for exemption.
3. The land must produce agricultural products having an average gross sales value of $10,000 for the two year period preceding the application.
4. The land must be in an agricultural district or have been formally committed to continued agricultural production.

Assuming the farm is at least 10 acres in size and is contained in an agricultural district or committed to agricultural production, the first question is whether the “start-up” year, in which there were no sales of agricultural products, can be counted as a year of use for agricultural production.

If the facts sustain a conclusion that in the start-up year farming practices were being initiated, that actual preparatory work was being accomplished on the land, or actual purchases of farm supplies and material were being made for initiation of commercial agricultural production, it would appear that such land could be deemed to be in use for the production of agricultural products. A mere declaration of intent to commence farming, however, would not be sufficient Tangible farming activity would have to be evident.

The $10,000 gross sales value requirement in the statute is based on a two-year average, and if $20,000 in gross sales were generated in the second year, this would meet the minimum average requirement in the statute.

April 3, 1974

Updated: