What the Inflation Discount Act might imply for farmers

This story was initially revealed by DTN/The Progressive Farmer by means of a partnership with the Mississippi River Basin Ag & Water Desk.

OMAHA — A sweeping invoice that may have main ramifications for agriculture and vitality has been despatched to President Joe Biden’s desk to grow to be regulation after a extremely partisan Home flooring debate Friday. The Inflation Discount Act (IRA) would dedicate $369 billion for local weather initiatives, together with applications for climate-smart agriculture and rural renewable vitality initiatives. The funding contains about $19.5 billion for USDA conservation applications for farmers and landowners

The Home voted 220 to 207 with each Democrat backing the IRA and each Republican opposed, although 4 GOP lawmakers didn’t vote. The $739 billion invoice now goes to President Biden who has championed the well being care and local weather invoice as key to his home agenda. Republicans criticized the vote given practically 180 lawmakers voted by proxy.

The IRA is funded by a 15% minimal company tax on companies with greater than $1 billion in common earnings. One other tax provision imposes a 1% tax on inventory buybacks by publicly traded firms as effectively.

In her closing arguments, Home Speaker Nancy Pelosi, D-Calif., mentioned the invoice reduces the deficit, “is absolutely paid for, ensuring the ultra-rich and largest companies pay their fair proportion.”

Republicans identified varied spending measures, together with a $27 billion nationwide local weather financial institution at EPA to lend cash for inexperienced vitality initiatives.

“Together with that slush fund, it fingers out tax credit like sweet with no accountability,” mentioned Rep. Kevin McCarthy, R-Calif., the Home minority chief.

Rep. Steny Hoyer, D-Md., the Home majority chief, known as the invoice, “The most important single funding dealing with the local weather disaster that any nation has ever made.” Hoyer added, “We’ve got a local weather disaster, and the deniers have undermined our capability to reply. This invoice responds, and it responds in step with the needs of the American individuals. It should deliver down the price of vitality for People by investing and growing cleaner, extra sustainable vitality applied sciences like electrical autos and photo voltaic panels.”


The local weather provisions within the invoice are supposed to assist decrease U.S. greenhouse emissions by 40% under 2005 ranges by 2030.

Abigail Spanberger, D-Va., pointed to funding for conservation applications in addition to the $1.7 billion that may go to the Renewable Vitality for America Program (REAP) for vitality effectivity applications and small-scale renewable vitality applications for farmers and different rural small companies.

“Farmers are the unique conservationists, and their experience cannot be ignored if we’re going to meet our shared local weather targets whereas bringing higher investments to rural America, strengthening farmers’ backside traces and decreasing the prices of inputs,” Spanberger mentioned.

The $19.5 billion for USDA conservation applications focuses on incentivizing extra farmers to undertake cropping and livestock practices that cut back greenhouse emissions, cut back nitrogen loss or sequester carbon within the soil.

Among the many high spending gadgets for USDA, the Environmental High quality Incentives Program (EQIP) will obtain $8.45 billion; the Regional Conservation Partnership Program (RCPP) receives $4.95 billion; the Conservation Stewardship Program (CSP) receives $3.25 billion; and the Agricultural Conservation Easement Program (ACEP) receives $1.4 billion.

At the very least $4 billion within the invoice goes to take care of drought reduction within the Colorado River Basin. Western Growers, which represents fruit and vegetable growers in California and different Western states, praised the Western drought add, noting the Colorado River helps 5.7 million acres of irrigated agriculture — primarily winter greens.

One other $1 billion will go to the Pure Assets Conservation Service (NRCS) for technical help to producers. USDA may also obtain $300 million to quantify carbon sequestration and emissions on farms.


Renewable vitality applications by means of USDA general will obtain $13.3 billion. Rural electrical cooperatives will obtain $9.7 billion for loans to construct out renewable vitality infrastructure with particular language on “zero-emission techniques” and carbon-capture applications.

Biofuels will see one other $500 million to develop blender pumps and different infrastructure to extend the blends of biofuels above 10% mix ranges for ethanol and 20% for biodiesel blends.

The invoice additionally extends the $1-per-gallon biodiesel and renewable diesel tax credit score by means of 2024. The $1.01-per-gallon second-generation biofuel tax credit score is also prolonged by means of 2024.

A significant enhance for airways transitioning aviation fuels will come from a $1.25-a-gallon sustainable aviation gasoline (SAF) tax credit score for 2023 and 2024. The SAF tax credit score additionally will get bumped up for fuels that cut back emissions by greater than 50%.

