Future farmers look to the sky

Moderated by Rick Badie

Some day, Georgia farmers will use aerial drones as routinely as tractors and mechanical cotton harvesters. Likewise for other industries in our region. Today a state official outlines how Georgia is preparing itself to capitalize on drone use, a practice expected to add jobs and have an economic impact across multiple sectors. Another guest writer deals with an emerging investment concept: crowdfunding. And a third writer talks about the GATE agricultural tax exemption program.

Drones vital to Ga. industries

By Steve Justice

Everywhere you turn, there are news stories about the emerging commercial uses of “drones” or unmanned aircraft systems.

According to a leading industry association, unmanned aircraft will bring nearly 2,000 jobs and an economic impact of $379 million to Georgia within the first three years of commercial use. Many of these jobs will come from UAS use in industries already very important in Georgia: agriculture, film and media production, infrastructure inspection and public safety. Leaders from Georgia’s aerospace industry, universities and state government are working to make that prediction a reality.

The first key: university research. Georgia Tech has more than 20 years’ experience in UAS technologies. Additional research is growing across the Georgia university system and at private colleges such as Mercer University. Tech also is leading a team of universities competing for the Federal Aviation Administration Center of Excellence for Unmanned Aircraft Systems, which would enhance our technology capabilities and attract more UAS companies to Georgia.The second key: Develop an “ecosystem” that supports unmanned aircraft. Georgia has more than 85,000 people employed in aerospace, an annual economic impact of more than $50 billion. Companies like Gulfstream, Pratt & Whitney, Triumph Aerostructures and PCC Airfoils helped make aerospace products the No. 1 international export for the state in 2014, totaling $7.8 billion. The new UAS sector will benefit from this reservoir of talent and capability to shape its future.

The Center of Innovation for Aerospace, a division of the Georgia Department of Economic Development, focuses on growing our existing aerospace sectors (manufacturing, air transportation, and maintenance repair and overhaul) and preparing for emerging opportunities such as space and unmanned aircraft.

The center is preparing Georgia to be a leader in the commercial UAS market across the entire life cycle: research and development, manufacturing, testing, training, operations and sustainment. In 2009, it brought together leaders from industry, academia, economic development and government to discuss the potential for commercial unmanned aircraft in Georgia. That led to the establishment of the UAS Working Group. This group meets quarterly to share information, discuss issues surrounding the sector and define activities to prepare for the safe use of drones in our state.

Moreover, the center works with university-industry “Innovation Projects” to improve technology while gaining experience operating unmanned aircraft safely. Agriculture, the largest industry in Georgia, already uses autonomous ground vehicles and other high-technology systems.

Recently, the Centers of Innovation for Agribusiness and Aerospace co-sponsored a study of UAS use in agriculture by the aviation school at Middle Georgia State College and Guided Systems Technologies. The University of Georgia provided test fields and agriculture expertise; there also was support from the Georgia cotton and peanut commissions. This project confirmed unmanned aircraft can help farmers lower costs and increase yields, but more is work is ahead of us.

The FAA recently took the first steps toward commercial use by approving UAS operations by six film production companies. Since then, more than 50 companies have applied for similar approvals. It is anticipated the FAA will soon approve drone use in other sectors such as agriculture, public safety and infrastructure inspection.

For a viable commercial UAS market, companies also will need clearly defined state regulations on liability, usage restrictions and licensing as well as an available, cost-effective insurance market, and a welcoming business environment.

Georgia has a long and successful history of innovation in aerospace. It began in 1907, when Ben Epps designed, built and flew the first aircraft in Georgia. That was less than four years after the Wright Brothers’ first historic flight. Now, Georgia is poised to succeed in the next wave of aerospace innovation — unmanned aircraft systems.

Steve Justice is director of the state’s Center of Innovation for Aerospace.

Time is right for crowdfunding investors

By David Walker

Georgia investment laws make Atlanta the breeding ground for new investment sharks.

ABC’s “Shark Tank” is a reality-based television series in which a business owner pitch his ideas to investors who, in turn, negotiate for a percentage of the owner’s business, usually at a price less than that offered by the owner. Having run out of funding options, the business owner is left to choose between the price offered by the “shark” or move forward without an investment.

Sounds great, if you’re the shark.

The television shark investors are wealthy billionaires who add to their wealth by buying low into small businesses, like the ones on Shark Tank, then selling high once the business is successful. Who wouldn’t want to be a shark?

Georgia is doing its best to build more investment sharks through crowdfunding. If you haven’t heard by now, crowdfunding happens when individual investors each contribute small amounts of money to fund an idea, project or business.

