$1 Billion USDA Program Will Fund Pilot Projects For The Development Of Climate-Smart-Commodity Markets

On February 7, 2022, Secretary of Agriculture Tom Vilsack announced a $1 billion competitive grant offering to fund pilot projects through it’s “Partnerships for Climate-Smart-Commodities” program. The program was developed at the USDA with input from stakeholders during a comment period in 2021. It is designed to encourage the development of markets for products of agriculture and forestry that are particularly beneficial from a climate change perspective. On February 16th there was a webinar outlining the detailed goals of the program along with the application requirements. This is an significant initiative because there are two ways that agriculture and forestry can address the threat of climate. As with any industry there are ways these industries could reduce their emissions of CO2, but in this case also of the more potent greenhouse gases methane and nitrous oxide. Because plants are involved and have a unique ability to remove CO2 from the atmosphere, there are also farming and forest management options that can lead to long-term sequestration of that carbon in the soil. It is specifically focused on projects to be carried out within the US.

This USDA initiative is not attempting to mandate any specific practices, but rather to partner with both the public and private sector to encourage free-market innovation in this space resulting in commodities that are legitimately positive from a climate change perspective. This could enable climate-conscious consumers or companies to “vote with their dollars” by purchasing “climate smart” products. The expectation is that this will result in benefits for the environment, producers and for downstream customers.

In it’s on-line question and answer link, the USDA acknowledges that there are already private initiatives focused on climate-smart production under various names. They do not seek to compete with those and encourage the entities involved to consider seeking additional funding from this initiative to build on what they have already started. There is no indication that the USDA intends to establish a certification system like it was required to do by congress for Organic. The labeling and marketing components appear to be up to those who receive the grants. This is likely to be a significant challenge because there are already so many unregulated label claims used in food marketing today. The term “food label fatigue” has been coined to describe this issue.

Key considerations in what is expected to be a competitive grant process are the scientific basis for the practice(s), a robust measurability/verification process, a chain of custody tracing, equitable participant compensation, and a viable marketing plan. The farmer/forester incentives are key because there are often costs and risks associated with the desired change in practices. The agency will also be making certain that there are no double payments involved related to existing incentive programs such as those through the NRCS (National Resource Conservation Service). There are some limitations such as an exclusion of land rental or purchase with the grant funds. There are also limits to do with the capital expense of methane digesters. This program is not designed to be a part of the carbon credits market.

In their presentation the USDA listed many example “climate smart” practices such as non-tillage, cover crops, manure management, feed strategies to reduce enteric emissions, precision agriculture, rice irrigation management to reduce methane emissions, and a variety of other strategies. Organic farming is not on this list and that is logical because it is not actually a good approach from a climate change perspective.

The USDA envisions grant submissions from a wide range of players including governmental entities, small businesses, non-profits, tribal governments, university extension, and both public and private institutions of higher education. It is anticipated that some applicants will be able to offer cost sharing or matching funds from other sources. The agency will be considering grants in the range of $250,000 to $100 million and on the order of 30 to 50 entities getting the final awards.

To be competitive, proposals need to have a sound scientific rationale, a means of measuring the benefit, a system to track products through the supply chain, and a way to create a viable market for the final product(s). For some of these there are already accepted measurement emissions and sequestration methods (e.g. the COMET-Farm climate resilience toolkit), but the agency is open to measurement innovation. In any case this is a challenging part of any project, but also one that is critical to insure the validity of any climate-related claims.

Applicant entities will have to follow a detailed application process using various government resources like Grants.gov and SAM (System for Awards Management). The projects that will ultimately be chosen must align with other governmental goals/requirements such as National Environmental Policy Act (NEPA) and the Endangered Species Act. Applications for the main part of the funding are due by April 8, 2022. There will be a second round focused on small and historically under-served entities with applications due by May 27, 2022. If patentable inventions come out of these efforts, the USDA will play a role in access, royalties and control.

As expressed in both Vilsack’s speech and the subsequent webinar, Partnerships for Climate-Smart Commodities stands out as an ambitious but scientifically and practically oriented program rising above the sort of ideological influence of something like the EU’s Farm to Fork Strategy. This more free-market US approach is something that makes practical and economic sense for those that do the farming, ranching and forest management while addressing the climate care needs of the entire population. If the US does indeed follow this public/private cooperation model, there is hope that agriculture and forestry will be enabled to play their unique and important role in the mitigation of climate change.