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Congress poised to pass Inflation Reduction Act with $38 billion for ag and forestry

The bill was passed by the Senate on Aug. 7 and U.S. House Speaker Nancy Pelosi said on Wednesday, Aug. 10, that the House of Representatives would pass it Friday, Aug. 12.

FILE PHOTO: Inflation Reduction Act of 2022 remarks at the White House
U.S. President Joe Biden delivers remarks on the Inflation Reduction Act of 2022 at the White House in Washington on July 28.
Elizabeth Frantz / Reuters
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WASHINGTON — Congress is poised to pass what is being called the Inflation Reduction Act, with substantial spending targeted at ag conservation, biofuels and help for struggling and underserved farmers and ranchers.

The bill was passed by the Senate on Aug. 7 and U.S. House Speaker Nancy Pelosi said on Wednesday, Aug. 10, that the House of Representatives would pass it Friday, Aug. 12.

The bill is a substitute to the House-passed Build Back Better Act. The Congressional Research Service outline the three main areas where the bill would affect agriculture:

Agricultural Conservation, $19.5 billion: The bill would add $18 billion in additional funding for existing farm bill conservation programs as incentives for voluntary conservation efforts, including the Environmental Quality Incentives Program (EQIP; $8.45 billion), Regional Conservation Partnership Program (RCPP; $4.95 billion), Conservation Stewardship Program (CSP; $3.25 billion), and Agricultural Conservation Easement Program (ACEP; $1.40 billion).

Additional funding would also be provided for conservation technical assistance ($1 billion), a carbon sequestration and greenhouse gas emissions quantification program ($300 million), and administrative expenses ($100 million).

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Renewable Energy, $13.3 billion:  Biofuels are not the biggest part of the bill, but it provides $5 million to the U.S. Environmental Protection Agency to carry out the Renewable Fuel Standard program, in part, for data collection and analyses for lifecycle greenhouse gas emissions of a fuel and would provide $10 million for new grants to support investment in advanced biofuels. It also has a sustainable aviation fuel tax credit that would, after 2024, be absorbed into a new clean fuel production tax credit. Lastly, the bill would extend certain tax incentives for biofuels, including for biodiesel and renewable diesel.

The bill would provide approximately $1.7 billion for eligible projects under the Rural Energy for America Program and approximately $304 million for grants and loans for underutilized renewable energy technologies and technical assistance with REAP applications.

For rural cooperatives, it would provide $9.7 billion — for financial assistance to eligible entities for the long-term resiliency, reliability, and affordability of rural electric systems through the purchase of renewable energy, renewable energy systems, zero-emission systems, carbon capture and storage systems, and more.

The bill would provide $1 billion for electric loans for renewable energy under the Rural Electrification Act.

 Agricultural Credit: The Inflation Reduction Act would provide debt relief for distressed farm borrowers and assistance for underserved farmers and ranchers.

The new debt relief program would provide $3.1 billion for loan modifications, including forgiveness, for “distressed borrowers” of U.S. Department of Agriculture Farm Service Agency direct or guaranteed farm loans “whose agricultural operations are at financial risk.” USDA is expected to develop the criteria for eligibility.

The Senate bill also includes nearly $2.9 billion to help underserved farmers, ranchers, and forest landowners, defined to include those living in high poverty areas, veterans, limited resource producers, and beginning farmers and ranchers. Most of this assistance is $2.2 billion of financial assistance for those who experienced discrimination before 2021 in USDA farm lending programs.

When including $5 billion for forestry programs, the bill contains about $38 billion for ag and forestry.

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American Farm Bureau Federation President Zippy Duvall, praised parts of the bill, but criticized some tax provisions.

“AFBF appreciates that lawmakers recognize the role agriculture can play in addressing climate change issues in the Inflation Reduction Act of 2022. Farmers and ranchers support voluntary, market-driven programs that help the environment while ensuring farms remain economically sustainable. Our members also appreciate the drought relief provided in the bill, and we are hopeful it will be used in a responsible way to assist growers affected by drought and mitigate global food supply challenges," Duvall said in a written statement.

“We are extremely disappointed in the last-minute inclusion of a tax increase on small, family-owned farms and ranches, in the form of extending limits on deductions small businesses can claim, while we are in a recession. We strongly encourage lawmakers to focus on policy that directly addresses record-high input costs, spurs economic growth, and addresses inflation that is crushing the pocketbooks of America’s families.”

In a statement issued before Senate passage, National Farmers Union President Rob Larew praised the bill.

“NFU welcomes the major investments in voluntary, incentive-based conservation programs for agriculture included in the Inflation Reduction Act. These provisions will support farmers and ranchers in continuing to expand their role in fighting climate change while also supporting the resilience of their operations. The addition of biofuels infrastructure funding is also a welcome addition and one that will support farmers and consumers across the country,” Larew said.

In a letter to Democratic colleagues, Pelosi called the $430 billion climate, tax and health care bill approved by the Senate over the weekend "life-changing legislation."

Reuters news service contributed to this report.

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