Digging into the Inflation Reduction Act and its impacts on the future of farming


On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA) into law. This $750 billion, once-in-a-generation bill makes critical investments in climate action and conservation, lowers healthcare costs, and amends the tax code. This is the largest single investment Congress has ever made in climate legislation! 

While we don’t yet know the full impact the IRA will have, passage of this bill means that there are now billions of dollars available to support farmers in building climate resilience on their farms and to help farmers in the West improve water management over the next several years. 

The IRA aims to cut greenhouse gas emissions to about 40% of current rates by 2030, and directs billions of dollars to climate solutions, from traditional renewables like wind and solar to climate smart agriculture practices. Specifically, the IRA invests about $40 million in climate smart agriculture, $4 billion in drought relief for western states, and an additional $550 million for water projects for disadvantaged communities. While there is some disagreement over the projected impact that the bill will have on greenhouse gas emission numbers, and these projections are just estimates, they still represent a major step forward towards a climate resilient future.

Young Farmers supported the bill to seize a rare opportunity to pass major climate legislation. Climate change legislation has faced hurdles for decades. The IRA is the biggest climate change package Congress has passed to date, and there likely won’t be another chance to pass a climate bill in the coming years. Passage of a bill this large means that there will be a lot of opportunities to influence implementation to ensure that the bill’s provisions provide the greatest climate benefits. 

Keep reading for an in-depth explainer of the IRA’s history, context, and what’s included in the bill.

 

How did we get here? 

The IRA is actually the evolution of previous climate bills Congress has been debating over the past year. In December 2021, the House of Representatives passed the Build Back Better Act, the $1.8 trillion reconciliation bill that would have invested about $28 million in agriculture conservation spending. However, Build Back Better did not pass the Senate, and therefore was not sent to the President to be signed into law. Before that, Build Back Better was also known as President Biden’s American Jobs Plan, which included generous provisions to position the U.S. agricultural sector to lead the shift to net-zero emissions while providing new economic opportunities for farmers. Early on, we joined a coalition asking lawmakers to double the amount of funding for farm bill conservation programs to equip farmers and ranchers with more climate resilience tools and to ensure that agriculture is a part of the solution to climate change.

The IRA is partly the result of continued negotiations on some of the provisions included within Build Back Better, and includes much of the original funding for conservation and agriculture. While the IRA is a much smaller bill than its predecessor, the Build Back Better Act, it is still a bill that will significantly transform our country’s policy response to climate change by making serious investments in climate action and sustainable agriculture. 

Although Build Back Better did not pass, the IRA did because of a unique set of circumstances. While most Senate votes technically require a simple majority of 51 votes, because of the filibuster and our highly charged and partisan political environment, the Senate needs a 60-vote majority to pass most bills today (or more specifically, the Senate requires 60 votes to end floor debate and begin voting on a bill). When the Senate has close to an even split between the two political parties (as -has been the case during the last two years), getting to a 60-vote threshold is rare. 

Once a year, however, the Senate can pass a bill with only a simple majority (51 votes) that is related to federal spending. This is known as the budget reconciliation process. You can read more about reconciliation here. This year, concerns around inflation and increased costs, historic droughts and floods, and the once-a-year reconciliation process aligned to create a window to make the largest investment in climate change possible. 

These windows don’t occur often in federal policy and Congressional leaders had to move quickly on the chance to make these investments in climate adaptation and mitigation. Major concessions had to be made, however, in order to move the package forward to win over moderate Democrats like Joe Manchin and Kyrsten Sinema. 

A future Congress may not be as amenable to this type of package, so these compromises were made to pass the IRA now. It’s not perfect—far from it. The IRA repealed debt forgiveness for BIPOC farmers and created pathways for new leases in oil and gas development. But there is still a lot to like in the final bill. 

At Young Farmers, we believe in both incremental and radical change in service of a radical farm future. We’ve seen grassroots policy advocacy dismantle inequitable policies and democratize political participation. We work strategically to contribute to these hard won policy victories. As farmers and advocates, we lead with our shared values without compromising on core principles. We believe policy change requires work and dialogue, and we fight to ensure our advocacy does not obstruct the realization of our vision for the future in which farming serves the public interest. 

Below we detail some of the positives and negatives of the IRA. 

 

IRA and the 2023 Farm Bill 

The farm bill is set to expire in 2023, but part of the IRA addressed farm bill programs, specifically the conservation programs that help farmers steward the land and water. This doesn’t mean the farm bill is done OR that we can’t make additional changes to the conservation programs when the 2023 Farm Bill is rewritten. We still need to be ready to advocate for the changes we want to see to the conservation programs, especially where the IRA may have missed the mark. 

The good news is that many of the conservation programs have been renewed. Programs like the Environmental Quality Incentives Program (EQIP) and the Conservation Stewardship Program (CSP) were set to expire in 2023. The IRA renewed them ahead of schedule and added some additional funding. 

Below are the details of what’s in the IRA and what’s out: 

 

Conservation

The IRA makes investments in four critical farm bill conservation programs: the Environmental Quality Incentives Program (EQIP), the Agricultural Conservation Easement Program (ACEP), the Regional Conservation Partnership Program (RCPP), and the Conservation Stewardship Program (CSP). All are key tools that can assist farmers in achieving climate resiliency, and by adding additional funding to these programs while also directing funding specifically to conservation technical assistance, we hope that more farmers will be able to access and benefit from these programs. 

