GOP highlighting climate costs for ag
July 22, 2009
OMAHA (DTN) – Agriculture’s role in reducing greenhouse-gas emissions could take a backseat to debate about the higher costs farmers could face under the climate legislation as the Senate Agriculture Committee hears from farm groups and key officials in the Obama administration on Wednesday.
Republican senators throughout the ranks of the Agriculture Committee have made it clear since last week that Secretary of Agriculture Tom Vilsack and Environmental Protection Agency Administrator Lisa Jackson had better come armed with detailed data on what kind of costs farmers may face. Some senators want detailed information broken down by commodity and state.
The climate bill passed by the House last month would reduce carbon emissions 17 percent by 2020 and as much as 80 percent by 2050. Emission reductions would largely come by moving away from coal-fired electricity over time and into other energy sources that release fewer greenhouse gases.
But coal is cheap, and replacements for coal-generated electricity could be costly. Further, power plants could convert more to natural gas in the short-term, which would directly lead to competition with fertilizer production given that natural gas is a major ingredient in nitrogen-based fertilizer products.
Wednesday’s hearing will be one of the last debates in Congress regarding cap-and-trade legislation before lawmakers recess in August. The Senate has opted not to push a climate bill into a floor debate before fall. Democrats on the Ag Committee and administration officials will argue the bill will create new green jobs, while Republicans will challenge the potentially higher costs that could affect agriculture and eventually food prices.
Sen. Mike Johanns, R-NE, former secretary of agriculture during the Bush administration, wants to challenge comments by current Agriculture Secretary Tom Vilsack that farmers could benefit from a cap-and-trade plan despite higher input costs. “We need to know what the USDA is basing this approach upon,” Johanns said Tuesday. “Why do they believe the benefits outweigh costs? Surely they did some research to back up those statements.”
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A USDA spokesman said last week that the department is working on getting an analysis completed before the hearing.
Given Johanns’ knowledge of USDA, he said the department is capable of analyzing the potential cost impacts on specific crops, fruits and vegetables and livestock and can break down the analysis by different states as well. He wants such data from the department.
“We need the recognition costs will vary significantly by different regions of the country,” he said.
Johanns said it appears Midwestern states “will be hammered much harder than the East or West coasts” because the Midwest depends more on coal to generate electricity.
Speaking last week in Wisconsin, Vilsack said climate-change legislation is tied to economic recovery and will help “develop a 21st century American economy.” Vilsack said investments in rural energy will create jobs, while agricultural offsets married with other USDA initiatives will combine to create “a new dynamic in rural America.”
Sen. Saxby Chambliss, R-GA, ranking member of the Senate Agriculture Committee, wrote a letter to Jackson last week asking that she present data at the hearing on the impact the legislation could have on costs to farmers.
Studies on the potential costs to farmers are all over the place. Johanns cites studies by the American Farm Bureau, Fertilizer Institute and Heritage Foundation that all state farmers will pay billions more each year for inputs under the legislation. Last week, two university studies in Iowa and Missouri put the potential costs at about 1.6 percent to 3.2 percent higher per acre for crop farmers based on specific parameters.
Sen. Charles Grassley, R-IA, said he will make the point at the hearing that agriculture is an energy-intensive industry that will be affected negatively by climate legislation. Grassley said he also wants to make sure farmers get credit for decades of minimum tillage or no-tillage practices that sequester carbon.
Grassley said he does not think it is possible that climate legislation would translate into a net benefit for farmers.
“I know there are people from Iowa who have said otherwise, but I tend to disagree with them,” he said.
Beyond agriculture, Grassley said he worries about more jobs moving to countries such as China or India if those countries refuse to reduce greenhouse-gas emissions as well.
While senators focus on costs, there are other issues that have not been fully flushed out regarding what could happen to agricultural operations under the House bill. For instance, the bill states agricultural operations are exempted from emission caps, yet there are provisions in the bill requiring the EPA administrator to establish “standards of performance” for uncapped emission sectors an promulgate rules for those standards within two years.