Teams backing ethanol and biofuels supported the invoice, pointing to the investments in infrastructure and sustainable aviation fuels.

“Whereas this invoice doesn’t comprise every thing on our want listing, it does comprise some unimaginable incentives for farmers and ethanol producers trying to capitalize on carbon depth,” mentioned Brian Jennings, CEO of the American Coalition for Ethanol.

One other $1 billion goes for loans for electrical era from renewable vitality sources for rural and nonrural energy firms. This contains photo voltaic, wind, hydropower, biomass, or geothermal. The federal authorities would cowl as much as 50% of the loans for such initiatives.

The manufacturing tax credit score is also prolonged with changes within the tax credit score for the expertise used and when building of the undertaking started. The tax credit score contains bonuses for initiatives that use sure ranges of home supplies as effectively.

The laws additionally contains a number of residential and energy-efficiency tax credit for purchasing merchandise equivalent to warmth pumps or putting in photo voltaic panels on properties.


The 45Q tax credit score for industrial carbon sequestration could be prolonged to initiatives that start building earlier than 2033. The tax credit score for injection or utilization is elevated to $60 a ton. Direct air seize would go to $180 a ton, and disposal of carbon would go to $85 a ton.

The tax credit would doubtless spur extra give attention to carbon pipelines and sinking carbon into the bottom the place potential. The tax credit improve the incentives for giant chemical and cement plans to take a look at methods to seize emissions.

[Read more: Despite hundreds of millions in tax dollars, ADM’s carbon capture program still hasn’t met promised goals]

When added up, all the assorted tax incentives for renewable vitality and emission reductions whole practically $271 billion over 10 years.


One other $5 billion might be used for forest administration, together with about $2.15 billion for funding to scale back lifeless wooden and different vegetation that may be gasoline for forest fires. One other $2.75 billion will go towards city areas and different non-federal forests to develop incentives equivalent to carbon sequestration in these areas.


Leaders of the Federation of Southern Cooperatives/Land Help Fund and the Nationwide Black Farmers Affiliation expressed frustration with farmer debt-relief provisions within the invoice. Senators rewrote the provisions following a number of lawsuits filed by white farmers final yr that halted help to minority farmers that was included within the American Rescue Plan Act (ARPA).

Regardless of criticism from some teams representing Black farmers, Home Agriculture Committee Chairman David Scott, D-Ga., mentioned the invoice supplies “expedited reduction” to USDA mortgage recipients in danger for dropping their farm operations. “It additionally permits USDA to assist farmers and ranchers who’ve suffered discrimination in Farm Service Company farm mortgage applications,” Scott mentioned.

[Read more: An Illinois bill aims to counteract a decades-long trend: The decline of the Black farmer]

The invoice supplies USDA with $3.1 billion in funding for USDA to supply reduction for at-risk agricultural operations. All distressed debtors of direct or assured loans administered by USDA are doubtlessly eligible for help beneath this provision, which is designed to maintain these farmers in manufacturing.

The invoice supplies $2.2 billion for a program to supply monetary help to farmers, ranchers or forest landowners who’ve skilled discrimination in USDA lending applications. Beneath the brand new language, monetary help would go to farmers, ranchers or forest landowners who’re “decided to have skilled discrimination previous to Jan. 1, 2021,” in USDA farm lending applications. The monetary help will not be greater than $500,000 “as decided to be acceptable based mostly on any penalties skilled from the discrimination.”

As written, the invoice doesn’t prioritize the 17,000 farmers and ranchers who obtained letters promising debt reduction.

The invoice additionally contains $250 million that may go towards analysis, training and Extension, in addition to scholarships for 1890 Establishments — land-grant, traditionally Black schools and universities (HBCUs).

One other $250 million within the invoice would go to assist underserved producers by means of loans and grants equivalent to those that farm on heirs’ property.

Chris Clayton may be reached at Chris.Clayton@dtn.com. Comply with him on Twitter @ChrisClaytonDTN

This story is a product of the Mississippi River Basin Ag & Water Desk, an editorially impartial reporting community based mostly on the College of Missouri Faculty of Journalism in partnership with Report For America and funded by the Walton Household Basis. Copyright 2022 DTN, LLC. Used with permission.

High picture: An Oklahoma farmer harvests wheat round wind generators in western Oklahoma. The Inflation Discount Act will drive extra incentives to extend renewable vitality equivalent to wind and photo voltaic manufacturing in rural America. (DTN photograph by Chris Clayton)

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