3. The Commodity Credit Corporation

The Commodity Credit Corporation (CCC) is a federal corporation used to fund a variety of USDA activities, including conservation programs, export assistance, and international aid.

In 2018, the Trump Administration announced a major new subsidy program designed to help farmers affected by the United States’ trade war with China.¹⁷⁸ The initiative, the MFP, provided direct payments to farm operations that produce a commodity affected by Chinese tariffs. The program was created through executive action, under §5 of the Commodity Credit Corporation Charter Act, which authorizes CCC to dispose of surplus agricultural commodities and aid in the development of new markets, marketing facilities, and uses of agricultural commodities.¹⁷⁹ The MFP quickly became the single largest source of subsidies for farmers, distributing $28 billion over the first two years.¹⁸⁰ In 2020, the MFP was replaced by the Coronavirus Food Assistance Program (CFAP), which was designed to assist producers who lost income due to the pandemic.¹⁸¹ As of mid-2021, USDA has distributed over $24 billion through CFAP.¹⁸²

While some tree nut producers were eligible for MFP and CFAP payments, most of the funds went to emissions-intensive operations producing

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dairy and livestock or commodity crops such as soybean, sorghum, and wheat.¹⁸³ Rather than respond to foreign tariffs or reductions in commodity prices by supporting the conventional production of annual crops, USDA should instead respond by developing new markets for products produced in carbon-farming systems, particularly those with the greatest climate benefits, such as alley cropping and silvopasture. It should also develop payment programs through CCC for farmers using climate-friendly practices, providing the largest benefits to those practices with the greatest sequestration potential.

Prior to his appointment as undersecretary for farm production and conservation in 2021, Robert Bonnie proposed using CCC to fund a carbon bank that would finance climate-friendly activities undertaken by farmers and foresters.¹⁸⁴ Specifically, the carbon bank would provide farmers with a guaranteed price for greenhouse gas emissions reductions through a reverse carbon credit auction.¹⁸⁵ Implementation of such a program will require credible, feasible, and accurate methods of determining the greenhouse gas impact of various practices; steps to address additionality concerns—whether the measures paid for would have been undertaken (or maintained for certain timeframes) even without the payment; and measures to ensure that financed reductions are either permanent (such as ongoing greenhouse gas emissions reductions) or for established long-term periods (such as through long-term contracts to continue certain practices). In addition, this approach should be designed not to disadvantage some of the most effective carbon-farming practices, such as alley cropping, which often require larger initial investments and could thus be less competitive in a reverse auction system. Likewise, a reverse auction system must be sure to address equity concerns and not favor larger-scale operations, which likely would require lower payments on a per acre basis than mid-sized and smaller-scale ones. If implemented well, such a carbon bank could play a major role in reducing net emissions.

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