Friday, July 24, 2009

Role Of Agriculture & Forestry In Global Warming Legislation

Jul 22: U.S. Department of Agriculture (USDA) Secretary Tom Vilsack and other Administration officials and agriculture interests testified before the Senate Agriculture Committee, Chaired by Senator Tom Harkin (D-IA) on, The Role of Agriculture and Forestry in Global Warming Legislation. Witnesses testifying included representatives from the: National Farmers Union; American Farm Bureau Federation; Forest Climate Working Group; the Bipartisan Policy Center; and key Administration officials including: Tom Vilsack, Secretary of ; Lisa Jackson, U.S EPA Administrator; and Dr. John Holdren, Director of the White House Office of Science & Technology.

In an opening statement, Chairman Harkin said, "The challenge ahead of us is daunting, and yet if we are to honor our responsibility to future generations we cannot sidestep it. . . While this overall transformation strategy is clear, the task is far from simple. Our production, delivery, and use of energy are incredibly large and pervasive in our lives. We need to drastically increase efficiency throughout our energy economy, and we need to accelerate the transition from fossil fuels to energy derived from domestic renewable energy resources. . .

"Agriculture and forestry can play a central role in this energy transition and earn economic rewards for doing so. . . With good reason, we hear a lot of concern expressed about projected costs to consumers, farmers, ranchers, and other businesses from proposed energy and global warming legislation. I share those concerns, and that is why I believe we must do our best to analyze costs and find the most economical, commonsense ways to achieve critically important results. . . I am convinced that this energy transformation holds the key, not only to economic recovery today, but to major job growth and economic development for decades to come. . . The energy and global warming challenge ahead is unlike anything we have faced before, and yet experience shows America is up to the task of leading the world in solving it."

Ranking Member Senator Saxby Chambliss (R-GA), raised many concerns in his opening statement. Senator Chambliss outlined several concerns with the House-passed American Clean Energy and Security Act (H.R. 2454) and the "tremendous costs associated with its provisions." He said the cap and trade program will "undoubtedly raise production costs for farmers and ranchers." He called for more hearings on the legislation. He said he has asked USDA and Texas A&M University to conduct economic analyses of the bill, with special attention to the effects at the farm gate level and to consumers.

Chambliss said according to the Farm Bureau, full implementation of the bill will cause farm income to drop $5 billion compared to the baseline. Also, the National Cotton Council says cotton producers will see $300 to 400 million in increased production costs, rice producers will see their costs increase $80 to $150 per acre and Farm Bureau estimates corn and soybean farmers will see their costs increase over $20 per acre by 2020.

Senator Chambliss said, “Like most of my Senate colleagues, I want to support a bill that provides greater energy security for Americans and addresses climate change. Unfortunately, the House bill is not the answer. I want to support a bill that creates all kinds of jobs, not just green jobs. That bill should also reflect the realities of producing food, fiber, feed, and fuel in the United States and recognize the unique aspects of rural America. I support greater energy conservation and efficiency. I support the development of nuclear energy, renewable and alternative energy sources, and new drilling. We can do all of these things while addressing the environmental aspects of energy production and use. I’m ready to work with any of my colleagues who share similar goals.”

In his testimony, USDA's Vilsack released the results of USDA economic analysis showing that the economic benefits to agriculture from the cap and trade legislation will likely outweigh the costs in the short term, and that the economic benefits from offsets markets will easily outpace increased input costs over the long term. Vilsack said, "Although we realize there are a variety of specific approaches that can be used to achieve clean energy and climate goals, over the last several weeks, USDA has analyzed costs and benefits of the House-passed climate legislation for agriculture. Our analysis demonstrates that the economic opportunities for farmers and ranchers can potentially outpace -- perhaps significantly -- the costs from climate legislation.

Contrary to other testimony and statements, Vilsack said, "The agriculture sector will benefit directly from allowance revenues allocated to finance incentives for renewable energy and agricultural emissions reductions during the first five years of the H.R. 2454 cap and trade program. Funds for agricultural emissions reductions are estimated to range from about $75 million to $100 million annually from 2012-2016. H.R. 2454's creation of an offset market will create opportunities for the agricultural sector. In particular, our analysis indicates that annual net returns to farmers range from about $1 billion per year in 2015-20 to almost $15-20 billion in 2040-50, not accounting for the costs of implementing offset practices."

Vilsack continued, "So, let me be clear about the implications of this analysis. In the short term, the economic benefits to agriculture from cap and trade legislation will likely outweigh the costs. In the long term, the economic benefits from offsets markets easily trump increased input costs from cap and trade legislation. Let me also note that we believe these figures are conservative because we aren't able to model the types of technological change that are very likely to help farmers produce more crops and livestock with fewer inputs. Second, the analysis doesn't take into account the higher commodity prices that farmers will very likely receive as a result of enhanced renewable energy markets and retirement of environmentally sensitive lands domestically and abroad. Of course, any economic analysis such as ours has limitations. But, again, we believe our analysis is conservative -- it's quite possible farmers will actually do better."

The American Farm Bureau, completely countered the testimony of Secretary Vilsack and concluded, ". . .we remain very concerned about the broad potential adverse impacts of cap-and-trade on agriculture. Even though some say agriculture will benefit, that will depend to a great degree on where the producer is located, what he or she grows, and how his or her business model can take advantage of any provisions in the legislation. Not every dairy farmer can afford to capture methane – it is a capital-intensive endeavor. Not every farmer lives in a region where wind turbines are an option. Not every farmer can take advantage of no-till. Not every farmer has the land to set aside to plant trees. . . Yet, every farmer has production costs to meet. Nearly all of us rely on fertilizer. We all drive tractors. We all use energy in our production. We know our costs will rise. And frankly, we are very concerned about the impact of this legislation on our livelihood."

The Farm Bureau also emphasized the importance of an international agreement and stated, "Unless other countries, such as China and India, adopt similar emissions restrictions, the United States, if it adopts this legislation, will be imposing tremendous costs on our economy and our children and grandchildren and all for very little if any benefit. . . A ton of GHG emitted in China is the same as a ton of GHG emitted in Virginia. Regulating emissions in Virginia without regulating emissions in China will have little or no effect on the environment. Most experts agree that if the House legislation worked exactly as planned, it would not lower temperatures by more than a few tenths of a degree by 2050. Most experts agree that the United States cannot solve this problem alone. . . "

Access the hearing website for links to all testimony and a webcast (click here). Access a statement from Senator Harkin (click here). Access a statement from Senator Chambliss (click here). Access the 13-page USDA Preliminary Analysis of the Effects of H.R. 2454 On U.S. Agriculture (click here).