Agricultural Deferral- getting started
My husband and I are starting a small farm out in Oregon City and we want to get started collecting the proper data to apply for our Ag deferral in three years. We're not sure where to start, how we should be keeping track of our farm income and how best to build systems which would be clear enough to show that we qualify. I'm interested in getting any guidance you have. Thanks for your time! Kelly Kelly Brittan
Congratulations on the new farm venture and land. Please reference our What can I do with my Land? Publication.The appendix goes into detail about the farm deferral. In addition the publication will introduce the steps you need to take for assessing your land, soil testing, market analysis (with some resources) and farmer assessment (thinking about how YOU fit in is as important as the soil). The publication will also provide recommended resources for everything from funding to enterprise analysis.
For more clarity around EFU - See the Farm Use section on pages 2-1 thru 2-4 in this Farm Use Manual: https://www.oregon.gov/DOR/forms/FormsPubs/farm-use-manual_303-422.pdf
For defending your EFU status, a business plan and detailed record keeping will help the process move quickly. The county assessor can request a copy of the “Farm Schedule F” from your federal income tax filing or other records you have kept to evaluate your claim for deferral. You can also reach out to your county assessor to see if they have any recommendations, every county operates slightly differently. For support in record keeping and the development of a business plan you can reach out to your local Small Business Development Center https://bizcenter.org/centers/clackamas-sbdc/
As for record keeping - you will want to closely track all income and expenses for the business. While you may not be able to report income right away, your expenses associated with building the farm business (infrastructure, seed, etc) will demonstrate the INTENT to sell.You will want to choose your preferred tracking method, whether it be through Quickbooks, with Excel or another. The Small Business Development Center will be able to provide resources to make those decisions.
While you are building your business - Farm use is not required to actually result in a money profit. The legislature recognized the risks of farming (and time it takes to build a business). It has not imposed any specific income requirements for land in an EFU zone. It merely requires that the person engage in farm activities with the primary purpose of obtaining a profit. It is also clear that the legislature viewed bona fide farms as those farms that produced products or crops sold in the open market. Small operations such as raising chickens for family use or a few pigs to trade with a neighbor for some other product or service do not qualify.
For additional information these two Oregon Department of Revenue websites give detailed information on both the EFU and non-EFU programs: