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Blog | August 17, 2022

Climate Wins and Racial Equity Losses in the Inflation Reduction Act

Yesterday, President Biden signed the Inflation Reduction Act of 2022, a bill with expansive goals that go far beyond the issue of inflation. The $700 billion-plus package is a landmark climate and health care bill, financed without new spending largely by tax increases on corporations earning more than $1 billion. According to nonpartisan analysis, it will reduce carbon emissions by 40% by the year 2030 and reduce the U.S. deficit over time with a $300 billion positive difference between the legislation’s new spending and revenue.

The Inflation Reduction Act brings a $40 billion investment to farmers to implement and increase climate-resilient agriculture practices.

To be clear, the climate portions of the Inflation Reduction Act are less ambitious than they were in the first attempt to pass climate reform (via the ill-fated Build Back Better bill). And there were disappointing concessions made to win the necessary support of Senator Joe Manchin; these concessions will continue to expand oil and gas drilling. Nonetheless, this bill will incentivize unprecedented shifts toward climate-resilient agriculture, renewable energy, electric vehicles, and curbing methane emissions from fossil fuel production. For agriculture, the Inflation Reduction Act brings a $40 billion investment to farmers to implement and increase climate-resilient agriculture practices.

A Betrayal of Black Farmers

A very dark mark on this bill is that it repeals and rewrites sections of the American Rescue Plan (ARPA, which was signed into law in March 2021) that formally recognized the long history of discrimination of Black, Indigenous and People of Color (BIPOC) farmers and ranchers by the U.S. Department of Agriculture (USDA). The $5 billion program authorized by ARPA intended to provide essential debt relief and assistance to BIPOC farmers facing ongoing impacts of decades of discrimination by the USDA. But it had been suspended by litigation filed by white farmers and political organizations who claimed the program was unconstitutional. Farmers of color were suddenly in dangerous limbo. They no longer knew if the letters they received from the USDA—which confirmed the amount of debt relief they would receive—were to be trusted.

This spring, the Federation of Southern Cooperatives, Farm Aid’s partner and ally, successfully won the right to intervene in the case, requiring the judge to consider the depositions of Black farmers who had faced discrimination by the USDA. Supporters of the intervention, including Farm Aid, had hoped to see a favorable court decision once Black farmer testimony was considered. Federation staff attorneys traveled across the country to collect their depositions. But now, with the repeal of ARPA Section 1005, that work to collect and share painful stories of Black farmers’ discrimination and betrayal by their own government feels wasted. The case is no longer planned to be heard in court, so the experiences of discrimination suffered by Black farmers will not be formally on the record.

Cornelius Blanding, executive director of the Federation said, “Black farmers were really counting on that debt relief and if we don’t receive it, many of us will lose land, equipment, and many of us just might lose our homes—this is a matter of survival.”

“The IRA’s loan modification process provides an unsatisfactory alternative for the farmers promised debt relief last year. First, it offers loan modifications for ‘distressed’ borrowers, which could be interpreted to exclude farmers who are ‘delinquent’—including the 17,000 farmers who were told they did not need to make payments on the loans that would be forgiven under ARPA Section 1005, who now face daily threats of foreclosure.”

— Dania Davy, Director of Land Retention & Advocacy of the Federation

Farm Aid stands with the Federation and the 17,000 farmers and ranchers who received letters from USDA promising debt relief through the American Rescue Plan. These borrowers remain extremely vulnerable to foreclosure and we will work with our partners and allies (including Farmers Legal Action Group, Rural Coalition, National Family Farm Coalition and the Rural Advancement Foundation International-USA) to ensure that implementation of the new debt relief program enables them to stay on their land. Here is what we know about the two debt relief programs so far:

  • IRA includes $3.1B for loan modifications for “distressed*” direct and guaranteed borrowers “whose agricultural operations are at financial risk*
  • IRA include $2.2B for “discrimination financial assistance*” to provide financial assistance of up to $500K for “farmers, ranchers or forest landowners determined to have experienced discrimination prior to January 1, 2021*

* These terms will be defined during implementation of the legislation by the USDA. With farmer livelihoods in the balance, timely and clear implementation is urgent and essential.

Farmers’ Climate Change Solutions

For climate-resilient agriculture, the Inflation Reduction Act includes important increases for long-underfunded conservation programs, including the Conservation Stewardship Program, and improvements to the Environmental Quality Improvements Program (EQIP). These and other programs incentivize climate-friendly practices such as reduced tillage and cover crops, renewable energy infrastructure on farms and in rural communities, and climate-smart forestry.

As our partners at the National Sustainable Agriculture Coalition put it via their Interim Policy Director Mike Lavender, “The influx of money is unquestionably a big deal for sustainable agriculture and climate resilience.”

Lastly, a late amendment allocates $4 billion to combat extreme drought in the West, which has a significantly detrimental impact on farmers and ranchers.

The debt relief changes contained in this bill are extremely disappointing and rightly cause Black, Indigenous and People of Color farmers to question their government’s commitment to end institutional racism in farm lending and other programs. Farm Aid stands with these farmers and ranchers. And the Inflation Reduction Act of 2022 is a crucial acknowledgement of the essential role that farmers and ranchers play in reducing climate change and its impacts.

As we gear up for passage of a new Farm Bill in 2023, the Inflation Reduction Act sets an important tone that the single largest bill affecting agriculture and food production and access should be focused on climate-resilient agriculture.

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