Indiana farmers and ag businesses are facing a property tax shock after assessments on some farm buildings doubled, tripled and, in some cases, increased by as much as 500%—raising concerns about the cost of doing business and the future of livestock expansion in the state.
The sharp increases are hitting poultry operations particularly hard, according to Becky Joniskan, president of the Indiana State Poultry Association. She recently told the Indiana General Assembly’s Agricultural Promotion and Regulation Task Force that updated construction cost tables used in property tax assessments are dramatically overstating the value of poultry facilities.
“Our duck, turkey, and broiler chicken barns—so our meat bird barns—saw incredible increases in their property tax assessments,” Joniskan told lawmakers.
The problem, she said, stems in part from construction-cost figures being used by the Indiana Department of Local Government Finance (DLGF) to determine the assessed value of agricultural buildings.
Joniskan said the numbers being used for poultry barns are far above what producers and companies are actually seeing in the marketplace.
“Their cost per square foot for those barns is somewhere between $59 and $89 a square foot,” she said. “And some of our companies build some of their own barns, so they have their own numbers, and they’re saying even a really nice barn, completely outfitted, looks like $17 a square foot.”
That gap can have significant consequences for farmers.
When the assessed value of a livestock facility jumps dramatically, the resulting property tax bill can increase even though the farmer has not added production capacity or generated additional income from the building.
For livestock producers operating on already-tight margins, a large and unexpected increase in property taxes can quickly become another financial pressure on the farm.
A statewide patchwork
Joniskan said the impact has also varied from county to county.
Some local assessors have made adjustments after reviewing the increases, while others have allowed the higher assessments to remain.
That has created what livestock leaders describe as an uneven property-tax landscape for agricultural facilities across Indiana.
“Whether it’s improving the process by which cost tables are developed by the Indiana Department of Local Government Finance, adjusting percentages in statute, or providing more top-down guidance to local assessors, we need to address the doubling and sometimes tripling of the values of many of our facilities that we saw this year,” Joniskan said.
The concern goes beyond the immediate tax bill.
Livestock facilities represent major capital investments. Producers considering whether to build a new barn, expand an existing operation or invest in additional production capacity have to account for the long-term cost of owning that facility.
If property taxes suddenly become a substantially larger part of that calculation, Joniskan warns Indiana could make itself less attractive for future livestock investment.
“You can’t move your farm, you are where you are, right?” she said. “And we want people to be able to expand or decide to add that barn to their existing farm and they can’t move to another county.”
But livestock production can move across state lines.
“They can go to another state though,” Joniskan said. “And we do have, you know, grow-out barns, if we’re talking turkeys, that, you know, Illinois and Kentucky have grow-out barns and they feed into our processing plants and they may decide to go build and expand in those areas.”
That is an important consideration for an industry built around a network of growers, processors and supporting businesses.
A farmer may not be able to relocate an existing operation, but future investment can be directed elsewhere if the economics no longer make sense.
Calling for transparency
Joniskan told lawmakers that part of the solution is greater transparency in how DLGF develops the construction-cost figures used for agricultural buildings.
She said the department relies on data collected by a third-party organization to establish construction costs, with those figures then adjusted for factors such as inflation.
The poultry industry believes those numbers do not accurately reflect the cost of constructing barns in Indiana.
“There’s a third-party group that goes out and collects all sorts of data and that’s how they establish all the supplies and then they adjust for inflation and that sort of thing,” Joniskan said. “So there’s a third-party that does that and their numbers are just off for Indiana.”
Joniskan said agricultural organizations should have an opportunity to review and comment on the underlying data before new construction-cost figures are used to calculate assessments.
“If we had seen that in advance, we could have commented, ‘Hey, this is really out of line and this is going to cause our assessments to increase significantly,’” she said.
Instead, she said, the report and underlying numbers used by DLGF are not currently subject to that kind of public review.
“That report that the Department of Local Government Finance relies upon and sources from a third-party isn’t something that gets public comment and involvement,” Joniskan said. “That, I think, is a potential improvement.”
Looking for a fix
For Indiana livestock producers, the issue now moves beyond identifying what caused this year’s assessment increases. The bigger question is how the state can prevent similar shocks from undermining farm investment in the future.
Indiana’s agricultural organizations are pushing for legislative changes, including reducing the property-tax cap on agricultural buildings from 3% to 2%.
The debate comes at a critical time for Indiana livestock agriculture. Producers are already dealing with volatile input costs, labor challenges, changing market conditions and substantial capital requirements to remain competitive.
A property-tax assessment that suddenly values a barn at several times what it actually cost to construct it adds another layer of uncertainty.
Joniskan’s message to lawmakers is that Indiana needs an assessment system that reflects the real economics of agricultural construction—and provides producers with enough transparency to identify problems before they translate into dramatically higher tax bills.
For livestock farmers, the stakes are bigger than a single year’s assessment.
They are deciding where to invest millions of dollars in barns, equipment and production capacity. And if Indiana’s tax structure makes those investments significantly more expensive than they are in neighboring states, the state risks losing not only new barns—but the economic activity, jobs and livestock production those facilities support.
As Joniskan told lawmakers, farmers may not be able to move the farms they already operate.
But when it comes to the next investment, they can choose where to build.
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