Farm Programs

Congress continues to be highly divided Program (CSP), and other conservation on many key topics and will likely remain programs. The BBB bill also contains in that mode until after the 2022 mid- funding for renewable energy developterm elections, and possibly longer. Most ment (primarily wind and solar energy), likely, we will continue to have renewable diesel tax credits, research Congressional discussions on infrastruc- and development of sustainable aviation ture legislation and funding, climate fuels, and transition to electric vehicles. change and carbon sequestration, renew- The House version BBB bill did not able energy, and dealing with new strains increase the capital gains tax rate for of Covid. However, we are also likely to farmers or include any adjustments to have initial hearings on the next Farm the “stepped-up basis” rule on farm Bill in the coming months. There are assets and would not change the farm many important issues and decisions estate tax exemption; however, that potentially could affect farmers farmers remain very wary of potenand the agriculture industry, which tial future costs and tax implicacould possibly be addressed by Congress and the tions of this legislation. The initial cost of the White House in 2022 and beyond. House BBB bill was listed at $1.75 trillion; howevFollowing is perspective on some key ag policy issues which may be under consideration by Congress or through executive action in the coming year: er, the Congressional Budget Office has estimated the total cost at closer to $5 trillion once the legislation has been fully implemented. The diverse BBB bill is now being debated in the U.S. Senate and if passed could have some changes in both pro-

Infrastructure legislation and implementa- grams and funding from original House Bill. If a tion — After months of negotiation, the Federal compromise is reached on the BBB legislation early “Infrastructure Investment and Jobs Act” or so- in 2022 that allows it to pass both houses of called “Bipartisan Infrastructure Framework” (BIF) Congress and be signed into law, it will likely bill, was passed by Congress and will now be imple- include several provisions that will impact farmers mented by the Federal government. The BIF legis- and the agriculture industry.lation provides $1.2 trillion in funding for basic infrastructure projects. This includes approximately $550 billion in new spending, with the remaining $650 billion being for pre-allocated funding targeted toward highway projects and other projects that were already scheduled. Of the new funding, $284 billion or 52 percent will be allocated toward for surface transportation needs, including road and bridge projects and modernizing the U.S. rail system, as well as upgrades to ports and waterways and public transit investments. The remaining $266 billion (48 percent of the funding) is allocated to other core infrastructure projects, such as improving the U.S. electrical grid, expanding broadband access, drinking water and wastewater improvement projects, and other targeted rural development efforts. Many of these basic infrastructure projects will benefit farmers, businesses, and rural communities. Climate change and carbon sequestration — It seems that everyone from members of Congress, business leaders, the national media, and local friends and neighbors are discussing carbon sequestration, carbon credits, and potential legislation to address climate change. Obviously, there is a wide range of opinions regarding the impacts of climate change and how to address the situation. Some would like to see a strong-handed approach by the Federal government relative to types of vehicles we drive, energy policy, and farming practices, while others would like to see a more voluntary and incentivized economic approach that is developed by business and industry. One quote at Farmfest this past year by an expert on carbon credits was: “the carbon market is like the wild, wild west,” meaning there is no clear-cut path as to where the United States or the ag industry is headed related to the carbon market. Several com-

“Build Back Better” legislation — In panies have already introduced carbon programs November, the U.S. House passed the so-called that will pay farmers for introducing practices that “Build Back Better” (BBB) Act that is a broad- sequester carbon, so that those carbon credits can based piece of legislation would address many be in turn used by those companies or sold on the issues and would boost targeted spending for cli- open market. Before farmers enter into long-term mate change, renewable energy, health care, child- agreements related to carbon credits, it is imporcare, education, immigration, and other social infra- tant for them to know what practices will qualify structure provisions. It is estimated that approxi- for carbon credits, what will the compensation be mately $82 billion was included in the House ver- for the carbon credits, and are there potential sion of the BBB legislation for agriculture related future impacts on their farming operation. The spending and provisions. This includes funding for “bottom-line” is that it is probably better to “walk a 5-year program to pay farmers $25 per acre for before you run” when it comes to make major planting cover crops, as well as major funding changes in a farming operation strictly targeted increases for the Environmental Quality Incentives toward gaining compensation from the emerging Program (EQIP), the Conservation Security carbon market.

FARM PROGRAMS By Kent Thiesse MARKETING

ment — Many states in the Upper Midwest, including Minnesota, have a well-established corn-based ethanol industry, which utilizes over 35 percent of the corn produced each year in the United States. In addition to the direct benefits to farmers, renewable energy plants have become cornerstones in rural communities by providing jobs, adding to the local tax base, and enhancing the overall economic vitality of the communities. The renewable fuel standards which are set by the U.S. Environmental Protection Agency are targeting corn-based ethanol blending rates to return to the statutory level of 15 billion gallons per year in 2022, after being temporarily