Crowdfunding is not a new concept. Televangelists first used it to accept donations. Nowadays, the medium of choice is the Internet, but this time, contributors are looking for more than just a tax deduction.Typically, when business owners require funds to start or grow, they reach out to friends and family, followed by banks. With Internet crowdfunding, the business owner can look for funding throughout the world.

But what do worldly sharks want in return?

In 2012, President Barack Obama signed the Jobs Act, which instructed the Securities and Exchange Commission to issue rules letting crowdfunding investors have an ownership interest in a business. This meant business owners could offer investors an actual stake in their companies instead of a donation or gift certificate.

The SEC has not yet issued its rules, so most crowdfunding investors sit on the sidelines, waiting to jump in the water.

Georgia is not waiting.

The Legislature adopted the Invest Georgia Exemption, which allows a state resident to go on the Internet, register as a crowdfunding investor, invest in Georgia small businesses and receive an ownership interest in the business or a return on the investment.

Since the exemption’s adoption, Georgia businesses have begun listing offerings on crowdfunding platforms or portals that provide investment information for potential investors. To date, most marketing related to the exemption has been directed toward business owners, and rightfully so, because businesses breed investors.

Most of Georgia’s crowdfunding investors are unaware, however, that a number of crowdfunding portals are available right now listing local Georgia and Atlanta businesses for investment, only for Georgia residents. In addition, Georgia and Atlanta crowd investors can minimize their risk by visiting a business or talking to its owner. Due diligence is key for any investor. It’s much easier to gather information about businesses when they are in your own pond.

The time is ripe for crowdfunding investors in Atlanta and the rest of Georgia to jump in the water, swim around and take a bite out of the investment opportunities offered by the state’s small businesses. After all, just like our eco-system, business owners need sharks.

David Walker is an Atlanta business attorney.

Farm tax breaks good for Ga.

By Bryan Tolar

When it comes to job growth and strengthening the economy, competition among states, cities and counties can be fierce. Tax benefits galore are laid at the doorstep of would-be business growth, and it’s no different for farms and agribusinesses that must survive and thrive to grow, process, pack and deliver food and other products.

Georgia’s agricultural and forestry industry has a strong history and remains vibrant today partly because of investments made by state and local governments. While many Georgia fields are empty after harvest, farm families and communities benefit from the reduced tax burdens.

In 2011, lawmakers established the Georgia Agricultural Tax Exemption (GATE) program and prescribed how operations must qualify to get the sales tax exemptions on these farm inputs.GATE, administered by the Georgia Department of Agriculture, consists of a 10-step application. Each step must be followed correctly, or it flags the account and hurts the applicant’s chances of approval. If you don’t qualify, you don’t get a card. Penalties for perjury are stiff.

Most farm-use items have been exempt from sales taxes for many years. The new program, however, added exemptions to include all areas of Georgia’s agricultural industry. GATE includes farm equipment parts and the fuel used in tractors and other machines. Energy used by those processing farm products, such as cotton gins, was added to help ensure these energy-intensive agribusinesses remain competitive in the global marketplace.

Like all tax exemptions, GATE does have a cost. Some county and city governments feel it more than others. Unfortunately, some counties taking action to increase property taxes make GATE the scapegoat.

The exemption is “extremely important to production agriculture,” says Terrell Hudson, a multi-generation farmer in Dooly County. He has rare insight: He’s also the county commission chairman.

Metro Atlanta is seeing property tax increases, even though GATE barely moves the needle here. Clearly, local economic factors drive authorities to adjust local taxes. But hiking property taxes and blaming it on sales tax exemptions for agriculture — many that have been in place for decades — is mostly political cover.

Agriculture knows no state boundaries. Agricultural retailers also serve customers and compete across state lines. There is nothing new about sales tax exemptions for out-of-state farmers. It’s important to keep neighboring farmers’ dollars coming to Georgia.

Out-of-state farmers, too, must obtain a GATE card to obtain sales tax exemptions. Without GATE, much of the revenue wouldn’t come our way, pushing Georgia ag retailers and the communities they support to the brink.

Keeping up with GATE rules can be challenging for both farmers and ag retailers. The agribusiness community has worked overtime to help farmers and retailers understand the limits of the program. Agribusiness groups have led education efforts and worked successfully with lawmakers and ag officials to fine-tune the program and close potential gaps. Department of Revenue oversight will also strengthen the program and encourage compliance.

Georgia agriculture has steadily grown. Lawmakers have shown their willingness to support this state’s largest and strongest economic sector. All signs point to an even brighter future for agriculture and forestry across our state. While sweat and tears will always be part of production agriculture, local economies should be open to GATE — because empty fields and idle tractors will never grow an economy.

Bryan Tolar is president of the Georgia Agribusiness Council.


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