Vilsack touts climate bill benefits
July 23, 2009
WASHINGTON (DTN) – Economic benefits to agriculture from climate legislation and carbon markets will, in the long term, “easily trump” increased input costs from a cap-and-trade program, Secretary of Agriculture Tom Vilsack told the Senate Agriculture Committee on Wednesday.
Senators questioned members of the Obama administration about the impacts of climate legislation that was approved by the House of Representatives last month. The Senate is expected to take up similar legislation sometime this fall.
Prior to the hearing, USDA released an analysis showing that the House-passed climate bill would marginally increase input costs for major crops but could potentially lead to higher income through carbon offsets and biomass markets. The analysis did not touch on fruits and vegetables and only marginally examined the impacts on livestock producers.
Vilsack told senators the bill would generate net returns to farmers of $1 billion to $2 billion a year through 2020 and almost $15 billion to $20 billion in 2040 to 2050.
“So let me be clear about this analysis and its implications,” Vilsack said. “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 offset markets easily trump increased input costs from cap-and-trade legislation.”
Republicans on the Senate Agriculture Committee focused on areas where the USDA analysis lacked detail, as well as examining how much farmland could go out of production under climate legislation.
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Sen. Mike Johanns, R-NE, in particular, tried to challenge Vilsack and Environmental Protection Agency Director Lisa Jackson on land going out of production. The American Farm Bureau Federation had projected as many as 40 million crop acres could convert to forestry, effectively 10 percent of the nation’s planted cropland. Johanns said that takes away feed from livestock.
“It affects the pork producer, the cattle guy and why it beats the living daylights out of them,” Johanns said.
Neither Jackson nor Vilsack could quantify potential land shifts. But Vilsack said marginal cropland and ground in the Conservation Reserve Program would be the bulk land shift into forestry.
“The problem with the question is it assumes there is no increase in productivity,” Vilsack said. “I’m not willing to concede there will be a reduction in productivity.”
Without a solid number on projected acreage shifts, Johanns said, “You can’t sell this plan.”
Republicans also challenged statements last week by Jackson in a separate hearing that the U.S. passing a cap-and-trade program alone would not help reduce global warming. Jackson had said other countries would have to reduce their emissions as well. Sen. Saxby Chambliss, R-GA, said Secretary of State Hillary Clinton learned last week that it is hard to sell greenhouse-gas emissions to India and China. “They basically have said, ‘Go stuff it,'” Chambliss said.
Johanns said it becomes a problem selling a plan that will not assure China and India, for instance, reduce emissions.
“Poor Tom Vilsack has to go out there with that testimony and tell farmers with a hope and a prayer that this is going to work out,” Johanns said.
Beyond passing legislation, Vilsack said increased temperature changes in coming years could have enormous implications for farmers, ranchers and landowners. Drought, more intense weather events, forest fires, insects and disease outbreaks will increase and subject landowners and rural America with higher costs, he said.
Earlier in the day, National Farmers Union President Roger Johnson questioned what might be the cost to agriculture if greenhouse gases are not reduced. It may be difficult, but an analysis should be done on crop insurance indemnities, disaster payments and other costs that could be created if the U.S. doesn’t work to mitigate greenhouse-gas emissions, Johnson said.
“The cost of no action must become a legitimate part of the ongoing debate,” Johnson said.
Bob Stallman, president of the American Farm Bureau Federation, maintained potential costs to producers are much higher than USDA figures. Projections from the Farm Bureau put higher production costs at $5 billion to $13 billion a year. Stallman questioned why Congress would consider legislation that would not lower emissions without other major industrial countries also doing the same thing.
While Johnson also said he is worried the EPA could use existing laws such as the Clean Air Act to regulate all air pollutions without new legislation, Stallman said he doesn’t buy into that scenario. Stallman said he did not think the EPA would push to aggressively regulate agriculture because it would lead to an outcry that would force Congress to respond.
“I find it difficult to believe this Congress will give them (EPA) the resources to come out on a farm-by-farm basis and regulate ag,” Stallman said.
USDA used an EPA projection that diesel fuel costs would rise 17 cents a gallon to push up production costs. The higher production costs between 2012 and 2018 would push up input costs by $700 million, USDA projected. Vilsack said the cost projections don’t factor the ability of farmers to adapt to changing conditions.
“These estimates assume that in the short term, farmers are unable to make changes in input mix in response to higher fuel prices, an unlikely scenario given past history, so they likely overestimate the costs to farmers,” Vilsack said.
Vilsack emphasized throughout the hearing that any studies by USDA or critics of the climate legislation cannot quantify the potential innovation from farmers to respond to future demands.
When asked about the potential lack of response from other countries on climate mitigation, Vilsack said he thinks other countries are waiting on leadership from the U.S. on this issue. Effective climate legislation in the U.S. could help other countries push measures or support a new United Nations agreement later this year in Copenhagen, Denmark.
“I would be very, very doubtful that countries such as India and China do nothing,” Vilsack said.