Simcoe County dairy farmers tussle with MPAC over property assessment

by JIM ALGIE  

Three years after they began processing and marketing milk from their own Jersey cows on their own Simcoe County farm, John and Marie Miller are still battling “industrial” property assessment that’s racking up unpaid tax at the annual rate of $18,000.

Among 10 on-farm dairies in Ontario, John Miller knows of only one other classified “industrial” for property tax purposes by the Municipal Property Assessment Corporation (MPAC). Miller followed MPAC procedures with a request for reconsideration and lost.

He subsequently sought an arbitration hearing which had been scheduled for Oct. 19. However, in an interview from his home near Creemore, Wednesday, Miller said he now expects he’ll seek postponement of that hearing, pending new developments in the case which has attracted the attention of Dairy Farmers of Ontario.

The bill for unpaid taxes to Clearview Township now tops $50,000 on a 5,616 sq. ft., steel-clad, stone-fronted building. Miller had expected his milk plant would qualify for assessment as farm property and much lower taxes as part of Ontario policy in support of added-value on-farm processing for raw food commodities.

The corporation’s refusal to budge on the assessment is “like picking the buds off a plant before you get the fruit growing,” he said. “We felt we were on the right side of this issue,” he added. “Our customers tell us we’re on the right side of this issue. Our neighbouring farmers that I talk to feel we’re on the right side.”

Miller has begun to think it will take a policy decision by Ontario Finance Minister Charles Sousa to sort out the question of how to assess on-farm dairies. Similar enterprises have sprung up throughout the province in recent years.

A 2012 Dairy Farmers of Canada news release cited four “micro dairies,” including Miller’s, in Ontario. That number has grown to at least 10 on-farm milk processors, Miller said. He compares on-farm processing of milk to maple syrup production, which is exempt from industrial classification on its facilities.

Assessment of maple syrup property is the subject of specific regulation, however, a statement issued by MPAC communications specialist Darlene Rich said Friday. The 2004 regulation places “certain maple syrup producing properties in the farm property class,” the statement said.

Qualifying properties must otherwise be in the farm property class and must process sap “into pure maple syrup or other pure maple products.” As well, at least 50 per cent of the processed sap must have been “tapped from trees on land owned or leased by the farmer.”

Miller doesn’t see a distinction.

“Really what difference is it — us processing our own milk and someone taking sap from their trees and boiling it and making maple syrup? There really isn’t any difference,” Miller said.

With the notable exception of maple syrup facilities, MPAC currently classifies farm facilities that add value to raw commodities in the industrial property class, the MPAC statement said. It cites existing law and regulations that describe industrial property as “land used for or in connection with manufacturing, producing or processing anything.”

Rich’s statement responded to a series of submitted questions. In response to a question about milk processing facilities that continue to be assessed as farm land, the statement said MPAC procedures remain consistent across the province.

MPAC assessors review farm properties under various circumstances, including a request by a municipality or land owner and at the time of a sale or issuance of a building permit.

“If after review and consultation with the owner, a portion of the farm is found to be used for the purpose of `manufacturing, producing or processing anything’ the appropriate legislated industrial property class would be applied,” the MPAC statement said.

Clearview Township council has expressed support for Miller’s assessment fight in letters to MPAC, and he has enlisted the help of veteran area MPP Jim Wilson. As well, Miller has consulted recently with Dairy Farmers of Ontario (DFO) officials who have expressed interest in his case and have referred him to a law firm with experience in Ontario tax assessment issues. A DFO spokesman could not be reached for comment.

It’s not just milk processing plants that have the potential to be lumped into the industrial classification, he said; other added-value farm operations in Ontario could experience the same problem.

He referred to Premier Kathleen Wynne’s often-quoted challenge to agriculture as her government took office in 2013 to create 120,000 new jobs by 2020. “Part of that is through added value on farm; so if you start taxing the life out of them, then that’s not going to happen,” Miller said.

The Millers and their 10-person staff milk 120, pure-bred, Jersey cows and manage about 700 acres of cropland near Creemore. The cows descend from a herd established in 1959. The dairy processes and sells milk and cream in glass bottles through numerous retail outlets across central Ontario.

Other than assessment issues, Miller is happy with the move to on-farm processing.

“It’s been fun; it’s been rewarding,” he said. “That’s why you do new ventures is that you’re looking for that excitement.”

The assessment battle he describes as “a fight” but one that he hopes ultimately to win.

“It’s a matter of getting your hands on it and rolling up your sleeves and working at it until we find a solution,” he said. “It takes time to get it done; but we’ll get it.” BF