4 implications of the political environment for future USDA loan and grant funding

There are some exciting things brewing at the USDA with big implications for farm funding. Below we outline 4 things you should be aware of.

Cover crops are on Joe Biden’s mind

President Joe Biden mentioned cover crops for the second time since December 2020 in a national address yesterday. This reminds us of the days when Washington and Jefferson exchanged letters discussing the cover crops they planted in their rotations.

“Farmers planting cover crops, so they can reduce carbon dioxide in the air and get paid for doing it.”

View Mr. Biden’s full remarks here, and review here the first time Mr. Biden mentioned cover crops.

You can bet if Mr. Biden is considering cover crops a worthy endeavor, top USDA officials are listening.Today, the EQIP program offers an average of $35 per acre to plant cover crops. We’re watching closely to see how payment rates and EQIP priorities may focus even more on this erosion-preventing, soil health-building technique in the coming years. Look out for 1) more funding being directed through EQIP, CSP and other USDA programs towards cover cropping, and 2) new initiatives like equipment grants to support cover crop implementation.

Public support for cover cropping could also shift the tide of research priorities and private investment. Institutions of higher education, like the University of Missouri, are already doubling down on the topics of soil health and regenerative agriculture. More federal attention on the space could catalyze more research dollars being directed towards assessing the environmental and economic impacts of cover crops.

Carbon markets could be legitimized with the Growing Climate Solutions Act

The Growing Climate Solutions act passed in the Senate Agriculture Committee this month and is now making its way to the wider Senate floor. This piece of legislation provides for the establishment of standards and a third-party verification program for carbon markets. If it’s passed, farmers can anticipate a stronger emphasis in the coming years on carbon markets. That means more money for implementing practices like cover cropping, precision nutrient management and no-till agriculture. Current carbon markets pay up to $30 per acre per year.

An additional $11B would be available in grants for stewardship in the Climate Stewardship Act

The “Climate Stewardship Act” also arrived at Congress this month. This is actually the second time this Act has been proposed by Senator Corey Booker (he first floated it in 2019). There are some very exciting implications in this Act for agriculture and farm funding.

Namely, this act provides for the expansion of USDA grants for stewardship from about $3B a year today to $14B a year over the next few years. This is hugely important, as USDA programs such as EQIP and CSP only have enough budget to fund about half of all eligible applications right now. And, the NRCS is actively looking to expand its reach to more producers.

The funding allotments break down as follows:

  • Expand CRP, taking the program from funding 30 million acres to 40 million acres over 10 years
  • Increase EQIP from $1.75B per year to $7B per year
  • Raise CSP from $700M per year to $7B per year
  • Expand RCPP from $300M per year to $1B per year
  • Turn up the dial on REAP, taking the program from $50 million to $3 billion annually
  • Establish Soil Health Equipment Grant program (funding amount unspecified)

Underserved producers, Urban Ag more of a focus for USDA programs

Another exciting implication of the current political environment is that underserved producers are a top priority for funding. Underserved producers are those who have been left out of the system due to economic or racial identity, or those who are beginning and veteran farmers.

How exactly this prioritization gets implemented is still up in the air. Historically the USDA has set aside pools of funding for these producers (ie: 5% of the EQIP funding pool). We anticipate that this will continue to be the method of prioritizing these farmers, and we’re hopeful there may be some new initiatives as well.

Additionally, urban agriculture is a new focus for the USDA (like when the USDA awarded an Urban Ag grant last year). This has implications for farmers who want to implement urban projects, like container farms or urban market enterprises. We’re excited to track what this might make available in terms of USDA grants and loans, as it can be difficult to get federal funding today for container and urban agriculture projects.

Thank you for tuning in and stay posted as we track the implications of today’s political environment for your farm!

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