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For over a year and a half, countless farmers and ranchers nationwide have been sending an unmistakable message to policymakers in Washington, DC – that the climate-smart agriculture funding included in the Inflation Reduction Act (IRA) is exactly what they’ve been looking for.

Since the IRA was signed into law on August 16, 2022, the farmer-driven demand – in red states and blue states alike – for these resources has far outpaced availability. In fiscal year (FY) 2023, the IRA made $850 million available for climate-focused conservation, and in a showcase of the extent of demand for these resources, applications totaled a staggering $2.8 billion.

Yet despite the overwhelming popularity of these climate-smart agriculture resources and the four key working lands conservation programs to which they are linked, recent indications suggest that when the House Agriculture Committee marks up their farm bill in late May 2024, it may fundamentally undermine precisely what has proven so popular among farmers and ranchers. The National Sustainable Agriculture Coalition (NSAC) believes the next farm bill should not only keep these resources invested in the most popular and oversubscribed conservation programs but also keep them climate-focused. Whether or not the House Agriculture Committee will choose that path remains to be seen.

This post examines the latest data on IRA starting with a look at the basics – including long standing farmer and rancher interest in conservation and climate-focused agriculture practices. 

First things first. By now, the popularity of USDA’s key working lands conservation programs – the Conservation Stewardship Program (CSP), the Environmental Quality Incentive Program (EQIP), the Agricultural Conservation Easement Program (ACEP), and the Regional Conservation Partnership Program (RCPP) – is well known. CSP and EQIP, in particular, are two of the most popular. In 2020 and 2022 combined, contract data demonstrate that roughly 3 out of every 4 farmers who applied to these programs were turned away due to a lack of funding. Digging a bit deeper, we see that one reason why these programs have been so popular is their support of climate-smart agriculture and forestry (CSAF) practices. 

For decades before the IRA was signed into law, farmers have been able to use programs like CSP and EQIP to implement CSAF practices, all of which are long-standing, classic conservation practices that address a myriad of resource concerns, such as erosion, soil health, water quality, wildlife habitat, and more. As it turns out, farmers and ranchers are interested in CSAF independent of the IRA’s climate focus. In fact, in FY2021 and FY2022 – before the first dollar of IRA had been obligated – farmer demand resulted in significant portions of both CSP and EQIP investing in CSAF.

Taking all of this together – the popularity and consequent oversubscription of CSP and EQIP plus the demonstrated farmer interest in farm bill-funded CSAF practices – it was hoped that the IRA’s generational investments would be sufficient to reverse both trends, even in the first year of funding availability (FY2023). One would reasonably think that the sheer scale of the IRA’s investment would immediately address oversubscription, while also leading to a drop in farm bill-funded CSAF practices as all the demand for such practices was directed toward the IRA pool instead. However, the exact opposite has turned out to be true.

In one of the clearest demonstrations of farmer and rancher support for the IRA’s investments as-passed and with a climate-focus, the first year of IRA funding availability brought two remarkable outcomes: first, CSP and EQIP were functionally just as oversubscribed as they were before the IRA, and second, a significant portion of the farm bill’s baseline funding for CSP and EQIP still went to supporting CSAF practices. Let’s dig into both of these a bit further.

First, new reporting demonstrates that due to increased applications nationally during FY2023, only 25% of farmers applying to EQIP and 30% of farmers applying to CSP secured contracts during the first year of IRA availability. These application rates are largely consistent with those before IRA funding was available. In FY2023, 24,645 farmers were turned away from CSP and 100,228 farmers were turned away from EQIP. The fact that additional IRA funding did not meaningfully change the percentage of farms that were turned away from receiving CSP and EQIP funding plainly illustrates the scale of investment these programs needed, and still need.

Second, looking at farm bill dollars obligated toward CSAF practices on new contracts during the first year of IRA funding, we see that states are still choosing to spend between 7% to 100% of their combined CSP and EQIP farm bill funding supporting CSAF practices. On average, 38% of all FY2023 CSP and EQIP farm bill funding went to CSAF practices.

Despite hundreds of millions of dollars available exclusively for CSAF practices through the first year of IRA funding, the data shows that farmers and ranchers still used significant farm bill baseline funding on top of IRA funding to implement even more CSAF practices.

Combined, the latest data from 2023 not only demonstrate just how badly the IRA’s investments were needed, but it shows how popular these investments are among farmers and ranchers. All of which raises the question of why Congress would entertain altering them in the first place. 

Up until now, we have exclusively looked into how the first year of IRA funding availability altered – or more accurately, didn’t alter – longstanding pre-IRA trends of conservation program oversubscription and farm bill-funded CSAF conservation practices. Now let’s turn our attention toward the details of IRA funding itself. 

The USDA’s Natural Resources Conservation Service (NRCS) – which administers most federal conservation programs – has reported spending nearly all of the IRA funds allocated to each program for FY2023, roughly $850 million in total, as well as a significant portion of FY2024 funds allocated for RCPP. See state-by-state analysis from NRCS here and additional state summaries comparing IRA spending to historic and current farm bill spending here. 

In the FY2023 conservation contract data below, the IRA funding is almost as oversubscribed as the broader conservation programs themselves. On average, less than half of the farmers who submitted valid CSP or EQIP applications for IRA funding were successful. 

As evidenced by the number of farmers turned away, it is clear that farmer demand for IRA is strong even in the first year of funding availability. As word-of-mouth and success stories continue to spread, that demand will only grow, especially as volatile and more extreme weather patterns increasingly lead farmers to build climate-resilience into their operations. 

As of late April 2024, NRCS is also actively conducting program sign ups for FY2024 IRA funding, meaning more money is being obligated through new contracts with farmers every day. It is safe to assume that NRCS will obligate all FY2024 IRA funds within this fiscal year.

It’s hard to argue with data, and in this case, the data is clear. Given the continued strong demand for conservation programs writ large, and the overwhelming and expanding demand for CSAF practices in the wake of the IRA, Congress needs to both permanently increase funding for CSP and EQIP, and permanently improve these programs’ ability to serve farmers interested in CSAF practices. 

By any metric, the IRA has been a wildly successful experiment. As with any successful experiment, the absolute worst thing to do is fundamentally undermine what made it a success – but that’s exactly what the House Agriculture Committee is considering. Proposals to repurpose the IRA’s funding to less popular conservation programs – or even to shift it away from conservation programs altogether – may still be on the table. The same is true of the IRA’s hallmark climate targeting, which reports indicate will likely be stripped from the House Agriculture Committee’s farm bill proposal in an outright failure to acknowledge the interests of hundreds of thousands of farmers and ranchers.

The right next step is both simple and – based on the IRA’s popularity among farmers and ranchers in red and blue states alike – bipartisan. Congress should fully protect the IRA’s generational investments – keeping them climate-focused and entirely invested in the most popular conservation programs. After all, if it ain’t broke…

The post Farmers and Ranchers Love the IRA’s Climate-Smart Funding. Will the House Farm Bill Pull the Rug Out from Under Them? appeared first on National Sustainable Agriculture Coalition.