HONOLULU — Hawaii lawmakers are advancing legislation to define legitimate farming operations and prevent landowners from exploiting agricultural tax breaks without genuine agricultural activity.
The proposal, Senate Bill 2153, comes as the state grapples with “gentlemen farmers” who maintain tax-exempt status while using farmland for residential or scenic purposes rather than productive agriculture. The bill would create a tiered system classifying farms by output, size, and function—from subsistence farmers to corporate food producers.
“What if you have an old, retired guy that raises a couple of grass fats for the family, and he kills an animal every eight months then shares that with his family?” said Sen. Tim Richards, a cattle rancher from the Big Island who introduced the bill. “That’s bona fide agriculture, absolutely. It’s subsistence.”
The issue has rankled Hawaii for decades. Illegitimate and unproductive agricultural operations have allowed some developers to target farmland for new housing, with mansions interspersed with fruit trees classified as orchards or a handful of goats deemed a ranch. Critics say the current system enables tax evasion while depriving the state of revenue and legitimate farmers of support.
The state lost more than 1,000 farms between 2007 and 2022 while the average operation size grew, indicating increasing concentration of large-scale agricultural outfits. Advocates fear the bill could require smaller operators to spend limited time proving income while larger counterparts increase commercial footprints.
“My concern is that we then increase the hurdles and headaches for smallholders, without meaningfully addressing the consolidation of land ownership,” said Hunter Heaivilin, advocacy director at the Hawaii Farmers Union.
The Hawaii Farm Bureau and Farmers Union suggest the state look to Guam, where farmers must register with the agriculture department to access markets, tax exemptions, and support programs. Some farmers might be annoyed by extra paperwork, but it could give the state a clear view of the agricultural landscape, said bureau executive director Brian Miyamoto.
For any definition, especially regarding taxation and programs, enforcement at both county and state levels will always be a concern, noted Jonathan Helton, policy analyst for Grassroot Institute of Hawaii.
Despite uncertainties, the proposed rubric has agriculture advocates feeling quietly optimistic about its potential to help the state distribute incentives such as grants, subsidies, and tax exemptions to those who need them most.
“I’m not convinced we have it worked out quite right,” Richards said. “But then again, as they say, legislation is making sausage. It’s going to take a little bit of grinding and mixing before you get done.”
Former Land Use Commission chair Jonathan Likeke Scheuer warned of potential unseen consequences for land and water use, or even preferential treatment of certain farmers based on where they fall in the matrix. “It’s setting up some larger policy discussions,” he added. “It’s not clear exactly what those are, and some of those could be very contentious.”