(1) An applicant for agricultural land classification must prove that the land indicated in the application actually produced the livestock, poultry, honey and other products from bees, biological control insects, field crops, fruit, or other animal and vegetable matter raised for food or fiber or sod, ornamental, nursery, and horticultural crops that are raised, grown, or produced for commercial purposes.

(2) Contiguous and noncontiguous parcels must be under one ownership and each parcel must be actively devoted to agricultural use and meet all of the production and income qualification tests in these rules to be classified as agricultural land. Noncontiguous parcels in the same ownership that are actively devoted to agricultural use can combine agricultural production and/or current livestock carrying capacity to meet the income or carrying capacity requirements.

(3) A county farm and ranch reporting form that reflects any livestock or personal property used on the land must have been filed at some time by the current landowner with the local department office.

(4) Poultry or game birds that are raised in a building, confined cage or enclosed area, are considered activities that are not supported and produced by the land. Land used for poultry and game birds raised under these conditions is not eligible for consideration as agricultural land.

(5) The sale of honey and other products from bees shall be considered agricultural income if the applicant meets the following requirements:

(a) the landowner is registered with the Montana Department of Agriculture as an apiary; and

(b) the apiary must have at least 25 bee colonies annually sited on the land from May 1 through August 31.

(6) The sale of biological control insects shall be considered agricultural income if the insects are supported solely from noxious weeds grown on the land indicated on the application.

(7) Plants or nursery stock not grown and nourished by the land are not acceptable forms of agricultural income or agricultural production for purposes of this rule. Examples include trees grown in self-contained pots or burlap bags placed in or on the ground and plants grown in flats located in a greenhouse.

(8) If the land is used primarily to raise and market livestock, the land must be capable of sustaining a minimum number of animal unit months of carrying capacity. The minimum number of animal unit months of carrying capacity must equate to $1,500 in annual gross income as determined by the Montana State University-Bozeman's Department of Agricultural Economics and Economics, with cattle as the base.

(a) Beef cows are owned to produce calves, usually one calf per year.

(b) The calf is the annual product produced from the grazing land via the beef cow.

(c) Calf prices have averaged approximately $1.00 per pound. Weaning weights for calves are typically 500 pounds. The average revenue produced by one cow/calf pair is $500. Three sold calves from three cow/calf pairs would generate $1,500 in income.

(d) Based on a 10 month grazing season (typical), 30 AUM are required to generate $1,500 (3 cow/calf pair X 10 months = 30 AUM).

(e) For the reappraisal cycle ending December 31, 2008, the Montana State University-Bozeman's Department of Agricultural Economics and Economics determined the minimum number of animal unit months of carrying capacity to be 30 animal unit months. For subsequent reappraisal cycles, the minimum number of animal unit months of carrying capacity needed to equate to $1,500 in annual gross income for each cycle will be determined by the Montana State University-Bozeman's Department of Agricultural Economics and Economics for the base year for each cycle. The base year for each cycle will be established by administrative rule.

(f) One animal unit (AU) is assumed to consume 915 pounds of dry herbage production per month from native grazing land. The carrying capacity may be based on information obtained from the United States Natural Resource and Conservation Service (NRCS) soil survey. If a soil survey does not exist, the carrying capacity may be based on an estimate by the NRCS, the local county agricultural extension agent, or the department. Based on the manner in which the NRCS measures dry herbage production and the lost forage consumption due to grazing livestock and other causes, the per-acre per-year dry herbage production consumed is 25% of the NRCS estimate for an unfavorable precipitation year on nonirrigated grazing land. On nonirrigated domestic grazing land, the department shall increase the estimated nonirrigated native grazing land carrying capacity by 50% (1.5). The department shall use the following formula, based on NRCS soil survey information, to calculate the carrying capacity for nonirrigated native grazing land, which does not exhibit significant overgrazing or weed infestation:

(i) per-acre per-year dry herbage production multiplied by 0.25 equals the per-acre per-year dry herbage production consumed by livestock;

(ii) per-acre per-year dry herbage production consumed by livestock divided by 915 pounds of dry herbage production consumed per-month per-animal unit equals the animal unit months per acre (AUMs/acre); and

(iii) livestock acres grazed multiplied by AUMs/acre equals the total AUMs.

