Last week, we took a look at the overall $5B strategy for specialty crop AgTech automation. This week we are going to dive into some of the specific re-allocation requests and rationale.

First, let’s look at the Inflation Reduction Act (IRA) Climate-Smart Ag Funding, which represents $19.5B and is being used to increase existing conservation programs through NRCS through payments for practices that reduce GHG emissions, improve soil carbon, reduce nitrogen losses, or sequester carbon. The major spends are: (1) $8.5B on cost-share practice payments (EQIP); (2) $5B on regional partner-led conservation projects (non-profits, Universities – RCPP); (3) $3.3B on multi-year stewardship contracts for conservation; (4) $1.4B on wetlands easements (ACEP); (5) $1B on conservation technical assistance. While there is demand for the program (it’s a government subsidy – that should not surprise anyone), it provides mediocre climate accounting (at best) while providing no improvement to grower economics. The success metric is the carbon sequestered and the funds deployed. It is already being modified to allow reallocation to wider funding options.

Much of this money would be better spent  subsidizing grower automation purchases. Keep in mind that many of the climate smart ag programs are positioned as meant to help farmer’s economics. The reality is that for many of these programs, farmer success metrics aren’t measured at either baseline or incremental performance and are rarely used as success metrics when evaluating the programs. Automation spending success can be measured by evaluating the actual impact on labor and grower economics, as well as by job creation (economic development impact).

Second, let’s look at the USDA Partnerships for Climate-Smart Commodities, a 2022 Pilot Grant Program that is going to spend $3.1B on 141 projects for: (1) technical and financial aid to farmers; (2) monitoring, reporting, and verification; and (3) market development (premiums for “climate smart” products). The Trump Administration reframed the program as “farmer first” and added requirement that 65% of funds go to farmers (by putting in place lower admin cost caps). So how is this program doing? Well, the original USDA targets were 60,000 participating farms, 25M+ acres, 60M metric tons CO2e. The actual results (two years in are 14,000 farms, 3.2M acres, 400k metric tons). As with the IRA program, there are no farmer success metrics established as targets or measured. As above, the metrics for automation incentives are much easier to manage and tie directly to labor and job creation metrics. These are better targets for rural communities than emissions reductions.

Now let’s take a look at the model for building the AgTech incentives infrastructure to help support accelerating AgTech purchases. It already exists and is part of the Climate Smart Funding efforts of the last 10 years. It’s the electric (EV) tractor subsidies program that uses CARB (California Air Resources Board) payments. The first program is FARMER, which pays for EV tractors that replace diesel FARMER, requires proof that the replacement tractor was turned into scrap (particularly wasteful by the way – there are a lot of farming communities that could use old diesel tractors that are not going to be used in the US market anymore), and provide an average check size of $80,000 – $100,000. FARMER represents 85% of program payments through CARB. The second program is CORE, which pays to incent EV tractor purchases, represents 15% of program payments, and has an average check size of $50,000 – $60,000.

As an example, one of the program participants (companies that want to participate in CARB programs need to be vetted and selected), Monarch Tractor made EV tractors that received significant CARB dollars. The business model for Monarch was selling 40 horsepower (HP) tractors for $85,000 and receiving a $50,000 – $60,000 payment from CARB. Even after receiving $155M in VC funding and significant CARB funding to help support their EV tractors being purchased by growers, Monarch was unable to raise more capital and was acquired by Caterpillar after attempting to pivot from a tractor company to an IP company.

Now let’s look at the success metric for these two programs. The program win was based on emissions reductions based on the number of hours the EV tractor was driven. But here’s where the EV tractors meet the road. It’s very hard to prove these emissions because it appears that the system was largely based on an honor system of self-reporting and tops down economic models that are not verified via any bottoms up analysis. I have seen some of these EV tractors in their native habitat at growing operations. They are very rarely in use because of the lack of a compelling use case, but the same unused tractors are getting credit for success metrics because of the factors mentioned above.

Next, let’s look at the Regenerative Pilot Program, USDA’s $700 million program that was announced December 10, 2025. It is being run by NRCS as an FY2026 pilot that redirects/set-asides funding inside two existing conservation programs: $400 million through EQIP and $300 million through CSP. The stated goal is to move USDA conservation funding from isolated “practice-by-practice” payments toward whole-farm regenerative conservation plans focused on soil health, water management, and “natural vitality.” It is a large conservation delivery pilot layered on top of EQIP/CSP, with a stronger emphasis on whole-farm planning, soil-health testing, bundled practices, and public-private supply-chain partnerships.

To date, many of the success metrics for similar practice payment programs want credit for approving a budget and spending the money. You can excuse farmers for not being overly impressed with passing a budget and actually spending the money. That’s basically table scrapes for any grower operations team. The real key is measuring the success of the spend. For many pilots and launched programs around regenerative practices, the success is only measured to the allocation and spend stage. It never makes it to actual grower metrics that improve their economics. As above, reallocating some of this capital toward automation incentives provides a much better set of metrics for rural economies.

I am in the middle of the analysis around federal economic development grants. For now, know that there looks to be $4.7B – $5.2B a year in federal grants in programs like Community Project Funding (EDI) ($3.3B in FY 2024), Economic Development Admin ($1.1B), Revitalization Grants ($320M), and USDA + DOE Econ Dev ($800M). The next action item is to identify which of these apply to rural economies and how the success metrics are measured to see how competitive the economic development impact of automation incentives compares to existing programs.

So that is the summary of programs we are looking to re-allocate dollars from to support the growth of automation revenue to $5B annually.