A letter signed by over 20 agricultural and biofuel groups was sent to officials at Treasury, the Department of Agriculture, Department of Energy and the White House today urging them to establish reasonable guidelines that will allow farmers to benefit from a tax credit, called 45Z, which is designed to facilitate the sale of ethanol and other biofuels in the aviation sector.
The letter was signed by a range of groups, including the National Corn Growers Association, American Soybean Association, Growth Energy and the Renewable Fuels Association, National Oil Seed Processors Association and Clean Fuels Alliance of America.
“Farmers are facing structural economic issues where projected costs exceed expected revenues,” the letter said. “As you know, biofuels are a critical market for American farmers, and tax incentives like the 45Z tax credit are essential policy instruments to secure long-term demand for liquid fuels made from American-grown feedstock. Stable, long-term market incentives will help farmers outpace their global competitors, and allow them to make capital, input, and management decisions that shape the next several growing seasons.”
The 45Z tax credit was established to facilitate the use of biofuels, like ethanol, in the aviation sector, which would help airlines reduce their greenhouse gas emissions while increasing demand for U.S. ag products.
But as the law goes through the rule-making process, growers are calling on Treasury, USDA and the Department of Energy to establish guidelines for accessing the tax credit. Ag groups are urging the agencies to provide a seat at the table for farmers and recognize their long-standing use of conservation practices.
Agricultural conservation practices, such as the use of cover crops and no-till or strip-till, improve soil structure and organic matter, increase water infiltration and enhance drought tolerance. These outcomes reduce crop damage during periods of excessive precipitation while also stabilizing yields under drought stress, ultimately lowering risk and reducing indemnity payments.
But the letter noted that these practices come at a cost.
“Farmers often must make significant capital investments in equipment, absorb variable costs such as cover crop seed, and undertake significant management changes,” the letter said. “Clear 45Z guidance is critical for farmers and their lenders to plan with confidence. Without regulatory certainty on the inclusion of on-farm practices, those incentives will not materialize at the scale necessary to drive participation.”
Ag groups say they are hopeful that this inter-agency group works collaboratively and swiftly to finalize their upcoming rulemaking for the benefit of America’s farmers.
