Rancher Jason Smith walked back and forth in a barn on his Mount Hermon ranch early Tuesday morning, tapping calves on the muzzle or haunch with a wooden crook, hissing and growling as he herded cows in different enclosures.
Smith and his 81-year-old father, Walter, were separating the calves born last year.
UPDATE: Judge rules in favor of Washington Parish rancher sued by sheriff over taxes on steak sales
Some would be sold to another rancher, some were directed to a stockyard in Amite. The rest he planned to keep on his 240-acre ranch in the rolling hills of northern Washington Parish, near the Mississippi state line. About three dozen steers were also on the ranch which will then be slaughtered and sold under the Smith Angus family label.
The ranch has been selling its beef directly to consumers since 2019, and it’s been a key part of the business. But the meat sale puts the Smith family farm at odds with Washington Parish Sheriff Randy “Country” Seal, who sued in state court, alleging Smith’s sales aren’t covered by law. of the state that allows farmers in Louisiana to sell many products duty-free. .
Seal alleges Smith owes nearly $40,000 in taxes and penalties since 2016, when Smith formed the LLC he uses to sell the meat.
The lawsuit, which was filed in late 2021 and went to trial in a Washington parish courtroom last month, caught Smith off guard.
“I was like ‘you gotta be kidding me,'” Smith said. He contacted the sheriff, but was told they “were determined to prosecute him,” Smith recalled.
The lawsuit has put other ranchers and farmers in the state on edge.
If Seal wins, it could mean dozens of other farms in the state that sell their products could be forced to pay sales taxes, which would mean higher prices for customers, which could drive down demand for their locally produced products.
Marty Wooldridge, a cattle rancher from Oil City in northwest Louisiana, said he was worried about the case. Adding sales tax to the produce he sold from his farm would make his prices less competitive with larger farms. He noted that the local grocery store sells fatty hamburger meat that is already below its production costs.
“I think this type of case could set a precedent that could make all agricultural products uncomfortable,” Wooldridge said. “I can’t understand on what basis this is advancing.”
Old profession, new practices
Smith, 49, is relatively new to breeding. He grew up in Baton Rouge before joining the Marine Corps. He completed two tours in Iraq, earning a Silver Star for his actions in Fallujah in 2004 and eventually achieving the rank of lieutenant colonel.
Six years ago he retired and returned to the family farm to help his father.
“The farm has been in my family for over 100 years,” Smith said.
But to continue for another century, Smith knew he would need to make some changes to cut costs and improve revenue. He introduced rotational grazing and added sheep. He moves his shadow and water every day so the cows move to different parts of the property.
Implementing the new methods, he said, was the best way to make good use of the land, reduce the costs of fertilizers and other inputs, and maximize livestock income.
He also set up the business to start selling meat on his own.
His meat sales became increasingly important to the ranch.
“In 2020, it really took off,” he said. The pandemic has made people much more aware of where their food comes from and some have liked to support local producers, he said. Selling meat brought in about $40,000 in 2020 and about $55,000 last year, he said, more than half of his total income in 2021.
“It’s the only source of income where I can set my own prices,” he said. “It is also the source of income with the greatest potential for growth.”
Louisiana Department of Agriculture and Forestry officials estimate that there are more than 100 ranchers statewide selling their products under private labels, as is Smith. The number exploded during the pandemic, and demand remained strong.
State law specifically states that livestock and agricultural products sold directly on the farm are exempt from sales taxes.
“If he raises cattle, then he processes it, it’s still his cattle raising,” said Louisiana Agriculture and Forestry Commissioner Mike Strain. “A manufactured product would be if you took that meat, cooked it, and sold it as ready to eat.”
“It couldn’t be any clearer,” Strain said. Strain sent a letter to Smith noting the provisions of state law and the Uniform Commercial Code that specifically call meat an agricultural product.
“Based on these statutes, agricultural products raised on the farm and sold directly to consumers by the farmer are exempt from tax,” Strain’s letter states.
But Seal alleges in its lawsuit that processed beef products, like what Smith sells to restaurants and consumers, are not exempt.
“The tax collector argues that the term ‘livestock’ is not the equivalent of ground meat or other processed meat products sold directly from a farm,” Seal said in a legal filing.
A spokesperson for Seal declined to comment, citing the status of the case. Judge Alan Zaunbrecher is expected to rule any day.
“We just need to be left alone”
Wooldridge said the importance of small farms was highlighted during the pandemic, when many slaughterhouses closed and meat became much harder to obtain.
“Can we feed the whole state? No,” Wooldridge said. “But we can certainly help you.”
If Seal is successful and breeders like Smith and Wooldridge have to start charging sales tax, it would make them “less competitive,” Wooldridge said.
“You have people all over the state doing this,” he said. “We just need to be left alone.”