(1) An applicant for agricultural land classification must prove that the parcel(s) 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. Contiguous parcels under one ownership 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. Each noncontiguous parcel of land as defined in ARM 42.20.601 that is under one ownership and totals between 20 and 160 acres in size must be part of a bona fide agricultural operation and meet agricultural eligibility criteria set forth in this rule. Each noncontiguous parcel of land that is under one ownership and totals between 20 and 160 acres in size that is not part of a bona fide agricultural operation must each meet agricultural eligibility criteria set forth in this rule.

(a) For parcels of land that do not meet income eligibility requirements as outlined in this rule, but are used for farming or ranching, as a part of a family farm or ranch business as described in 15-7-202, MCA, the following proof of eligibility requirements will be considered when the owner of the land applies for agricultural land classification and the successful fulfillment of these requirements will allow the parcel to be classified as agricultural land:

(i) the subject property must be located within 15 air miles of the family-operated farm or ranch;

(ii) the owner of the subject property must submit proof that 51% or more of the owner's Montana annual gross income is derived from agricultural production;

(iii) the property taxes on the subject property are paid by the family-operated farm or ranch business, which may be a family corporation, family partnership, sole proprietorship, or a family trust; and

(iv) submit proof that at least 51% of the farm or ranch entity's Montana annual gross income comes from agricultural production.

(b) If the conditions of (1)(a)(i) through (a)(iv) are met, the land is eligible for agricultural classification.

(2) The department will accept a copy of a cancelled check as proof of payment of property taxes by the family-operated business entity. Other acceptable proof of payments of the property taxes will be reviewed on a case-by-case basis.

(3) If the owner of the subject property, which does not meet the requirements to be classified and valued as agricultural land, is a shareholder, partner, owner, or member of the family-operated farming or ranching entity involved in Montana agricultural production, the property owner may qualify the subject property as agricultural land if they submit proof that details the legal relationship between the owner and the family-operated farming or ranching business entity. This proof must include:

(a) a copy of the documents that establish a legal relationship with the family-operated farming or ranching business entity, such as the documents on file with the Secretary of State; and

(b) proof that at least 51% of the property owner's or family-operated farming or ranching business entity's Montana annual gross income comes from agricultural production.

(4) If the conditions of this rule are met (mileage, establishment of the legal relationship, and income), the land is eligible for classification as agricultural land according to its use.

(5) For all applications received under this rule, the acceptable proof of income shall be the most recent year Montana individual and/or corporate tax statements, whichever is appropriate. The forms presented as proof must include all state and federal tax forms that detail the amount of income received from agricultural production as well as the amount of Montana gross income.

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

(7) Poultry or game birds that are raised in a building, confined cage, or enclosed area, are considered commercial 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.

(8) 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.

(9) 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.

(10) Plants, or nursery stock that are not grown and nourished by the land are not acceptable forms of 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.

(11) 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, 2014, 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 the information obtained from the NRCS soil survey. If a soil survey does not exist, the carrying capacity may be based on an estimate by the NRCS, the 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 the midpoint between the normal and unfavorable precipitation year estimates 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.

(12) 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. The income must be from agricultural products marketed by, or from annual rental or lease payments received by, the owners, owner's family members, or the owner's agent, employee, or lessee. Family members may include grandparents, parents, spouses, children, and siblings. Acceptable proof of income shall include:

(a) sales receipts;

(b) canceled checks;

(c) copy of income tax statements, or other written evidence of sales transactions;

(d) annual rental or lease payments of at least $1,500 provided there is demonstrated proof of agricultural activity on the land and the land is capable of sustaining that activity; or

(e) annual rental payments of at least $1,500 made under the federal conservation reserve program (CRP), or a similar program that reimburses the landowner to remove the land from the current agricultural use and place it in a different agricultural use.

(13) 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 the 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.

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

(15) 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 production; or

(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 (11) if livestock is the basis for production; and

(c) a confirmation by the department.

(16) 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.

(17) 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.

(18) Land qualifying in (16) and (17) will be assessed at the value established by the department for the highest productivity level of nonirrigated continuously cropped farm land.

(19) 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.

(20) Land under the CRP, the integrated farm management (IFM) program, or any other program that reimburses the landowner to remove the land from the current agricultural use and places it in a different agricultural use shall be classified and valued in the same land use category the acreage was in when it became eligible for the programs.

(21) For land between 20 to 160 acres, any acreage in excess of that in the forest land classification in ARM 42.20.705 shall be classified pursuant to 15-6-133, 15-6-134, 15-7-201, and 15-7-202, MCA.