On August 16, President Biden signed the Inflation Reduction Act (IRA) into law. The $750 billion law contains funding for health care and climate and includes tax changes aimed at large corporations. What does this mean, in turn, for the Food & Ag industry specifically?
Sweeping Tax Incentives and Beneficial Programs in the IRA
New tax incentives: The Inflation Reduction Act also includes sweeping tax incentives and funding for U.S. food and agriculture, renewable energy, and manufacturing. These provisions include significant programs available to agricultural landowners. The bill also contains one of the largest boosts to U.S. renewable fuels production in our nation’s history.
Significant added funding for USDA’s Ag programs: Overall, the Inflation Reduction Act contains over $40 billion in funding to agricultural conservation, rural development, and forestry programs. This includes an additional $18 billion in funding for agricultural programs administered by USDA including the Environmental Quality Incentives Program (EQIP) and the Conservation Stewardship Program (CSP). These popular programs have long been oversubscribed with demand far outpacing supply of funds.
Voluntary climate change practitioners can benefit: Program funds would be directed to climate change-related goals and prioritize mitigation activities and would be provided to farmers and ranchers who implement voluntary agricultural practices designed to combat climate change.
- Specific funding to USDA programs is as follows:
- $8.45 billion for the Environmental Quality Incentives Program
- $4.95 billion for the Regional Conservation Partnership Program
- $3.25 billion for the Conservation Stewardship Program
- $1.4 billion for the Agricultural Conservation Easement Program
- $1 billion for the Conservation Technical Assistance Program
- Along with the additional funding, these programs are reauthorized through fiscal year 2031.
Expanded Biofuels Production Will Benefit Corn and Soybean Producers
Infrastructure Provisions and Extended Tax Credits Fuels Biofuels Production: The Inflation Reduction Act also represents one of the largest boosts to U.S. biofuels production in history. The bill includes $500 million for new biofuels infrastructure – enough to deploy an additional 10,000 E15 gas pumps nationwide. The bill also extends existing tax credits for biofuels and launches new significant tax credits that will dramatically expand biofuels production in the United States for road vehicles and for aviation. These provisions will greatly benefit corn and soybean growers nationwide.
Sale of Biofuels will Increase with Greater Availability of E15 Pumps: To put the significance of this legislation for the ethanol industry into perspective, Presidents Obama and Trump both implemented $100 million ethanol infrastructure programs during their terms in office. This combined $200 million in funding resulted in the installation of roughly 2,800 E15 pumps nationwide. The $500 million in funding provided by the IRA is expected to result in the installation of an additional 10,000 E15 pumps which will significantly increase the availability and sale of E15 biofuels.
New and Expanded Credits: Add to this the extension and expansion of existing credits and the creation of significant new credits and you have a package that will do more to boost the U.S. biofuels industry than perhaps any action since the passage of the renewable fuels standard.
Are you are considering implementing conservation measures on your farm or expanding your biofuel operation? Now might be the time.