Farmers on the Hook for Millions after Trump Freezes USDA Funds

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February 10, 2025

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by Daniel Wu, Gaya Gupta and Anumita Kaur (Washington Post) Farmers report missing millions of dollars of funding they were promised by the U.S. Agriculture Department, despite promises from the Trump administration that a federal funding freeze would not apply to projects directly benefiting individuals.

On his first day in office, President Donald Trump ordered the Agriculture Department to freeze funds for several programs designated by President Joe Biden’s signature clean-energy and health-care law, the 2022 Inflation Reduction Act. The freeze paused some funding for the department’s Environmental Quality Incentives Program, which helps farmers address natural resource concerns, and the Rural Energy for America Program, which provides financial assistance for farmers to improve their infrastructure.

Farmers who signed contracts with the Agriculture Department under those programs paid up front to build fencing, plant new crops and install renewable energy systems with guarantees that the federal government would issue grants and loan guarantees to cover at least part of their costs. Now, with that money frozen, they’re on the hook.

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The Agriculture Department has also halted funding for other programs, including scientific research grants in agriculture and producing climate-smart crops, according to a letter sent to the agency Thursday from House Democrats on the Agriculture and Appropriations committees.

“Pulling the rug out from these recipients runs counter to the mission of the USDA and will quickly and significantly cripple economic development in rural America,” the letter says.

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But over the weekend, farmers reported that their funding remained frozen — another blow to farmers who are also facing threats of tariffs and freezes to foreign aid spending that involved food purchased from American producers.

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The Agriculture Department made $3.1 billion from the Inflation Reduction Act available in the 2024 fiscal year for climate-smart agriculture activities, according to the department, including grants and loans for initiatives such as the Environmental Quality Incentives Program and the Rural Energy for America Program.

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The funding freezes have also paused large projects across multiple states. The Iowa Soybean Association said Thursday that Agriculture Department payments had been suspended for a five-year Midwest Climate Smart Commodity grant that the organization secured in 2022. The $95 million deal supports over 1,000 farms in 12 Midwestern states and encourages conservation practices in producing corn, soybeans, wheat and sugar beets, the association said.

Hundreds of participating farmers are owed $11 million after investing in new farming practices and crops due to the program, the association said. READ MORE

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Government Payments Drive U.S. Farm Income Surge in 2025 (AgWeb)
Frozen USDA funding forces furloughs, program cuts: Money that farmers counted on to move farm projects forward has dried up. (Farm Progress)

Excerpt from Ag Web: A staggering 345% increase in government payments — from $9.3 billion in 2024 to $42.4 billion in 2025 — is the key factor behind the income boost. -- The U.S. farm sector is poised for a significant increase in net farm income in 2025, primarily driven by an unprecedented rise in government payments, despite a decline in overall farm revenues.

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This surge is largely attributed to ad hoc disaster and economic assistance, totaling $35.7 billion, approved by Congress in December. Other direct payment programs, such as Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC), are also projected to rise significantly.

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Despite increasing costs in labor, livestock purchases and seed, overall farm expenses are forecast to decline slightly to $450.4 billion in 2025, continuing a downward trend from 2023. Key reductions include lower expenditures on feed, fertilizer, and pesticides.

Economic and Policy Implications

While the increase in government payments has bolstered working capital and improved financial health indicators, concerns persist regarding the long-term sustainability of farm support programs. With farm receipts declining and tariff uncertainties looming, lawmakers may face renewed pressure to reform the farm safety net in future legislation.

Your Next Read — Breaking Down the 2025 American Relief Act: What It Means for You READ MORE

Excerpt from Farm Progress: The Trump administration’s freeze of previously approved farm projects is taking a financial toll on farm groups that are working with farmers to install those projects.

Pasa Sustainable Agriculture, which received $55 million in 2023 to lead a climate-smart farming project across 15 states, recently announced that it was furloughing 60 employees attached to its project starting April 1.

Meanwhile, New Jersey Resource Conservation and Development (RC&D) recently announced that due to the ongoing federal funding freeze, it would suspend further implementation of previously approved farm programs.

All this is related to the Trump administration’s freeze of Inflation Reduction Act funding previously approved under the Biden administration. This includes $3.1 billion to fund 141 projects under the Climate Smart Commodities program.

Although at least two federal courts have ordered the administration to release those funds, the issue is mired in the federal court system pending appeals, and it is not clear when, or if, the funds will ever be released.

On Feb. 20, USDA announced the release of $20 million in IRA funding for contracts under the Environmental Quality Incentives Program, Conservation Stewardship Program and Agricultural Conservation Easement Program.

The department stated that additional funding announcements were forthcoming. But it also reiterated that it wanted to ensure programs are “focused on supporting farmers and ranchers, not DEIA programs or far-left climate programs.”

Funding crunch

Hannah Smith-Brubaker, Pasa’s executive director, says the situation is the most serious the organization has ever faced.

Pasa was a big recipient of Climate Smart Commodities program funding, one of only nine projects nationwide to get more than $50 million over five years to install “climate-smart” practices on farms: everything from cover cropping to hedgerow planting, reduced tillage to silvopasturing. It was the lead organization of a project that included at least 20 farming organizations in 15 states.

The funding allowed it to hire staff to work with farmers to install practices and provide technical assistance. Smith-Brubaker says it provided $1.87 million in funding to 143 farms, with an additional $1.7 million in shovel-ready projects awaiting signature and funding.

Pasa paid 75% of upfront costs to farmers to get projects started, with farmers providing 25%, which would get reimbursed pending an inspection. But the funding freeze has stopped the program in its tracks. She says the organization scrambled to verify and sign off on 118 projects to reimburse $500,000 to farmers, the last remaining IRA funds it had.

"But when you're put into the position of either making farmers whole or retaining employees, and you make the farmers whole, you do have to start tapping into your rainy-day fund to try to keep employees for a little bit longer,” Smith-Brubaker says. "A rainy-day fund is for an emergency, not for forever, and that's what we're kind of in the position of now. We wanted to give our employees a month notice for furloughs and have them be able to have their health insurance for an extra month.

"All that the federal government is doing by not honoring these contracts is saying to the farmer, ‘You can't trust us,’” she adds. "We leveraged our relationships on behalf of the USDA, and USDA is not honoring their side of the bargain, and farmers are just so upset.”

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Laura Tessieri, executive director of New Jersey RC&D, says the funding freeze has affected three programs the organization runs: the Regenerative Farm Network, the Grazing Initiative and the Farmers Accessing REAP project.

The Grazing Initiative, a five-year program with 20 farms, aims to expand grazing and local markets for grass-fed beef. It funded things such as fencing and watering systems to improve rotational grazing systems.