💵 Farm Tax Hike / 🛸 Drone Liftoff / 🍒 Berry Heyday

Yeah, the above is farmers everywhere reading deeper into proposed tax changes coming out of D.C over the past few weeks.

Senate Democrats have introduced a tax proposal poised to prevent the estate tax from dying out. The Sensible Taxation and Equity Promotion [STEP] Act would tax currently unrealized capital gains at death.

It’s a grim proposition for farmers, who account for 1.7% of current estate tax generation. The STEP Act would eliminate the stepped-up basis that heirs receive for property and include a $1 million per person exemption.

Translation: For all our fellow novice tax accountants out there, a stepped-up basis typically means big-time tax savings. Eliminate it, and Uncle Sam will be showing up at farm gates across the country looking for his fair share.

Under current law, heirs receive the stepped-up basis in an asset’s value, and after that, they pay capital gains tax only after they sell the asset and only on gains after the original owner’s death.

The act would eliminate that and add a tax for transferring assets - like tractors or grain - as if they were sold for fair market value, even while the farmer is still alive.

This might sound familiar because there’s been a lot of death tax buzz lately. The act comes less than a month after the Republican-backed Death Tax Repeal Act of 2021 was introduced to the House and Senate. What a coincidence.

What’s next: Significant debate is expected as the Biden administration weighs this act in the context of paying for a new infrastructure proposal. The STEP Act has to make it through a 50-50 Senate - so it’s a game of wait and see.

→ It’s that time. As of Sunday, the USDA reported that 2% of the country’s corn crop had been planted with not enough soybeans seeded to report progress yet.

→ The French freeze. Plunging temperatures as low as -5°C have French winemakers lighting candles and burning bales of straw to protect vineyards across its popular wine regions.

→ That grocery bill though… For a 10th consecutive month, global food prices rose, led by spikes in meat, dairy, and vegetable oils. World prices have now hit their highest level since June 2014.

→ Throwing stones at stone fruit disease. A $5 million USDA grant is headed to a team of scientists to control Armillaria root rot, a fungus affecting 500 woody species of stone fruit and nut trees like almonds, cherries, and peaches.

→ Taiwan pork on lockdown. After a dead pig infected with African Swine Fever washed ashore on the weekend, the Asian island put local herds on lockdown and began test protocols on nearby farms.

→ Agribiz earnings: CHS Inc. took a $38.2 million Q2 loss driven by COVID-19 hits on their energy business, while Syngenta Group celebrated a 5% bump in sales and a 3% spike in earnings for fiscal 2020 results.

→ Testing 1, 2, 3: Researchers at the University of Minnesota and Colorado State University developed a test for Palmer Amaranth - the notoriously resistant weed - with 99.9% accuracy.

It’s a bird, it’s a plane, it’s…another drone company.

Guardian Agriculture, a Boston-based startup, just deposited a batch of seed money from seed businesses. $10.5 billion from big-time players [Bayer, Wilbur Ellis, FMC] will help this startup bring digital farming to America’s farmers with its first drone system for crop protection application.

Ready for liftoff.

The autonomous vehicle is called an “eVTOL” – electric vertical takeoff and landing. Each drone has the capacity to spray or fertilize up to 40 acres per hour on pre-planned routes. The drone collects and acts on data to reduce product waste.

The drone’s benefits could be three-fold:

Extend growers’ reach
Reduce environmental impact
Minimize product resistance

When these flying sprayers go out into the big, big world, they “are capable of eliminating hundreds of millions of pounds of unnecessary pesticide use annually while helping farmers grow healthier, better-protected crops.”

You can drone your own way.

Rather than being an expensive up-front cost to farmers, the drone would be offered as a service – which is how crop-dusting services are currently offered. The service ranges from $10 to $45 per acre based on Guardian’s surveys of farmers. There’s no upkeep for farmers, either.

What’s ahead: With $20 million of preorders on the docket, Guardian will ramp up manufacturing to ship out drones to early-adopting farmers in Florida and California.

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The U.S. blueberry industry is booming.

USDA figures from 2019 pegged total U.S. harvested acres up 15% from 2018, with total production growing 21%, to 673 million pounds. A decade-long sprint to grow the domestic crop has acres up 60% from 2009.

And most producers are eyeing up the fresh market sector, with fresh berries cashing in at $2.03/lb, more than four times the $0.50/lb that processed berries will fetch on their way to jams and syrups.

But that doesn’t come without some berry big challenges.

Fresh berries have traditionally been hand-picked, and naturally, that means you need a lot of hands in the fields, a tough task in growing regions where farm labor is tough to come by.

Enter the machines. The rapid adoption of testing and trialing machine harvesters has become the norm. But they, too, have barriers.

With blueberry plants scaling up to six feet tall, berries encounter multiple ‘drops’ as they are harvested through the machine. With drops of 12-inches or more creating a chance of bruising, producers often test G-force safe zones with various landing pad materials to minimize crop damage.

And mums the word: Many growers won’t discuss their machinery or harvest solutions because they want their brand associated with ‘hand-picked’...even if their crop isn’t.

The final verdict: More than just the machines themselves, other factors matter too, like proper harvest timing, ripe picking temperatures, and nailing the right machine speed by variety. When you add incoming improvements in genetics & pruning, machine-harvested quality could mirror hand-picked in the not-too-distant future.