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Summary:

Innovation is at the heart of America’s farm tradition. Having proven over more than two centuries that they can thrive while dealing with uncertainty and unforeseen challenges, adapt to new circumstances often out of their control, and innovate practical solutions to ongoing change, America’s farmers are proven entrepreneurs. Whether it’s rising input costs, fluctuating commodity prices and tariffs, or market disruptions based on events thousands of miles away, farmers are skilled at seizing the opportunities in adversity.

Now the agriculture industry increasingly faces unprecedented challenges from severe and unseasonable weather, putting practices that were effective in past decades in question. Out of necessity, farmers and ranchers are experimenting with and adopting forward-thinking methods to ensure that their operations, both large and small, survive and thrive in the face of these swiftly evolving circumstances.

More than ever, American farmers need the support and freedom to innovate. But U.S. federal farm policies do not sufficiently incentivize, and in many cases hinder, this farmer-led entrepreneurial activity. The 2023 Farm Bill represents a timely and strategic opportunity to greatly increase investment and innovation in new practices and technologies that:

• restore and increase soil health
• reduce farm input costs
• boost crop resilience to extreme weather events while reducing crop loss risk and insurance costs
• store atmospheric carbon and mitigate climate change
• enhance additional ecosystem benefits such as reduced soil erosion and input runoff, improved water and air quality, and increased biodiversity
• bolster economies of hard-hit communities in rural America

These economic and environmental benefits can be achieved through three policies in the 2023 Farm Bill that will incentivize and promote the freedom to innovate that so many farmers are demanding to manage their operations for maximum health and productivity.

The next decade represents a critical window to enact policies that address the climate challenge. It’s imperative that the next Farm Bill helps transform U.S. agriculture to meet 21st century challenges with a framework that robustly incentivizes innovation—and actively partners with the producers, Ag tech, equipment and input companies, consumer product companies and consumers, and other stakeholders who are leading the Ag sector to a new, innovative, and economically sustainable future.

Include The Healthy Soils Healthy Climate Act

The 2018 Farm Bill introduced a new program, On-Farm Conservation Innovation Trials, under the USDA’s Natural Resources Conservation Service (NRCS). The program included the Soil Health Demonstration Trial (SHDT) program with a specific focus on practices and innovations to improve soil health. Hundreds of farmers and ranchers in nearly all 50 states are now participating in SHDT trials, and many more would like to. As called for in the Healthy Soils Healthy Climate Act introduced in Congress6, the 2023 Farm Bill should greatly expand the SHDT program and make it permanent.

Create And Fund An Advanced Research And Innovation Hub Within the U.S. Department of Agriculture

With the emergence of Ag Tech as a potentially transformational and fast-growing investment sector in recent years—akin to the clean-energy sector in 2009—Congress should create and fund an entity comparable to ARPA-E within USDA to support and accelerate private and academic R&D in future-focused Ag areas such as soil health data collection and measurement; farm robotics; precision Ag management software; and bio-based fertilizers, herbicides, and pesticides. The new entity should create partnerships with other relevant agencies such as EPA, DOE, DOD and National Labs, as well as land grant universities across the U.S. These federally funded research hubs will bring high-quality jobs, both directly and indirectly through p

Include the Cover Act

Crop insurance has been a cornerstone of U.S. federal agriculture policy and an essential economic safety net for America’s farmers for nearly a century. Under policies administered by the USDA’s Risk Management Agency (RMA), some 90% of all farmed acres in the U.S. are covered by federal crop insurance. However, some crop insurance policies have become a barrier to best practices and have reduced producers’ ability to innovate for crop resilience in their specific regions and on their individual farms. And the current system costs U.S. taxpayers billions of dollars every year.

Summary:

Based on the Biden administration’s plans to invest $45 billion to replace 100 percent of lead service lines in America, the findings from Getting the Lead Out: Employment & Economic Impacts from Replacing America’s Lead Service Lines, this report from E2 and the United Association of Union Plumbers & Pipefitters (UA) estimates that the $45 billion invested in this program will create and support 56,080 jobs annually for 10 years, or a total of 560,800 job-years. This annual estimate includes 26,900 direct jobs—construction workers, plumbers, pipefitters, heavy equipment operators—as a direct result of this activity. Another 13,600 jobs that last for 10 years are created throughout the value chain, and 13,800 jobs are created each year for 10 years as a result of workers spending their paycheck.

About 84 percent of all jobs created through this investment are in construction (52 percent), professional and business services (24 percent), and manufacturing industries (8 percent). Insofar as the bulk of these jobs involve high-skill construction occupations, the jobs created will provide good wages and training opportunities for local residents and promote economic benefits to affected communities.

This investment into cleaning up our nation’s water supply also would generate $38.3 billion in labor income, $11.7 billion in taxes, and $53.9 billion in additional value to the economy. That would represent a 120 percent return on investment.

In addition to the jobs created and value added to the economy from this activity, additional benefits like increased positive health outcomes would be generated. It has been estimated that an additional $22,000 of societal benefits are generated for every lead pipe replaced as a result of lower cardiovascular disease. Since in many areas lead service lines are more likely to exist in environmental justice communities, and since Black and Latino children have disproportionately high overall lead exposure, replacing these lead pipes will also greatly benefit low-income and minority households.

The scope of this work is massive and reaches every state. The Natural Resources Defense Council (NRDC) estimates that between 9.7 million to more than 12 million lead service lines are distributing water throughout our nation. About 700,000 or more of these service lines are found in Illinois, while Ohio, Michigan, New York, New Jersey Missouri and Wisconsin each contain more than 300,000 of the nation’s lead service lines; the top ten states total about 4 million.

