With New Zealand’s honey production and export on the rise, there are certain tax considerations for producers to be aware of.

New Zealand’s honey exports have been increasing since 2013 and looking to be still growing. Not only has the industry seen an increase in export volume, but there have also been some staggering prices achieved for some of the purest Manuka Honey in our export markets. [1]

We are now seeing an increase in honey revenue being generated from many of our rural properties in both the agricultural and horticultural sectors, with this income often supplementing traditional farming operations.

We have noticed an increase in new entities appearing in the industry. Many are joint ventures with each contributing to different aspects of the business, for example a landowner joining with the owner of the hives and maybe a transport business that would be responsible for relocating the hives. These entities can work very well if the rules and expectations of each party are made clear from the start, with robust agreements being put in place.

Many farm businesses receive payments for honey produced on their land, or payments from an apiarist for the lease of their land. These amounts will usually be taxable income to the farming business.

If however, the farming business is becoming more involved in the business of beekeeping themselves, there are several considerations to be worked through.

There will be additional information required at year end when accounting for beekeeping as compared to the traditional farming business. These will include how to treat the investment and expenditure made during the year, which could include the purchase or manufacture of hives, the bees themselves, wages, hive feed, repairs and maintenance and protective clothing, amongst other things.

Generally, the purchase or production of the hives themselves will be a capital asset and depreciation can be claimed on an annual basis with all other expenses largely deductible as per any other farming business.

The issue of valuing any stock on hand at balance date will need to be addressed, as most apiarists will have honey on hand at balance date. Most apiarists will be able to utilise trading stock rules available to small tax payers and will therefore be able to value stock on hand at either market value or cost of production. Using market value removes the need to do a complex cost calculation but would mean that profit is essentially recognised before it is received. Market value may be appropriate for a small producer of bulk clover honey but may be less appropriate for Manuka honey, due to prices achieved in the market and the fluctuations in price within that market. Once a valuation method is adopted it must be applied consistently from one year to the next, unless there is a valid commercial reason to change.

It would be advisable if entering a beekeeping business to have a balance date that fits with the production cycle, so a June or July balance date may be best suited to most apiarists.

Overall, beekeeping is considered a farming activity and is therefore entitled to the same concessions that other farmers have including being able to utilise the income equalisation scheme.

If you have any queries about the taxation of your farming operation, contact your local adviser.

[1] https://www.mpi.govt.nz/dmsdocument/34329/direct