The activities of agricultural and horticultural organizations involve raising livestock, forestry, cultivating land, raising and harvesting crops or aquatic resources, cultivating useful or ornamental plants, and similar pursuits.
For this purpose, aquatic resources include only animal or vegetable life, but not mineral resources. The term harvesting, in this case, includes fishing and related pursuits.
The primary purpose of exempt agricultural and horticultural organizations under Internal Revenue Code section 501(c)(5) must be to better the conditions of those engaged in agriculture or horticulture, develop more efficiency in agriculture or horticulture, or improve the products. Their net earnings may not inure to the benefit of any member.
Agricultural organizations may be quasi-public and are often designed to encourage better agricultural and horticultural products through a system of awards, using income from entry fees, gate receipts, and donations to meet expenses of upkeep and operation. When the activities are directed toward improving marketing or other business conditions in one or more lines of business, rather than improving production techniques or bettering the conditions of persons engaged in agriculture, the organization may qualify for exemption as a business league, board of trade, or other organization under Code section 501(c)(6). In addition, an organization may qualify for exemption under section 501(c)(3) if its primary purpose is educating the public on horticultural or agricultural subjects.