Senate Passes Inflation Reduction Act, Including $40 Billion in Ag Funding

Farmers would be offered more incentives to plant cover crops or adopt other conservation practices after Democrats in the Senate pushed through the Inflation Reduction Act on Sunday.

After an overnight debate on amendments stretching into mid-afternoon Sunday, Vice President Kamala Harris broke a 50-50 tie to pass the bill. The $739 billion bill focuses on spurring renewable energy and reducing greenhouse-gas emissions.  To fund the measures in the bill, Democrats set a 15% minimum tax on large corporations and new tax on stock buybacks. The biggest chunk of spending - about $369 billion - would go toward addressing climate change in different ways, including nearly $40 billion in the agriculture title.

What's new: Senate Democrats made a few last-minute ag-facing additions to the bill.

First, they added $4 billion for drought resilience, which would be directed to the Bureau of Reclamation.

Democrats also snuck in $3.1 billion in relief funds for "distressed" borrowers of USDA loans and $2.2 billion to administer aid to farmers who have experienced discrimination from USDA before January 1, 2021.

What's old: The bill would dump $20 billion into various existing oversubscribed USDA agriculture programs to reduce environmental impact. This includes:

- $8.45 billion for the Environmental Quality Incentives Program (EQIP)

- $6.75 billion for the Regional Conservation Partnership Program (RCPP)

- $3.25 billion for the Conservation Stewardship Program (CSP)

- $1.4 billion for the Agricultural Conservation Easement Program (ACEP)

The legislation also seeks to bolster rural clean energy and economic growth with a $14 billion spend in rural development. This includes:

- $9.7 billion in grants and loans to dole out to rural electric cooperatives for renewable energy projects

- $1.965 billion to the Rural Energy for America Program (REAP)

- $1 billion for forgivable Section 317 loans for electric generation from renewable energy resources for resale to rural and non-rural residents

- A provision for direct pay credits for rural electric cooperatives investing in renewables, which would bring the tax-exempt entities into parity with for-profit counterparts that have reaped renewable energy tax credits for years

- $500 million for biofuels infrastructure

- $5 billion for fighting wildfires and boosting carbon sequestration projects via climate-smart forestry

Heard from the lobby: Jim Mulhern, the CEO of the National Milk Producers Federation, said the bill is a "game-changer" and "will better position dairy farmers to effectively implement the dairy sector's Net Zero Initiative and fulfill its 2050 environmental stewardship goals." A number of ag groups also praised the biofuels provisions.

However, the American Farm Bureau Federation was opposed to the bill, with President Zippy Duvall saying it "has serious concerns about the proposed increase in taxes on American businesses at a time when the country is entering a recession."

Editor’s Take:

This bill is expected to easily pass in the U.S. House of Representatives.  Plenty of money being offered to various sectors of agriculture. Some of the funds simply will augment programs already in existence while other funding will jump-start new programs aimed at increasing conservation efforts and sustainability. In other words, farmers are going to reap some of the monies being passed around as a result of this new spending spree. Will it actually have the desired results on the targeted areas? It will be decades before we know the answer! In the meantime, farm income in many areas will go up even further as a result of this spending package. Once again, farmers/ranchers who benefit from this legislation should be prime targets for CAD members looking for business in the ag sector.