Source: Questline

The Inflation Reduction Act (IRA) of 2022 has been called the single largest investment the federal government has made in climate-smart agriculture ever. Here's a look at how the IRA will help our nation’s farmers and ranchers reduce their carbon footprint, improve sustainability, and continue to feed the country.

Increased conservation funding

U.S. Department of Agriculture (USDA) programs provide financial and technical assistance to farmers and ranchers looking to adopt conservation practices on their lands. The programs are designed to mitigate harmful environmental impacts of agriculture by reducing greenhouse gas emissions, sequestering carbon in the soil, reducing runoff and more.

These programs have been incredibly popular – so much so that the programs haven’t had enough funding to meet demand. The IRA provides a $20 billion cash infusion and will give more landowners access to the following programs:

• The Environmental Quality Incentives Program (EQIP): EQIP offers financial and technical assistance to farmers and ranchers looking to improve water and air quality, improve soil health, expand water conservation efforts, and mitigate the impacts of draught and extreme weather events.
• The Regional Conservation Partnership Program (RCPP): RCPP funds conservation efforts around natural resources. Efforts are focused on land management and restoration.
• The Conservation Stewardship Program (CSP): CSP helps farmers and ranchers build on existing conservation efforts by improving grazing conditions and increasing crop resiliency.
• The Agricultural Conservation Easement Program (ACEP): ACEP helps qualified landowners protect, restore, and enhance wetlands, or create conservation easements that protect working farms.

An additional $4 billion of IRA funds have been earmarked to assist fruit and vegetable growers in draught impacted Western states.

Biodiesel production

Farmers can also benefit from the $500 million the IRA earmarks for biofuel industry development. The goal of the funding is to increase biofuel blends above the current 10% for ethanol and 20% for biodiesel.

The IRA also extends existing tax credits for biodiesel and biomass-based diesel producers and blenders, and it has provisions for sustainable aviation fuels. The tax credits are expected increase biofuel production, which will increase the demand for feedstocks like corn and soybeans.

Renewable energy

The IRA extends the 30% Solar Investment Tax Credit through 2032, making solar systems more economically viable for farmers. Rooftop solar installations can reduce a farm’s overall emissions.

Additionally, the IRA includes funds to develop renewable energy in rural areas. This will provide opportunities for farmers willing to let developers install utility-scale solar arrays or wind turbines on their land. By farming the sun or the wind, you'll not only create a new revenue stream, but contribute to the overall decarbonization of our energy grid.

Debt relief

In 1935, there were 6.8 million family farms in the US. As of 2021, there were just over 2 million. Between draughts, floods, and wildly variable market prices for agricultural goods, many farmers are struggling to make the economics of farming work – especially when much of their land is in high demand from housing and commercial developers. But as family farms disappear, food insecurity increases across the country. The IRA includes $3.1 billion to help those at-risk operations and distressed borrowers, with another $2.2 billion to fund a program that will assist those underserved by previous USDA lending programs.