High Payment Delinquency Rate for Anaerobic Digestor Loans for Farmers Leads to USDA Pause

     The USDA just paused loans for anaerobic digestors for U.S. farmers due to a high delinquency rate for loans. The pause, announced in late January, is for up to 90 days while USDA investigates delinquencies and project underperformance, according to Jacob Wallace at Waste Dive. The loans were under the Rural Energy for America Program (REAP), which is (or was) a very generous subsidized program. The Rural Business Cooperative Service (RBCS) announced the pause after a letter from 34 agricultural and environmental groups included a petition to end federal grants for on-farm digestors. The petition noted that $257 million of the $3.2 billion dispersed from REAP, which is 8% of the program’s dispersals from 2021 to 2025. They also noted that the average grant for these was much higher than for REAP-subsidized solar or wind projects.

     The goals of funding digestor projects are to reduce emissions and to help farmers, but the groups argued that the environmental benefits of digestors were nullified by their detriments. They also argued that the loans were helping larger consolidated farms, i.e., factory farms, rather than the small farms they were intended to benefit. Biogas and RNG groups disagreed with that assessment. They also argued that the digestors reduce emissions, provide a revenue stream for farmers, and lower their cost of fertilizers. Another complaint by those opposed to the digestor loans is that they have allowed large dairy farms to increase the size of their herds, and that digestate storage leads to higher ammonia production. Ammonia is an air and water pollutant. Digestors also yield more water-soluble nitrogen and phosphorus, increasing runoff. They noted several unauthorized discharges by large digestor operations into local water bodies. They cite chronic discharge of runoff and leachate.

     In addition to the environmental issues, they also noted that the projects often do not recoup their costs. Their analysis shows that 17% of large subsidized digestors have shut down, often for financial reasons.

     Wallace writes:

“In the letter, RBCS disclosed 21 loans to digestor projects totaling $386.4 million are seeing a delinquency rate of 27%. The pause also applies to “controlled environmental agriculture,” a category that includes vertical farming and hydroponics, which have a reported 43% delinquency rate.”

     It was noted in the petition that costs to taxpayers for digestors were too high compared to solar projects, and they generated less energy per dollar, noting that:

“…digestor projects needed almost three times more money to generate over four times less energy per dollar” than solar projects.

     Biogas and RNG groups have argued that on-farm digestors provide revenue for farmers and a cost-effective solution to manure management. The American Biogas Council notes that there are more than 600 anaerobic digestors on U.S. farms, and some digest food waste along with manure. They also noted that the high delinquency rate was unknown to them and requested more information about it.

"We look forward to learning more about what USDA claims are delinquent loans. The most important thing for Americans and rural communities is to help farmers recycle their manure into renewable energy and soil products," Serfass said in an emailed statement.

     Wallace notes that REAP funding was accelerated under the Biden administration and downsized under the Trump administration, along with the common rewording, dropping any references such as those to climate change, diversity, equity, and inclusion. Last June, the USDA paused REAP applications due to overwhelming response and continued popularity.

     In conclusion, it appears that the environmental and agricultural groups want the program to provide more bang for the buck, and the USDA appears to agree.

 

    

References

 

USDA pauses on-farm digestor loan agreements amid high delinquency rate. Jacob Wallace. Waste Dive. January 22, 2026. USDA pauses on-farm digester loan agreements amid high delinquency rate | Waste Dive

Environmental groups petition to end federal grants for on-farm digestors. Jaco Wallace. Waste Dive. January 15, 2026. Environmental groups petition to end federal grants for on-farm digesters | Waste Dive