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Neiffer sizes up 45Z program for farmers... Paul Neiffer of Farm CPA Report explains the implications of new USDA guidance on carbon intensity (CI) scoring practices and their impact on biofuel tax credits under Section 45Z. While biofuel producers directly benefit from these credits, farmers can only participate through direct payments for low-carbon crops.
USDA’s new calculator for corn, soybeans and sorghum allows farmers to estimate CO2 reduction based on practices like reduced tillage, no-till tillage, cover crops and enhanced nitrogen practices. By inputting their state, county and chosen practices, farmers can determine potential CO2 reductions, which translate into tax credits for biofuel producers.
For example, according to Neiffer:
- A no-till practice reducing CO2 by 1,900 results in 52 cents per gallon in credits for biofuel producers (calculated as CO2 reduction ÷ 219.78 × 6 cents).
- If manufacturing sustainable aviation fuel (SAF), the credit increases by 75%.
However, several uncertainties remain:
- County-specific carbon baselines and adjustments.
- Yield variations and their impact on credit calculations.
- Fertilizer usage and types, which are currently unaccounted for.
Challenges also include the timeline for implementing practices (e.g., cover crops for the 2025 crop year needed planting in 2024) and administrative costs, which could consume up to a third of the potential credit.
Neiffer highlights a regional analysis, showing no-till tillage as the most beneficial practice in terms of credit per bushel, followed by cover crops. Farmers may ultimately receive only a fraction of the biofuel producers’ credit, but this initiative is an essential step toward integrating carbon-smart practices into farming.
This score is important for determining the amount of tax credit a biofuel producer can receive under Section 45Z. However, it’s essential to note that the biofuel producer, not the farmer, directly receives the credit. The farmer’s participation is limited to receiving direct payments from the biofuel producer for providing low-carbon crops.
Neiffer says this is a positive first step, but there’s still a long way to go before farmers can fully understand the value of their crops in the Section 45Z program. Moreover, new administration policies could alter or eliminate the credit entirely. Many practices for the 2025 crop year are already too late to implement, so the full impact of this credit will likely be seen in 2026, if at all, he concludes.
Warm, dry outlook for southern HRW areas through April... The National Weather Service (NWS) extended forecast calls for increased chances of above-normal temperatures and below-normal precip over most of the Southern Plains through April. The bubble of below-normal precip is also expected to cover the western half of the Central Plains during the period. Below-normal temps and above-normal precip are likely over the Pacific Northwest. SRW wheat areas are expected to see above-normal precip, with above-normal temps in southern areas and “equal chances” in northern SRW states.
The Seasonal Drought Outlook calls for drought to develop or persist in the far southwestern Plains, along with the Central and Northern Plains through April. Drought removal or no drought is expected over SRW wheat areas and the PNW.
As of Jan. 14, USDA estimated 22% of the U.S. winter wheat crop experienced drought conditions.
Click here for related maps.
IGC cuts global corn production forecast... The International Grains Council (IGC) cut its forecast for 2024-25 global corn production, largely reflecting a downward revision for the U.S. crop. IGC forecasts global corn production at 1.219 billion tons, down 6 MMT from its prior forecast and 12 MMT below year-ago.
IGC kept its 2024-25 world wheat crop estimate at 796 MMT, with a downward revision for Russia offset by an upward adjustment to the Australian crop. For 2025-26, IGC initially projects production will rise to a record 805 MMT.
IGC raised its 2024-25 global soybean production forecast 1 MMT to 420 MMT, now up 24 MMT from last year.
House GOP urges Trump team to delay Biden-era policy rollbacks... House Republican leaders have asked the incoming Trump administration to hold off on reversing several Biden-era policies via executive order. Instead, they aim to repeal these measures through a reconciliation bill, which requires identifying budget savings. Key policies targeted for legislative repeal include:
- Student loan forgiveness: Estimated by Republicans to cost up to $250 billion.
- Electric vehicle Incentives: Provisions promoting EV adoption.
- Corporate Average Fuel Economy (CAFE) standards: Fuel efficiency benchmarks for cars and light trucks.
This strategy aligns with the GOP’s broader effort to offset tax cuts and border funding in their reconciliation package. However, deficit hawks and complex Senate rules on reconciliation could complicate their plans. Many Republicans are pushing for ambitious measures, such as a permanent extension of Trump-era tax cuts.
Biden administration proposes stricter rules for carbon dioxide pipelines... The Department of Transportation announced proposed rules aimed at enhancing the safety of carbon dioxide pipelines. These guidelines cover the design, installation, operation, maintenance and reporting standards for transporting carbon dioxide in a gaseous state. This initiative follows a 2020 pipeline rupture in Satartia, Mississippi, which hospitalized 45 people and forced the evacuation of 200 residents. With the Pipeline and Hazardous Materials Safety Administration (PHMSA) projecting a tenfold increase in CO2 pipeline mileage by 2050 from the current 5,000 miles, the regulations are designed to address growing safety concerns. The proposal, which will undergo a 60-day public comment period once published in the Federal Register, is expected to be finalized under the Trump administration.
USDA partially resumes CRP activity... USDA announced the resumption of work on Conservation Reserve Program (CRP) contracts signed before Oct. 1, 2024, which expand acreage under the program. These activities had been suspended following the expiration of the 2018 Farm Bill on Sept. 30. However, other CRP activities, including the continuous signup, remain on hold. FSA has indicated these will restart under the one-year extension of the 2018 Farm Bill enacted in December.
John Deere responds to FTC lawsuit; defends innovation and repair practices... On Jan. 15, John Deere issued a statement addressing charges brought by the Federal Trade Commission (FTC) and the attorneys general of Illinois and Minnesota. FTC sued John Deere, claiming the tractor maker illegally forced farmers to rely only on authorized dealers for repairs, padding its profits. “Illegal repair restrictions can be devastating for farmers, who rely on affordable and timely repairs to harvest their crops and earn their income,” said FTC Chair Lina Khan in a statement. The FTC commission voted 3-2 to bring the lawsuit with both Republicans voting against it, including Andrew Ferguson, President-elect Donald Trump’s pick to lead the commission. The company strongly refuted the allegations, describing the lawsuit as baseless and legally flawed. Key points from John Deere’s response include:
- Commitment to repair access: John Deere emphasized its long-standing dedication to customer self-repair, noting its history of publishing manuals, selling parts directly, and providing digital tools like Customer Service ADVISOR.
- Defense of innovation: The company stated that the lawsuit “punishes innovation and procompetitive product design.”
- Settlement efforts: John Deere disclosed ongoing settlement negotiations with FTC prior to the lawsuit and criticized the agency for relying on “inaccurate information and assumptions.”
- Recent initiatives: Highlights included the launch of Equipment Mobile in 2023, upcoming upgrades to the John Deere Operations Center, and a pilot program to enhance farmers’ repair options.
John Deere pledged to “vigorously defend itself” and criticized the lawsuit for ignoring its progress and commitment to empowering customers. The company’s Vice President, Denver Caldwell, asserted that FTC lacked an accurate understanding of the industry and John Deere’s practices.