Methodology

BW Research used IMPLAN to conduct the economic impact analysis, resulting in the jobs, value-added, labor income, and taxes data. IMPLAN is an input-output modeling software that tracks spending patterns through the economy and their resulting impacts on economic indicators. The cumulative effects of the initial investment are quantified, and the results are categorized into direct, indirect, and induced effects. To capture interstate flows, direct and indirect impacts are results of national-level multipliers, distributed across states using state-level modeling. Induced impacts are the results of state-level multipliers, so as not to overestimate the impacts of household spending. Workforce data such as occupational demographics and wages are derived from JobsEQ by Chmura. JobsEQ is a workforce data software that derives data from Bureau of Labor Statistics and Census Bureau data, among other sources. Unionization rates are derived from unionstats.com.

• Direct Impacts show the initial change in the economy associated with the investment. For example, pipefitters installing new service pipes or engineers planning the replacement.
• Indirect Impacts include the supply chain responses as a result of the initial investment (i.e., water pipe manufacturers).
• Induced Impacts refer to household spending and are the result of workers who are responsible for the direct and indirect effects spending their wages (i.e., direct and indirect workers spend income on clothes, food, healthcare, etc.).
• Labor Income includes all forms of employment income, such as employee compensation (wages and benefits) and proprietor income (i.e. payments received by self-employed individuals and unincorporated business owners). Labor income is a component of value added.
• Value Added is defined as the total value of production after netting out intermediate goods. This is another term for GDP.

Summary:

Most initiatives to fight climate change today focus on reducing fossil fuel emissions from electricity generation, transportation, and buildings. But to avoid the worst impacts of climate change we must also significantly reduce the atmospheric carbon that has already been emitted. While efforts are underway to develop new and high tech mechanisms to accomplish this, there is an immediately available and economically viable pathway for atmospheric carbon removal—one that provides a compelling new value proposition for farmers to revitalize their soils and get paid for doing it.

Regenerative agriculture methods such as cover cropping, crop rotation, low-till or no-till practices, and reduced reliance on fossil-fuel based inputs can mitigate climate change by drawing down atmospheric CO2 and sequestering that carbon in the soil, while improving microbial soil health, and increasing soil fertility, crop yield and resilience. These practices also produce multiple additional economic and environmental benefits.

For most of the past decade, agriculture has been one of the most challenging sectors of the U.S. economy. American farmers have had to endure plummeting crop prices, trade-war tariffs, rising costs for inputs like fertilizer, and increasing crop and livestock losses from extreme weather events and less predictable growing seasons—an estimated 85% of U.S. crop losses are due to extreme weather events. Then came COVID-19, disrupting supply chains, upending markets such as restaurants, schools, and institutional food, and further dimming farmers’ prospects with a likely extended recession. According to the Food and Agriculture Policy Research Institute at the University of Missouri, net farm income could plunge by 19% ($20 billion) in 2020.

But climate-smart agriculture and soil carbon drawdown are in the nascent stages of ushering in a potentially gamechanging chapter in 21st century agriculture. Through strategic direction of Farm Bill funds and other state and federal policies, partnerships with private sector companies seeking to go carbon-negative, and increased consumer demand for low-carbon food, fiber and fuel, regenerative cultivation practices can deliver four significant economic, environmental, and political opportunities for the U.S. farm economy.

Farm Profits and Economic Recovery

Climate-smart agricultural practices offer a path to economic recovery and long-term profitability for hard-hit farmers by delivering increased and more consistent crop yields, reduced costs for inputs (fertilizer, fuel, pesticides) and crop insurance, and the opportunity to participate in markets for soil-based carbon removal. ‘Reduced carbon’ or ‘negative carbon’ crop outputs and the products derived from them may also have increased market value as consumer awareness and demand increases for products with these attributes.3 Healthier soils also make farms and ranches more resilient in the face of increasingly common extreme weather events.

Ag Tech & Job Creation

“Ag tech” is one of the fastest-growing technology sectors, with investors from across the financial sector funding startup companies creating highly skilled jobs in technologies such as microbial soil additives, advanced sensors, drones, monitoring software, GPS mapping, genomics, AI, and data analytics. The demand for accurate soil data measurement and analysis is strong, and college programs to train new ag tech professionals are growing throughout the Farm Belt. Additional innovation is taking place in the creation of agricultural carbon trading platforms, establishing carbon as a new farm commodity.

Valuing Carbon Removal & Ecosystem Services

While storing carbon from the atmosphere in agricultural soils can be a key factor in the battle against climate change, the practices that sequester carbon also deliver a wide range of other environmental benefits—including improved water quality and conservation, improved air quality, greater biodiversity, and reduced toxic inputs. Markets and other opportunities that monetize these practices are emerging, creating new revenue streams for farmers and ranchers across the U.S.

Bridging Partisan Divides

Support for policies to incentivize agricultural carbon sequestration has bridged the historically contentious divide between the environmental and agricultural communities because the practices that restore and enhance soil carbon produce both economic benefits for farmers and natural resource benefits to society. In 2017, for instance, an unprecedented coalition of environmental, business, and farm industry groups helped forge and recruit bipartisan Congressional support for the Soil Health Demonstration Trial in the 2018 Farm Bill, a key soil health enhancement and soil carbon measurement program. Since then, numerous policies building on that provision have been proposed at the state and federal levels by lawmakers on both sides of the political aisle, as diverse stakeholders recognize the benefits of valuing agricultural carbon removal.