It is important to note that this bill creates specific conditions dictating how the funding for these programs can be used. In general, most funds must be spent by the end of September 2031. That sounds like a ways off, but in terms of the government, agencies will have to move quickly to get these funds out the door. Secondly, agricultural funds must be used to “improve soil carbon, reduce nitrogen losses, or reduce, capture, avoid, or sequester carbon dioxide, methane, or nitrous oxide emissions, associated with agricultural production.”

More specifically, the bill allocates:

  • $8.45 billion to the Environmental Quality Incentives Program (EQIP),
  • $3.25 billion to the Conservation Stewardship Program (CSP), 
  • $1.4 billion to the Agricultural Conservation Easement Program (ACEP), 
  • $4.95 billion to the Regional Conservation Partnership Program (RCPP), and 
  • $1.3 billion for Conservation Technical Assistance (CTA) at the Natural Resources Conservation Service (NRCS).

In the reauthorization of the conservation programs above, the IRA also made some changes to these programs. For EQIP, the IRA removes the requirement that 50% of funds must be spent on livestock operations, freeing up more money that can support different types of farm operations. It also increases the funding from $25 million to $50 million per year for the Conservation Innovation Grant program (CIG) on-farm trials, which means that there will be more funds available for experimenting with practices like cover cropping, water management, and improving soil health. EQIP’s funding will also prioritize programs that reduce enteric methane emissions. Also, the $1.3 billion for Conservation Technical Assistance includes $300 million allocated specifically for in-the-field data collection for on-farm greenhouse gas emissions reductions from agricultural conservation practices.

 

Drought relief

The Colorado River Basin is still experiencing a 20-year drought and reservoirs across the basin are empty. The IRA includes $4 billion to mitigate the impacts of drought in the western states. Congress included $12.5 million to provide emergency drought relief for Tribes, including funding drinking water and to mitigate loss of tribal trust resources. This is a small amount given that there are 29 federally-recognized Tribes that depend on the Colorado River. Although both of these investments could have positive results, the impact remains to be seen on how the funds are used. The Bureau of Reclamation will provide the funds to states and Tribal governments. 

Lastly, to support communities, the IRA includes $550 million for water projects for “disadvantaged communities” to improve municipal water supplies and to provide reliable access to domestic water supplies for households that don’t have it. Again, this is needed funding, but the specific projects that will be funded will be more telling than the text of the bill. 

 

Debt forgiveness for Black farmers

One of the provisions in this bill was the repeal of debt relief for black farmers. The IRA repealed Section 1005 of the 2021 American Rescue Plan Act (ARPA) which provided essential debt relief and assistance to Black farmers, Indigenous farmers, and other farmers of color facing ongoing impacts of decades of discrimination by USDA. This debt relief was blocked by lawsuits filed by white farmers, claiming discrimination and that the act was “unconstitutional” because the forgiveness was only available to farmers of color. While our partners and other advocates were working to secure the debt relief in court, Congress repealed the original language from ARPA without consulting with stakeholders. 

In its place, Congress included new language in the IRA to support “distressed borrowers.” This provision allocates $3.1 billion to USDA to provide debt relief for direct or guaranteed loans if farming operations are at “financial risk.” This language is much broader than ARPA language and does not include race-specific language. The first phase implementation of these funds started on October 18, 2022. 

The IRA also includes $2.2 billion to provide financial assistance for farmers, ranchers, and foresters who have experienced discrimination from USDA farm lending programs. The program is not race-specific, unlike the debt relief originally approved under ARPA, and allows financial assistance for anyone “determined to have experienced discrimination.” We don’t know yet how USDA will manage this program, but USDA has requested input from stakeholders and will be releasing more information soon. 

If you want to learn more about USDA debt relief for black farmers, and the new provisions in the IRA, check out this more in-depth analysis from our friends at National Family Farm Coalition and the Federation of Southern Cooperatives

 

Oil and gas

While the Inflation Reduction Act makes significant investments in climate and conservation, we recognize that there are several concerning inclusions, namely reinstating oil and gas lease sales in the Gulf of Mexico and Alaska, and hinging the passage of this bill on a future permitting bill, led by Senator Joe Manchin, that would speed approvals of fossil fuel projects like the Mountain Valley Pipeline. We do not agree with tying historic climate investments to activities that would perpetuate further climate degradation and injustice, however, we believe in the power of the IRA and are looking forward to working closely with USDA and the administration on swift and equitable implementation of the IRA’s provisions. 

In politics, nothing is final until it has passed the President’s desk. We see this with the promised permitting bill championed by Senator Joe Manchin. At the time of writing, that bill is not moving forward, and key Democratic senators like Senator Tim Kaine (VA) have opposed the bill. That said, things change, and anything can happen, especially as a new Congress will take seat early next year. 

 

Moving forward

At Young Farmers, we are trying to work within systems that are unjust, and we believe that we can and will change those systems over time by working in solidarity with our partners, building power with young farmers, elevating farmer stories, and leveraging our privilege and positionality as a bridge-building organization, to demand change. We know the IRA does not adequately address issues of environmental justice or equitably support frontline communities. 

We also know that with our country’s current political environment, opportunities to make investments in climate solutions are few and far between. We hold both of these realities to be true while working towards both incremental and radical change. Although the IRA has gains and losses for our priorities, we are committed to working with others in our ecosystem and with USDA and other federal agencies to maximize the benefits and minimize any ill effects. 

As Congress begins the process of writing the 2023 Farm Bill, we will work closely with our partners and allies to ensure that the perspectives and needs of young farmers are included in the final bill. To stay informed of opportunities related to rulemaking, to provide feedback on IRA implementation, and for other opportunities to advocate for climate action in the coming months, sign up for our climate and water campaign mailing list here.

 

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