How Agricultural Assessment Values are Determined
There are two factors necessary in determining agricultural assessments. First, a land classification system is needed to establish the different levels of land quality for which values must be determined. Second, a base agricultural assessment value must be calculated and an agricultural assessment per acre assigned for each level of land quality designated.
- Land Classification System
To establish a uniform statewide land classification system the Department of Agriculture and Markets uses differences in soil productivity as the common denominator in classifying all New York State farmland. A soil rating methodology has been developed based primarily on differences in the inherent ability of soils to support crop production. Two distinct types of soil groups are:
- Mineral soils are ranked in ten soil groups; groups 1-6 are further divided into subgroups, designated a and b, according to the natural lime content of the soil (i.e., high-lime and low-lime)
- Organic soils (muck) are ranked in four soil groups A-D.
- Calculation of a Base Agricultural Assessment Value
The Commissioner annually calculates a base agricultural assessment value. This base agricultural assessment value is calculated using the following data published by the United States Department of Agriculture for all farming in New York State:
- Farm real estate value is the total value of farmland and buildings, including improvements.
- Farm structure value is the total value of farm buildings, including improvements.
- Interest on mortgage debt is the total interest paid on farm real estate debt.
- Net farm income is the realized gross income (defined in number 6 below) less production expenses, as adjusted for change in inventory.
- Production expenses is the total cost of production.
- Realized gross income is the total of cash receipts from farm marketings, government payments, nonmoney income and other farm income.
- Taxes on farm real estate is the total real property taxes on farmland and buildings, including improvements.
- Number of acres harvested for all reported crops.
- Value of production which is the total estimated value of all reported crops.
Once this information is obtained the base agricultural assessment value is calculated as the average capitalized value of production per acre for the eight-year period ending in the second year preceding the year for which the agricultural assessment values are certified. In no event shall the change in the base agricultural assessment value for any given year exceed two percent of the base value of the preceding year.
The terms used in this base agricultural assessment value calculation are defined below:
- The capitalized value of production per acre is calculated by dividing the product of the value of production per acre and the percentage of net profit by a capitalization rate of ten percent, representing an assumed investment return rate of eight percent and an assumed real property tax rate of two percent.
- The value of production per acre is defined as the value of production divided by the number of acres harvested in New York state.
- The percentage of net profit is defined as the adjusted net farm income divided by realized gross farm income.
- Adjusted net farm income is the sum of net farm income, taxes on farm real estate and the amount of mortgage interest debt attributable to farmland, less a management charge of one percent of realized gross farm income plus seven percent of adjusted production expenses.
- The amount of mortgage interest debt attributable to farmland is the product of the interest on mortgage debt and the percentage of farm real estate value attributable to land.
- The percentage of farm real estate value attributable to land is the difference between farm real estate value and farm building value divided by the total farm real estate value.
- Adjusted production expenses shall be production expenses, less the sum of the taxes on farm real estate and the interest on mortgage debt.
- Using the Base Agricultural Assessment Value and the Land Classification System to Determine the Agricultural Assessment Values
The base agricultural assessment value for mineral soils, once calculated, is assigned as the agricultural assessment value of the highest grade mineral soil (1a). The agricultural assessment values for the remaining mineral soil groups shall be the product of the base agricultural assessment value and a percentage derived from the productivity measurements determined for each soil and related soil group in conjunction with the land classification system, as follows:
mineral soil group Mineral Soil Group Percentage of Base
Agricultural Assessment Value
1a 100 1b 89 2a 89 2b 79 3a 79 3b 68 4a 68 4b 58 5a 58 5b 47 6a 47 6b 37 7 37 8 26 9 16 10 5
For organic soils, Organic Soil Group A is two times the base agricultural assessment value for mineral soils. The remaining organic soil groups shall be the product Organic Soil Group A and a percentage derived from the productivity measurements determined for each soil and related soil group in conjunction with the land classification system, as follows:
organic soil group Organic Soil Group Percentage of Base
Agricultural Assessment Value
A Two times Mineral Soil Group 1a B 65 C 55 D 35
The agricultural assessment value for farm woodland (farm woodland attributable to any separately described and assessed parcel must not exceed fifty acres) shall be the same as that calculated for mineral soil group seven.
Orchards and Vineyards
Where trees or vines used for the production of fruit are located on land used in agricultural production, the value of such trees and vines, and the value of all posts, wires and trellises used for the production of fruit, are considered to be part of the agricultural assessment of such land.
Water bodies devoted to aquacultural production will be assigned the value for mineral soil group 1a.
Sources of Data Used
Primary reliance for data necessary to calculate Agricultural Assessment Values is placed on publications produced by the United States Department of Agriculture.