Executive Summary:

This plan outlines a comprehensive strategy to strengthen New Mexico's agricultural sector by prioritizing support for water and soil. It addresses the state's arid climate, ongoing drought, and groundwater depletion. Building on existing initiatives such as the New Mexico Department of Agriculture's (NMDA) Healthy Soil Program and the Natural Resources Conservation Service's (NRCS) Conservation Stewardship Program, the plan aims to enhance resilience for farmers and ranchers. 

A key new component is the establishment of the New Mexico Farmers Bank, a state-owned public bank dedicated to agricultural financing. This bank will be initiated with a $500 million investment from the general fund, providing low-interest loans and financial tools for water and soil initiatives.

Implementation will begin in 2027, with phased actions planned over five years. The focus will be on conservation incentives, technology adoption, education, monitoring, and improving financial accessibility through the new bank. Expected outcomes include a 20% reduction in agricultural water use and enhanced soil health across 100,000 acres by 2032, supporting sustainable farming amid climate challenges.

Background:

New Mexico's agriculture, including dairy, pecans, chiles, and livestock, contributes significantly to the economy but faces severe threats from water scarcity and soil degradation. Prolonged droughts, exacerbated by climate change, have depleted aquifers, reduced surface water availability, and made farming unsustainable in some areas. Industrial agriculture intensifies these issues by prioritizing high-water crops, leading to over-extraction of groundwater. Soil health is compromised by erosion, salinity, and nutrient loss, further straining water retention. Current programs, such as NMDA's Soil and Water Conservation efforts and the WaterSMART Initiative, provide a foundation but require expansion to meet future demands. Financial barriers often limit farmers' ability to invest in sustainable practices, underscoring the need for dedicated agricultural banking. This plan integrates these with new measures, including the establishment of the New Mexico Farmers Bank, to foster resilient, water-efficient, and soil-regenerative practices.

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Objectives:

• Water Support: Achieve a 15-20% reduction in agricultural water consumption by 2030 through efficient use and conservation, while maintaining or increasing crop yields.

• Soil Support: Increase soil organic matter by 1-2% on participating lands and reduce erosion by 25% via regenerative practices, enhancing water infiltration and nutrient cycling.

• Financial Accessibility: Through the New Mexico Farmers Bank, provide affordable financing to at least 2,500 farmers for water and soil projects, leveraging the $500 million general fund investment to offer low-interest loans and reduce reliance on high-cost private credit.

• Overall Agricultural Resilience: Support 5,000 farmers and ranchers in adopting sustainable methods, integrating with programs like New Mexico Grown to boost local markets and economic viability.

• Equity and Inclusion: Prioritize small-scale and underserved producers, including Native American and Hispanic communities, to ensure broad access to resources, with the bank offering targeted programs for these groups.

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Strategies for Water Support:

Focus on conservation, efficiency, and alternative sourcing to combat scarcity:

• Incentivize Efficient Irrigation: Expand subsidies for drip, pivot, and sensor-based systems through partnerships with NRCS and the Middle Rio Grande Conservancy District (MRGCD). Provide grants covering 50-75% of installation costs for qualifying farms, supplemented by low-interest loans from the New Mexico Farmers Bank.

• Promote Fallowing and Crop Rotation: Build on FFAR-funded research by offering payments for temporary fallowing in high-stress aquifers, targeting a 10% reduction in water use per acre. Integrate with crop diversification to low-water varieties like drought-resistant grains, with bank financing for transition costs.

• Rainwater Harvesting and Aquifer Recharge: Mandate technical assistance for on-farm rainwater collection and recharge projects in WaterSMART priority areas. Collaborate with the Office of the State Engineer to monitor and expand acequia systems for community water sharing, funding eligible projects via the bank.

• Public Education and Leak Reduction: Launch statewide campaigns via NMDA and Extension Services, including webinars on home, yard, and farm water conservation. Target a 5% reduction in system leaks through infrastructure audits and upgrades, with bank loans available for equipment upgrades.

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Strategies for Soil Support:

Focus on conservation, efficiency, and alternative sourcing to combat scarcity:

• Expand Healthy Soil Grants: Increase funding for NMDA's Healthy Soil Program to award $5 million annually in grants for projects adhering to principles like cover cropping, minimal tillage, and livestock integration. Prioritize soil testing and organic amendments, with matching loans from the New Mexico Farmers Bank.

• Technical Assistance Networks: Partner with the NM Healthy Soil Working Group and NRCS to provide free soil health assessments and training workshops. Establish regional hubs for peer-to-peer learning among farmers.

• Integration with Water Goals: Promote practices that enhance soil's water-holding capacity, such as composting and biodiversity planting, linking to conservation programs for dual benefits. Offer bank financing for implementation.

• Rangeland and Watershed Restoration: Support large-scale efforts through the Thornburg Foundation and USDA programs, focusing on erosion control and native plant restoration on grazing lands.

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Financial Support via New Mexico Farmers Bank:

To address financing gaps in agricultural sustainability, establish the New Mexico Farmers Bank as a state-owned public bank focused on farming and ranching. Modeled after successful public banking proposals and inspired by institutions like the Bank of North Dakota, the bank will:

• Formation and Investment: Legislate the bank's creation in 2027, with a $500 million initial capitalization from the state's general fund (representing about 5% of the FY2025 general fund appropriations of approximately $10.5 billion). This investment will enable the bank to leverage additional funds through deposits and partnerships.

• Services Offered: Provide low-interest loans (1-3% below market rates) for water-efficient irrigation, soil amendments, and regenerative equipment; offer risk-sharing programs for drought-prone areas; and facilitate grants-to-loan conversions for small farms.

• Governance and Operations: Overseen by a board including NMDA representatives, farmers, and financial experts; partner with existing lenders like Farm Credit associations to avoid competition and focus on underserved needs.

• Integration with Plan Goals: Prioritize funding for water and soil projects, aiming to disburse $200 million in loans by 2030 to support 50,000 acres of improved land.

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Implementation Timeline:

The plan rolls out in phases starting January 2027:

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Funding and Resources:

• Sources: Federal (USDA, NRCS, FFAR), state (NMDA, EDD Food Program, and the $500 million general fund investment for the New Mexico Farmers Bank), and private (Thornburg Foundation, Farm to Table NM). Aim for $50 million over five years in additional grants, with 40% for water tech, 40% for soil grants, and 20% for education, supplemented by bank lending.

• Allocation: Prioritize matching funds for small farms; leverage legislative wins like the 2025 Pollutant Discharge Elimination System Act for additional water resilience support, and use the bank to multiply the impact of public investments.

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Stakeholders:

• Lead Agencies: NMDA, NRCS, Office of the State Engineer, and the New Mexico Farmers Bank board.

• Partners: NM Healthy Soil Working Group, MRGCD, Extension Services, Farm to Table NM, local conservation districts, and public banking advocates.

• Beneficiaries: Farmers, ranchers, acequia associations, tribal communities.

• Engagement: Annual summits and digital platforms for input and collaboration, including bank advisory councils.

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Monitoring and Evaluation:

• Metrics: Track water usage via meters, soil health through organic matter tests, economic impacts via yield reports, and bank performance through loan disbursement and repayment rates. Use tools from the Water Use Program for data inventory.

• Annual Reviews: Independent audits by NMDA, NRCS, and bank regulators; adjust strategies based on drought indices and farmer feedback.

• Success Indicators: Reduced aquifer drawdown, increased participation rates, sustained agricultural output despite climate pressures, and positive financial returns from the bank's operations.

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(Last Edited & Published Oct. 2025)

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