Georgia Amendment 1: Are We Saving Family Farms or Making Them Bigger?

The first in a series examining Georgia’s proposed constitutional amendments and what they would do, so you can make an informed vote. Please note: I am not telling you how to vote.

Early voting is underway in Georgia, and while much of the attention is focused on the candidates, there are also proposed constitutional amendments on the ballot that deserve a closer look.

Over the next several days, I’m going to examine each question individually. I’ll do my best to explain what the proposal does, why its supporters believe it is necessary, and what the potential tradeoffs might be. I’ll also try to raise some questions that perhaps haven’t received enough attention.

Now look, after doing a deep dive on amendment 1 I probably have more questions than answers, but my goal is to give you enough information to make an informed decision for yourself. So without further ado, let’s start with Amendment 1, which concerns preferential property tax treatment for agricultural land.

Here is exactly what voters are being asked:

Shall the Constitution of Georgia, for the purpose of protecting family farmland, be amended so as to increase the maximum acreage to qualify for assessment and taxation as a bona fide conservation use property from 2,000 acres to 4,000 acres?

Pay particular attention to the phrase “protecting family farmland.” We’ll come back to that.

Georgia has a program called Conservation Use Valuation Assessment, commonly known as CUVA, that allows qualifying agricultural and timberland to be assessed for property taxes based on its current use instead of its fair market value.

A farmer whose family has worked the same land for generations shouldn’t necessarily face increasing property taxes simply because the property becomes more valuable for other purposes. The program helps reduce the financial pressure to sell agricultural land by providing a lower tax assessment in exchange for an agreement to keep the land for farming.

Currently, the general limit is 2,000 acres per owner, and Amendment 1 would double that to 4,000 acres. A YES vote would approve the expansion, while a NO vote would preserve the current limit.

I recently spoke with someone whose judgment on agricultural policy I respect a great deal. He supports the amendment, and his explanation gave me quite a bit to think about.

Farming has changed considerably over the years. Equipment is expensive, overhead continues to rise, and the economics of agricultural production increasingly favor larger operations that can spread those costs across more acreage. A farmer operating 2,500 acres may be able to produce crops more efficiently than several smaller operations working the same total amount of land.

He also raised a practical concern. Imagine a farmer with 2,500 acres who can receive preferential tax treatment on only 2,000 of them. The remaining 500 acres could become attractive to sell for a data center, commercial development, or any number of other uses. Expanding CUVA would reduce the ongoing tax expense associated with keeping those additional acres in production.

His argument is that preserving agricultural land is vitally important, and whatever tradeoffs come with that objective are worth considering.

I think that deserves serious attention. Once productive farmland is converted to another use, bringing it back into agricultural production can be difficult or impossible. Nobody is going to raze a Dollar General and start growing lima beans on it.

But our conversation also got me thinking about the changing nature of farming in Georgia and whether the proposed expansion might have consequences beyond preserving acreage.

According to the USDA’s 2022 Census of Agriculture, Georgia had 39,264 farms, down from 49,311 in 2002. During that same period, the average farm increased in size from 218 acres to 253 acres.

The number of farms has been declining while the average size of the remaining operations has generally been increasing. The trend is more noticeable in recent years, with the number of farms operating at least 2,000 acres increasing approximately 22 percent between 2017 and 2022.

Interestingly, the total acreage classified as farmland changed very little during those five years, meaning Georgia had fewer farms operating nearly the same amount of land.

That leads me to another question about who actually benefits from Amendment 1.

Of those 39,264 farms in the 2022 census, only 920 reported operating at least 2,000 acres. That represents approximately 2.3 percent of Georgia’s farms.

However, there’s an important distinction between farming land and owning it.

Of those 920 operations, only 263 farmed exclusively on land they owned. Another 629 operated on a combination of owned and rented land, while 28 rented all the land they farmed. The CUVA tax benefit goes to the property owner, who may or may not be the person actually farming the property. For example, a farmer operating 3,000 acres might own only a few hundred of them, while someone else could own several thousand acres and lease them to farmers. The USDA figures also don’t capture every potential beneficiary, particularly qualifying timberland owners outside the agricultural census.

The agricultural census can tell us how many large farming operations exist but cannot tell us precisely how many landowners would benefit from this amendment.

So I went looking for that answer in the fiscal note prepared for the legislation, and what I found was rather surprising. The Georgia Department of Community Affairs concluded that it could not calculate the fiscal impact of the proposal using the data available to it. No seriously, that’s what they said. Here is the link, scroll to page 1,706.

The department explained that CUVA eligibility is determined by county tax assessors, and that determining whether land qualifies requires examining both the property and its owner. Because those determinations are made locally, the department could not produce a reliable estimate of the financial consequences of doubling the acreage limit.

So we have a proposal to amend the Georgia Constitution to expand a preferential tax assessment, but we don’t have a reliable estimate of how many landowners would benefit, how many additional acres would qualify, or how much revenue local governments might forgo.

I don’t know if that means the proposal is necessarily expensive. In fact it could be relatively modest, but without those figures, it’s difficult to evaluate the tradeoffs.

Georgia’s property taxes are collected locally, and the financial consequences of this proposal wouldn’t necessarily be distributed evenly across our 159 counties. A few large agricultural holdings in a rural county could represent a meaningful portion of its land area. If additional acreage receives preferential treatment, that county and its school system would have to account for the resulting difference in taxable value.

