Drought negatively affecting crops; relief is not in the forecast
Crop conditions are worse than at the same time last year, particularly for spring wheat. As of the week ending August 9, 64 percent of the corn crop is in good or excellent condition. This was a slight improvement from the week ending August 2, but down from the second week of August in 2020 when 71 percent of the crop was in good or excellent condition. 60 percent of the soybean crop is in good or excellent condition. This was unchanged from the week ending August 2, but well down from the same week in 2020, when the number was 74 percent.1
Ag News Highlights
Proposed elimination of stepped-up basis
A proposed change in tax policy would eliminate stepped-up basis on capital gains, making it more costly for family farms to be passed down to the next generation. The American Farm Bureau Federation is urging farmers to write to Congress to inform them how important stepped-up basis is to family farms. Stepped-up basis results in a farmer paying taxes on the increase in the value of the farmland since it was inherited; its elimination would mean the full increase in the land’s value since it was purchased (possibly by a parent or grandparent) would be taxed. This could ultimately result in many farmers either taking out large loans or selling all or parts of their land in order to pay capital gains taxes, and even selling parts of the land could limit its ability to serve as a family business.
Infrastructure bill passes through the Senate
The $1.2 trillion infrastructure bill passed through the Senate on August 11. In an interview with AgriTalk host Chip Flory, USDA Secretary Tom Vilsack said the infrastructure spending should lead to more efficient transportation of ag goods, allowing farmers to be more competitive on price in the global marketplace. He also pointed out that “a significant percentage” of the $65 billion dedicated to high-speed internet is for the purposes of investing in rural broadband.
Anthrax cattle scare
In another threat for agriculture caused by drought conditions throughout the West, anthrax was found in a North Dakota cattle herd in the first week of August. Anthrax can be activated by droughts — which North Dakota has experienced through much of the year — and spreads to cattle through grazing. Farmers have been warned to monitor their herds and check with their veterinarians regarding the need for vaccinations. Vaccines for the potentially deadly disease are readily available and take about a week to provide immunity
Grain prices pull back
Corn, soybeans, and wheat prices declined in July and early August — the first sustained decrease in nearly a year. Rising cases of the Delta variant have increased concerns that demand will fade in the fall and winter, especially by restaurants if consumers shift back to eating at home. Mitigating these declines are potentially lower yields caused by poorer crop conditions with droughts in several key agricultural states. Moreover, prices for grain crops are still up sharply over the past year.