Sustainable Agriculture’s High-Stakes Crossroads under New Administration
Your update on sustainable agriculture policy - January 2025
Too long, didn’t read:
Is the “Made in America” push a boon or bust for farmers? Trump's tariffs aim to boost U.S. agriculture but risk sparking trade wars that could harm export markets.
Where does Section 45Z stand in an administration not prioritizing environmental issues? While the Clean Fuel Production Credit offers incentives for sustainable farming, bureaucratic delays and funding uncertainty leave farmers in limbo.
Are Trump’s cabinet picks champions for agriculture? Treasury nominee Scott Bessent’s skepticism of IRA spending may clash with Agriculture nominee Brooke Rollins’s strong farmer-first stance.
First Weeks of Trump 2.0 a Doozy for Agricultural Sustainability
As I reflect on the shifting landscape of U.S. agriculture, it’s clear that we’re on the cusp of change. The Trump 2.0 era brings new opportunities and challenges for farmers. The White House, while immediately focused on national security and border control, seems ready to elevate food and agriculture to a more prominent role. In a world where competition is fierce and margins are thin if not negative, farmers are adapting, blending time-honored traditions with emergent technology to stay ahead. While federal support may look different under this administration, the promise of business-driven solutions could offer practical ways to navigate these challenges.
Central to President Trump’s strategy is his push to bring production back to the U.S. By encouraging domestic manufacturing, the administration aims to fortify supply chains, agriculture included. This could open new markets for farmers, driven by increased demand for locally sourced products. But, as with any shift, there are trade-offs. Tariffs, meant to incentivize domestic production, could lead to retaliatory trade measures and price volatility, adding uncertainty for agricultural exports. Would there be lasting negative consequences? It’s too soon to tell, and the hope would be that the gains from using tariffs as a negotiation tactic would outweigh the losses, but the trade-offs must be considered nonetheless.
Small farms, many of which are already in their third consecutive year of losses, face mounting financial pressures. For these farmers, federal assistance will be more critical than ever. While the approach may differ from what we’ve seen in the past, President Trump’s expressed support for farmers in times of crisis offers hope that new programs could emerge to foster resilience and growth.
The private sector is also stepping up. With the administration de-emphasizing climate, the door has opened for private companies to fill the gap, driving innovation and expanding opportunities for farmers. The focus on deregulation could provide farmers with the tools they need to thrive, especially through data collection that helps quantify their efforts and unlock financial incentives whether public or private. By sharing their stories and engaging directly with stakeholders, farmers can build trust and demonstrate their contributions to economic growth.
At its core, the Trump administration’s agricultural policy emphasizes practical solutions and a return to domestic production. With resilience and innovation at the forefront, farmers—supported by both public and private sectors—have the potential to not only survive but thrive in this evolving landscape. As we look ahead, the road is open for new opportunities, but it will take a collective effort to ensure that agriculture remains a cornerstone of American prosperity.
Section 45Z DOA? Not So Fast!
The recent release of draft guidance on the Section 45Z Clean Fuel Production Credit marks a significant milestone for farmers and fuel producers alike. While the January notices from the Department of the Treasury were vague and incomplete, they represent an important step forward in incentivizing clean fuel production through the tax code. The credit, effective as of January 1, 2025, offers up to $1.00 per gallon for transportation fuels like ethanol and biodiesel that meet strict greenhouse gas emissions standards, with higher incentives for sustainable aviation fuel. Unlike previous credits and other clean fuel programs, Section 45Z is quite a bit more flexible—and it includes farmers in the calculus, clearing the way for the first-ever standardized, market-based incentives for adopting sustainability practices on the farm.
That said, the rollout isn’t without its challenges. The lack of finalized regulations and clarity around emissions methodologies has left some farmers and ethanol producers scratching their heads, unsure of how to fully prepare. Further complicating an already uncertain situation, the Trump Administration on its first day paused a number of federal initiatives, including the disbursement of funds authorized by the Inflation Reduction Act, of which Section 45Z was a key component.
The early draft guidance and the administration’s vocal support of farmers to date still constitute steps in the right direction. They signal a commitment to supporting farmers and biofuel producers who are ready to take on the challenge of reducing emissions while diversifying their income streams. For agriculture, this could mean new opportunities to leverage crops like sorghum or other feedstocks for renewable fuels. While there’s still plenty of work to be done—both in clarifying rules and ensuring smooth implementation—this is a promising start toward making clean fuel production a viable and rewarding path for America’s farmers.
For more information and guidance on Section 45Z, contact us.
(Somewhat) Optimistic Outlook for 45Z among Cabinet Appointees
During his confirmation hearing, the Secretary of Treasury nominee, Scott Bessent, expressed skepticism about the Inflation Reduction Act (IRA), stating that the U.S. has a "spending problem." While his overall stance on the IRA appeared critical, he acknowledged the importance of working with Senators on Section 45Z. Though this doesn’t signal endorsement, the tension suggests a willingness to positively engage on this specific provision, which is an encouraging sign for its future.
Equally significant is the role of the Secretary of Agriculture in shaping farming policy. During the confirmation hearing of nominee Brooke Rollins, senators posed numerous questions about her position on Section 45Z. She consistently voiced strong support for farmer-focused initiatives, affirming her commitment to working with the Secretary of Treasury and the EPA Administrator. Rollins emphasized that, if confirmed, she would prioritize ensuring agricultural perspectives are represented as the new administration finalizes the Clean Fuel Production Credit.
Together, these developments offer a cautiously optimistic outlook for Section 45Z, with key appointees showing varying levels of readiness to engage on this critical issue.
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