Stop to consider just how big 4000 acres are; its about 6.25 square miles. In a place like Glascock County where the USDA reports just 64 farms covering 13,079 acres, with an average farm size of 204 acres, a single 4,000 acre holding would represent more than 30% of all the county’s reported farmland and 4.35% of its total land area. Only one farm in the county reported operating more than 1,000 acres in 2022. Granted, timberland could also qualify for the tax benefit, but these numbers illustrate why the impact of Amendment 1 could vary dramatically from county to county, and why understanding the actual beneficiaries and local tax consequences is so important.

Although the ballot refers to a 4,000 acre limit, Georgia law allows certain family farming businesses to combine the acreage allowances of their individual owners. A qualifying 6,000 acre farm owned equally by two siblings, for example, could potentially receive preferential treatment on all 6,000 acres under the proposed rules, since each sibling would own 3,000 acres. This arrangement already exists under the current program, but the amendment would double the allowance available to each qualifying owner.

When most Georgians hear the phrase “family farm,” I suspect they picture something considerably smaller than a 4,000 acre operation. Yet a farm encompassing several thousand acres can absolutely be a family business, owned and operated by generations of the same family.

Providing an additional tax advantage to those larger holdings may help preserve agricultural land, but it could also contribute to the economic conditions that make smaller operations increasingly difficult to maintain.

And that brings us back to the ballot’s reference to protecting family farmland.

The question is whether providing an additional tax advantage to those larger holdings helps preserve the traditional family farm or contributes to the economic conditions that are making smaller operations increasingly difficult to maintain.

There’s a legitimate argument that consolidation makes farming more efficient because larger operations can spread equipment costs, purchase supplies in greater quantities, and operate at a scale that allows them to compete in agricultural markets. This is what my friend was telling me about when he described the most up to date cotton harvester and how it costs $1.1 million; small farms cannot afford that kind of overhead.

But there’s also an argument that giving larger landowners preferential tax treatment on additional acreage makes acquiring neighboring smaller farms more financially attractive.

Consider a family operating a 100 acre farm next to a much larger agricultural operation. If the smaller family decides to retire or sell, the larger operation may have the resources to purchase the property and incorporate it into its existing business.

The land remains in agriculture, which accomplishes the preservation objective. The selling family may receive a better price, and the larger operation may become more efficient.

But Georgia has also lost another independent farm.

That isn’t necessarily the result of CUVA, and I haven’t found research establishing that this proposed expansion would accelerate consolidation. The trend toward larger agricultural operations has been underway for decades, driven by technology, equipment costs, labor expenses, and the economics of agricultural production.

Still, tax policy changes incentives, and this amendment would extend an existing advantage to additional acreage held by larger landowners. And this makes me wonder if we are accelerating the demise of the family farm by creating that incentive to consolidate and not dealing with the barriers smaller farmers have in dealing the costs of their work.

Landowners receiving CUVA benefits generally agree to keep their property in agricultural or other qualifying use for ten years, and that commitment can follow the land when it is sold. For example, a farmer who sells his property after five years may leave the new owner bound by the remaining five years of the covenant. If that buyer decides to develop the property before the covenant expires, the penalty can be twice the accumulated property tax savings, including savings enjoyed by the previous owner. There are exceptions, and buyers can discover these restrictions before purchasing the land, but the arrangement allows one property owner to receive a tax benefit while potentially leaving a future owner responsible for the financial consequences of changing how the property is used.

So where do we draw the line on property rights?

If preserving farmland is the objective, why stop at 4,000 acres? Perhaps there’s a good reason to limit the tax benefits, whether it’s protecting local tax revenue or preventing too much preferential treatment from being concentrated among a handful of landowners. But without a fiscal note that can tell us how many people would benefit or what it would cost, it’s hard to understand why 4,000 acres is the right number.

And the state’s fiscal note leaves us without much of the information needed to answer that question.

I have tremendous respect for Georgia’s agricultural community and understand the importance of keeping working farmland in production. Agriculture is a major part of Georgia’s economy, and decisions affecting the future of farming deserve more attention than they generally receive.

I also believe we need to be careful about using the tax code to address problems without fully understanding the effects of the incentives we’re creating.

We’re watching Georgia farms get larger while the number of independent operations continues to decline. Some of that is the natural result of economic and technological changes. Some may reflect the increasing difficulty of making a living on a smaller farm.

Are we using preferential tax treatment to address the symptoms of rising input costs and overhead while the small family farm gradually disappears?

And if we succeed in preserving the land but end up with fewer families who can afford to farm it, how should we measure that success?

I don’t pretend to have all the answers, and the conversation with my agricultural policy friend has given me a better appreciation for the argument supporting this amendment.

I do think voters deserve to understand that the proposal involves more than protecting farmland from development. It raises questions about tax fairness, local government finances, agricultural consolidation, and the future of independently owned farms in Georgia.

The language on the ballot says the purpose is protecting family farmland.

It’s worth spending some time considering what we mean by that before deciding how to vote.

We’ll turn to Amendment 2 in the next installment.

Also, if you are wondering why I am in the weeds on this when I am usually the election policy guy, I spent six years on the House Agriculture and Consumer Affairs Committee, and I loved it.