Eventually, the Supreme Court will have to weigh in about how the federal government should treat contracts, Pittman said.
“If we’re going to say you can permanently impound or freeze those funds, then that calls into question the very arrangement of those contracts,” Pittman said. “If this becomes enshrined, it becomes a lot more problematic to be a service to the agricultural community. For universities, its very common in the land-grant universities to have reimbursable contracts.”
Ag Law Center has received a lot of inquiries about money frozen, as well as the payments owed to contractors who need to be paid. For farmers, Pittman said the ability of a new president to come in and impound funds could create changes in collateral for farmers relying on government programs.
“A future president can come in and put a pause on Title I payment and say we need to put a pause on them and review them for waste, fraud and abuse,” he said. “These are new realities to think about today.”
All of that then filters down to how agricultural lenders look at risk. “We have to take into account that there’s a higher possibility than before that a new president can legally retract payments,” Pittman said.
LOCAL FOOD PROGRAMS FROZEN, CONTRACTS CANCELED
On March 7, USDA notified states and tribes that it will not honor the 2025 Local Food Purchase Assistance (LFPA) and Local Food for Schools cooperative agreements. The Biden administration had signed $2 billion on multi-year contracts with states and tribes to expand the purchases of local and regional foods.
“There are farmers who saw that program come through in 2024 and were planning and already planting for 2025 to sell through this market channel and will no longer have a market,” said Katie Nixon, co-director for the Heartland Regional Food Business Center. “That’s thousands and thousands of small farmers across the country and hundreds of food hubs that were depending on that income for this year.”
The Heartland Regional Food Business Center serves all or part of six states. There are 12 such centers around the country under the Agricultural Marketing Service (AMS). They were created under the American Rescue Plan. All of their funds have been frozen since Jan. 20.
The Iowa Food System Coalition also raised alarms over losing more than $11 million in contracts under the programs.
Nixon said the Heartland center had committed to funding 89 grant recipients that involved small meat lockers, produce companies, farmer markets and rural grocery stores among the recipients. All of those projects and businesses are now on hold.
“There are a lot of different kinds of businesses in those 89 grants,” she said.
Nixon pointed to comments from Agriculture Secretary Brooke Rollins about improving efficiency in government, but making sure farmers are supported and people are being fed healthy foods.
“Many of her points were exactly what our food business centers have been doing,” Nixon said. “We’re building a grant program that services more communities directly.”
In other moves, USDA had earlier eliminated tens of millions in local food grants because language or words in the grants could be tied to “diversity, equity and inclusion.” In a lot of cases, the funds were being used to help expand fruits and vegetables in lower-income communities.
“They were told to detail that they were helping the underserved in their grant applications, and then they get punished for it,” Nixon said.
CONSERVATION CONTRACTS STILL FROZEN
USDA had stated that it had released contracts for farmers involved in the Environmental Quality Incentives Program (EQIP), Conservation Stewardship Program (CSP) and the conservation easement program.
USDA has not detailed how it is handling funds under the Partnership for Climate-Smart Commodities or the Regional Conservation Partnership Program (RCPP). USDA also has technical service contracts with conservation districts across the country.
DTN had learned at Commodity Classic that state conservation district offices around the country have had to furlough staff.
Sarah Blaney, executive director of the Oklahoma Association of Conservation Districts, said at the National Farmers Union meeting that Oklahoma Conservation Districts are waiting for USDA to reimburse them for conservation work done from August through December that have not been paid. Now USDA is informing conservation districts they will not receive pay for any work done after Jan. 19.
“The are saying they are not going to pay past that time, which I believe is a violation of their agreements. We have a signed contract with the federal government.”
Currently, Oklahoma Conservation Districts are waiting for $285,000 for work that was already done.
Oklahoma also has a large number of veterans who may have been tied to grants canceled because of attempts by the administration to wipe out “diversity, equity and inclusion.” Then there are a high percentage of Native American farmers in the state as well.
Blaney said her office has been forced to lay off staff while the remaining staff have taken pay cuts just to make cash flow. Oklahoma Conservation Districts also has a climate-smart grant that is frozen. Those funds were supposed to go to 25 local conservation districts.
“It will affect what we’re paying those district employees,” she said.
State conservation district offices across the country have faced similar problems.
“As we get further and further along, you’ll see those numbers increase in the numbers of states,” Blaney said. “They’ve been trying to hang on.”
The relationship between USDA and local conservation districts dates back to the 1930s when USDA sought to reduce soil erosion during the Dust Bowl, but the federal government needed connections on the local level with people farmers would trust.
“We have several agreements with the federal government to work on outreach and education with the whole goal of just enrolling more people in conservation programs and getting more soil and water conservation done,” she said.
Jon Doggett, former CEO of the National Corn Growers Association, told NFU members that agriculture traditionally relies on voluntary, locally led conservation programs. Doggett is advocating for farmers to protect the climate-smart programs funded by the Inflation Reduction Act.
“If this goes away, 10 years from now when the climate is worse than it is now, you are going to have regulations imposed on you. It’s not going to be voluntary” Doggett said. “We have to make this work.”
Blaney made a similar statement in her interview with DTN.
“We’re doing voluntary conservation, and it’s really based on trust of farmers and ranchers,” she said. “When a local conservation employee comes to them, they know these programs that we’re bringing aren’t going to hurt them. And when we no longer have the trust of our farmers and ranchers, that’s really going to be a big problem because if you can’t do it voluntarily, then instead you eventually get to the point that it’s a regulation, and that’s what we’re really trying to avoid, right?”
Also see “Larew: NFU Must Remain United and Press for a Farm Bill” here: https://www.dtnpf.com/….
Chris Clayton can be reached at [email protected]
Follow him on social platform X @ChrisClaytonDTN
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