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The American Rescue Plan Act of 2021: How New Investments in U.S. Agriculture Could Support Climate and Equity Goals

Signed into law on March 11, the American Rescue Plan Act of 2021 provides $1.9 trillion worth of relief across all sectors of the U.S. economy. While media coverage of this sweeping legislation has focused on vital components like stimulus checks, extended unemployment insurance, small business support, and vaccination assistance, less attention has been given to the $10.4 billion allotted to support U.S. agriculture and rural communities.

As described by a recent Farm Bureau analysis, this amount enables the purchase and distribution of agricultural products, advances COVID-19 mitigation efforts for agricultural workers, bolsters health care in rural communities, and provides debt forgiveness for farmers of color. The ARP provides $4 billion in USDA provisions to restore gaps in the food supply chain caused by the COVID-19 pandemic and ensure long-term food supply resilience. Funding is allocated for food distribution by food banks, restaurants, and nonprofits to feed families and to provide reliable demand for farmer products. This includes support for food processors and distributors, farmers markets, food banks, local food systems and producers in the form of grants, and loans to respond to COVID-19 and protect workers.

Additional provisions in the ARP account for the unique challenges the COVID-19 crisis has imposed on rural America. The Act establishes $500 million in funding to help increase access to COVID-19 vaccines and food assistance provided by local communities, and rural hospitals. Beyond programs administered by the USDA, the ARP makes investments in rural communities by providing financial assistance for housing costs and expanding internet connectivity.

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Provisions for Agricultural Communities of Color

The ARP includes provisions for $10.4 billion in funding to support U.S. farmers in the form of training, technical assistance, and most significantly debt relief. Nearly half of this funding will specifically target the historically “socially disadvantaged,” which the legislation designates as a class of producers that includes African Americans, American Indians or Alaskan natives, Hispanics, and Asians or Pacific Islanders.

The ARP will effectively cancel $4 billion worth of debt incurred by farmers of color, forgiving 120% of the value of loans from the Farm Service Agency, FSA guaranteed loans, and CCC Farm Storage Facility loans. Approximately $1.01 billion will go toward providing technical assistance, and financial support for these producers. Notably, the ARP sets floors for spending and allows for discretion regarding where additional funding is spent:

Amount (floor) Program or Priority Area
$50,500,000 To provide financial assistance to socially disadvantaged farmers, ranchers, or forest landowners that are former farm loan borrowers that suffered related adverse actions or past discrimination or bias in USDA programs.
$50,500,000 To provide outreach, mediation, financial training, capacity building training, cooperative development training and support, and other technical assistance on issues concerning food, agriculture, agricultural credit, agricultural extension, rural development, or nutrition to socially disadvantaged farmers, ranchers, or forest landowners, or other members of socially disadvantaged groups.
$50,500,000 To provide grants and loans to improve land access for socially disadvantaged farmers, ranchers, or forest landowners, including issues related to heirs’ property.
$50,500,000 To support and supplement agricultural research, education, and extension, as well as scholarships and programs that provide internships and pathways to federal employment, by providing:
$10,100,000 To 1994 tribal colleges and universities land grants
$10,100,000 To Alaska Native and Native Hawaiian serving institutions
$10,100,000 To 1890 land-grant institutions, including Tuskegee University
$10,100,000 To Hispanic-serving institutions
$10,100,000 To insular area institutions in the U.S. territories
$5,050,000 To fund the activities of one or more equity commissions that will address racial equity issues within the USDA and its programs.

The Role of Financing and Technical Assistance for More Sustainable, Resilient, and Equitable Agriculture

Farmers, ranchers, and forestland managers, like all business owners, require financial resources and planning to withstand market volatility and increasingly, the impacts of a changing climate that include extreme weather events. Incorporating practices that improve resilience to climate change, such as reduced tillage, cover cropping, agroforestry, or forest restoration, to name a few, can involve upfront investments in equipment, seeds or saplings, or labor. Changes in operations can further incur significant economic risks, including the potential for reduced income if crop yields change, lack of markets for cover crops, or lags in the return on investment in conservation practices. Such risks exist for producers who are considering operational modifications, even as research increasingly demonstrates long-term financial benefits to implementing conservation practices.

Adopting such practices could also provide opportunities for producers to generate potentially valuable carbon credits. However, producers’ ability to take full advantage of carbon credit markets requires additional finance—whether through public incentive-based programs or private lending—to help them overcome upfront cost barriers and mitigate economic risks.

There is a long history of producers of color being shut out of access to private lending as well as government loan and other financial assistance programs. With the passage of the ARP, USDA may now have the tools to help. The ARP’s $4 billion for FSA loan debt relief would help break the cycle of debt faced by farmers of color that has been further exacerbated by the COVID-19 pandemic. Ensuring financial capital is accessible to all producers and foresters, especially those who have been historically underserved by the USDA, will enable a faster shift toward more sustainable land management systems that will better support environmental and financial resilience for farmers, ranchers, and forestland owners and managers.

Producers of color have also been historically underserved through a lack of access to technical assistance, which can include information, technical expertise, tools, resources, and a delivery system to support natural resource management and conservation efforts by producers. The ARP’s $1.01 billion allocated for technical assistance and financial support for socially disadvantaged farmers would enable greater access and participation in Natural Resource Conservation Service and Farm Service Agency programs. Many of these programs support conservation practices that promote carbon sequestration in agricultural soils and reduce on-farm emissions. An overview of these programs can be found in our report on building a policy agenda for natural carbon solutions in U.S. farms and forests.

Socially disadvantaged producers face unique barriers to participating in conservation programs, and often the greatest barriers for black and tribal farmers stems from land ownership challenges. Black landowners of heirs’ property—land with fragmented ownership due to black landowners’ lack of access to the legal system and a legacy of property transfers occurring generation after generation without the benefit of wills or estate plans—often struggle to qualify for conservation assistance. Further, many tribal allotments have divided ownership that impacts their ability to use the land for conservation purposes.

These significant legal, financial, and technical barriers prevent many producers from adopting more sustainable practices that will enhance the health of their lands and the resilience of their businesses. Farmers, ranchers, and forest managers who don’t own their land or have a long-term lease are not incentivized to adopt practices that will improve ecosystem health and soil carbon sequestration if the financial benefits are realized after their lease has expired. Expanding opportunities for producers to secure long-term land tenure or ownership are therefore crucial for enhancing the climate mitigation potential of U.S. farms, forests, and grasslands.

Although the ARP is a substantial step forward, continued efforts are needed to ensure that farmers of color have on-going access to resources, funding, and technical assistance. For example, many rural and tribal communities do not have access to broadband, a prerequisite for climate-friendly precision agriculture and precision forestry practices. The BPC’s Farm and Forest Carbon Solutions Task Force plans to explore additional opportunities for policymakers to address historic inequities and position these communities to reap the benefits from implementing climate-friendly practices.

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