(9) If agricultural products, other than livestock, are marketed from land in the application, the applicant must provide proof that the parcel(s) indicated in the application produced at least $1,500 of gross agricultural income each year. Annual rental payments, government payments, or lease payments are not eligible agricultural income. Acceptable proof of income shall include:

(a) sales receipts;

(b) canceled checks;

(c) copy of income tax statements; or

(d) other written evidence of sales transactions.

(10) If the land is primarily used to grow crops that are not marketed but consumed by humans, livestock, poultry, or other animals in the agricultural operation, the applicant must prove that the land on the application produced the equivalent of $1,500 in gross agricultural income each year from crops that were consumed. The applicant must make a written estimate of the weight or quantity of food or animal fiber produced. The written estimate must include all proof set forth in this rule. The weight or quantity estimate will be multiplied by the current commodity price to determine whether the $1,500 annual gross income test has been met.

(11) If the consumption was from livestock, or the livestock was consumed by humans, the land must be capable of sustaining the minimum number of animal unit months of carrying capacity described in (8), with cattle as the base.

(12) Acceptable proof of production shall include:

(a) a statement from the United States Farm Services Agency (FSA) indicating estimated yield if crops are the basis for income;

(b) if livestock is the basis for income, information the taxpayer or their agent obtains from the NRCS web site, or a statement from the NRCS or the county agricultural extension agent indicating that the parcel(s) is/are capable of producing in its current state the minimum number of animal unit months of carrying capacity described in (8); and

(c) a confirmation by the department.

(13) For valuation as agricultural land, the owner of land used as a Christmas tree farm must provide proof that:

(a) all trees are cultivated or under accepted, proven husbandry practices;

(b) all trees are sheared on a regular basis;

(c) the property contains a minimum of 2,000 trees; and

(d) the Christmas tree operation continues to produce at least $1,500 in gross annual income once the initial crop of trees reaches salable maturity.

(14) For valuation as agricultural land, the owner of land used as a fruit tree orchard must provide proof that:

(a) there are a minimum of 100 trees;

(b) they are under accepted fruit tree husbandry practices; and

(c) the fruit tree operation continues to produce at least $1,500 in gross annual income once the initial crop of trees begins to produce fruit.

(15) Land qualifying in (13) and (14) will be graded and assessed as continuously cropped farm land, grade 1A4.

(16) For valuation as agricultural land, the owner of land used solely for summer fallow farmland as defined in the Montana Agricultural Classification and Appraisal Manual must produce a minimum of $1,500 in agricultural crop income every other growing season.

(17) A parcel or parcels of land less than 20 acres that meet all of the following criteria will remain classified and valued as agricultural land or as nonqualified agricultural land as defined in 15-6-133 and 15-7-202, MCA. The criteria that must be met are:

(a) the parcels are contiguous or noncontiguous parcels of land under one ownership;

(b) the parcel or parcels previous to a reduction in acreage as defined in (17)(c) totaled 20 acres or more in size and qualified as agricultural land or as nonqualified agricultural land under 15-6-133 and 15-7-202, MCA;

(c) a portion of the parcel or parcels was taken by or given without compensation, or sold for a public use as described in 70-30-102, MCA, to the federal government, the state, a county, or a municipality, and that action reduced the number of acres in the parcel or parcels to less than 20 acres; and

(d) since the reduction in acreage occurred, the parcel or parcels have not been further divided or devoted to a residential, commercial, or industrial use, and there are no covenants or other restrictions that effectively prohibit agricultural use.

(18) A parcel or parcels of land that meet the criteria in (17)(a) through (17)(d) are eligible for the classification determination identified in (17) regardless of when the acreage reduction occurred. However, taxpayers must notify the department of their eligibility in writing by the first Monday in June or within 30 days after receiving an assessment notice from the Department of Revenue, whichever is later.

(19) No refunds of taxes resulting from a reclassification of parcels under this part will be allowed for any tax year prior to the tax year in which the taxpayer notifies the department of their eligibility in (18).

(20) For contiguous and noncontiguous parcels of land under one ownership as defined in ARM 42.20.601 totaling less than 20 acres in size, any acreage in excess of that stated in the forest land classification in ARM 42.20.705 is classified as agricultural provided the acreage is actively devoted to qualifying agricultural use.