Insight – USDA expands the Partnership for Climate-Smart Commodities program

9 January 2023

On 12 December 2022, the USDA announced an additional US$325 million of pilot projects for the Partnerships for Climate Smart Commodities program (PCSCP). The announcement brings the total investment to over US$3.1 billion. The US$3.1 billion total is US$2.1 billion higher than the initial announcement of US$1 billion in February 2022.

Our review of the initial program can be found here.

Round one PCSCP projects

The PCSCP received over 1,000 applications. Seventy projects received funding under round one. Each project was awarded between US$5 million and US$100 million. Total funding was US$2.8 billion.

The USDA estimates the selected projects will affect over 50,000 businesses across more than 25 million acres (see Figure 1).

Most of the projects have medium- to long-term impacts. In many cases, such as activities to restore soil, the return on investment will take several years.

Figure 1: Estimated impact from the 70 projects in the first round of funding

Figure 1 Estimated impact from the 70 projects in the first round of funding

Round two PCSCP projects

The second round of project funding was valued at US$325 million. In total, 71 projects were awarded between US$250,000 and US$5 million.

The projects under round two focus on working with underserved producers, including tribal groups and minority-serving institutions.

Commodities covered by PCSCP projects

The selected projects cover a wide range of commodities. Fruit, vegetables, beef and livestock were the most common, followed by corn, soy and dairy (see Figure 2).

Figure 2: Number of projects by commodity

Figure 2 Number of projects by commodity

Each project’s ability to combat climate change was assessed on whether it aims to create a new market or establishes a new best practice. Examples of each include the following.

Figure 3: Project assessment framework, with examples

Climate-smart practices

Climate-smart markets

Reduced methane with manure practices. Sustainable aviation fuel from climate-smart commodities.
Cover crops. Climate-smart dairy products to connect to consumer-facing brands.
Enhanced efficiency fertilisers. Expanding climate-smart cotton in clothing labels.

 

Value of funding awarded

The USDA has a list of the successful PCSCP projects and the amount of funding each received. All 71 round two projects were awarded under US$5 million. Most round one projects were awarded between US$5 million and US$45 million (see Figure 3). However, 14 projects were awarded between US$70 million and US$95 million. Projects with larger funding amounts appear to cover a larger geographical region.

As part of its World Trade Organization obligations, the US is required to notify the WTO’s Committee on Agriculture about the extent of the PCSCP and how these measures fit into domestic support exempt categories.

Figure 4: Projects selected by award size

Figure 4 Projects selected by award size

The US is the world’s second largest agricultural producer. It is a leader in international forums such as the WTO and the Food and Agriculture Organization of the United Nations. Under the PCSCP, the USDA will summarise and publish important information, including datasets that measure the environmental benefits of the projects. This provides an opportunity for the Australian agricultural industry to monitor and learn from the outcomes of the pilot projects.

Resources

The Australian Government’s network of Agriculture Counsellors provided information for this article. More information about the Agriculture Counsellor network, including contact details, is available on the Department of Agriculture, Fisheries and Forestry website.

The USDA has more information about its climate adaptation plan.

Austrade has more information about the US market.

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