The Biden administration’s first 100 days have focused largely on managing the economic and public health consequences of covid-19 and signaling its policy priorities.
Investors focused on agriculture’s place within a systemic response to climate change have been encouraged by the president’s ardent reversal of his predecessor’s approach to the environment, and early signs the sector will play a key role in bringing the US back into global consensus.
Reaction to parts of Biden’s early climate and infrastructure proposals, however, reminds that domestic debate about the proper roles of government and the private sector is likely to shape the nature of opportunities in pivotal agriculture-related markets over the long-term.
In a letter to the Biden administration last week, American Farm Bureau president Zippy Duvall called for more transparency regarding a goal of preserving at least 30 percent of US lands and waters by 2030, which was included in its January 27 executive order on climate change.
The advocacy organization’s president reported his constituents want assurance their management of more than 140 million acres of private land already voluntarily enrolled in state and local conservation programs, will be recognized under any new framework.
“America’s agriculturalists are asking whether their good work will be recognized by the administration,” wrote Duvall, of reaction that has included observers labelling the plan a “land grab.”
“The concerns of farmers and ranchers are escalating regarding the intent of the 30×30 goal, the definition of conservation, and the metrics for defining success, among other things,” he added.
Climate-focused spending is also a focus of the Biden Administration’s $2 trillion American Jobs Plan, which inspired a $568 billion rejoinder written by Republicans who accuse Democrats of presenting their entire environmental agenda as an infrastructure package. The competing proposals dictate that the political and cultural divisions that have slowed US progress on other issues in recent years are being translated into opposing definitions of what constitutes “infrastructure.”
In the latest edition of its quarterly report The Feed, Farmer Mac explored how US ag could be influenced by increased spending in clearly infrastructure-related areas like rural broadband, photovoltaics, roads, bridges and port development. The recent suggestion by a New York Times columnist that the infrastructure plan be expanded to include a “moonshot” for plant-based meat suggests agriculture-focused investors would be well-served to keep an eye on the ‘what is infrastructure?’ debate as it develops.
Private firms in and around agriculture already report increasing interest in natural capital opportunities that harness the growing willingness among local, state and federal lawmakers to consider new approaches to managing public goods. A USDA-sponsored report published in 2019 surveyed 127 sustainable agriculture investment strategies, and found state and federal income tax credits for conservation easements to be the only one established enough to scale.
Any effort to build up agricultural conservation or regenerative incentive programs will indeed confront the same challenge highlighted by Duvall of balancing the need for changes that would not have occurred otherwise with the contributions of long-established producers. Private capital could help overcome such challenges, but further defining investors’ role in carbon, water and mitigation markets will require supportive policy frameworks that are not yet possible.
Though the particularly busy agenda guiding the Biden administration’s transition to power has left space for uncertainty, its effort to strike a new balance between public and private interests while integrating climate change into infrastructure spending could help clear a path for investors into burgeoning ag-related markets.