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American Farm Bureau Warns of Costs Of Cap-and-Trade on Ag Community
November 10, 2009

Posted by: David Lungren David_Lungren@epw.senate.gov

American Farm Bureau Warns of Costs Of Cap-and-Trade on Ag Community

EPW HEARING HIGHLIGHTS

 WATCH: Inhofe - Stallman Exchange 

With the Kerry-Boxer legislative saga having run its course,  EPW Policy Beat is launching a new project called "Hearing Highlights," in which we mine the recent cap-and-trade hearing record for-to borrow a phrase from the past-all "the best that was thought and said."   For three days at the end of October, the EPW Committee heard from witnesses representing various constituencies that would endure serious economic harm if cap-and-trade were enacted.  Of course, the committee also heard from witnesses that stand to gain-millions in fact-under a cap-and-trade regime.  So the hearings accomplished at least one thing: they presented a stark portrayal of who the winners and losers would be.  Our focus here is on the "losers"-in other words: consumers, ratepayers, farmers, ranchers, small businesses, manufacturing workers, the Heartland, and coal, to name a few. 

Today, we highlight excerpts from testimony by Bob Stallman, president of the American Farm Bureau Federation.  As Stallman meticulously recounted, cap-and-trade of the Waxman-Markey, Kerry-Boxer variety would mean certain disaster for America's farmers.  One effect of such legislation would be higher fuel and fertilizer costs.  This point was captured in the following exchange between Stallman and Sen. Inhofe:  (Click Here to Watch) 

INHOFE: And I think that's very significant to bring up, because there's somehow -- and we noticed this yesterday and the day before in these hearings -- there's the assumption that if you are exempt, you don't have any problems.

But what about the -- the cost of gasoline, the cost of diesel, the cost of fertilizer? How much has fertilizer gone up in the last five years, roughly?

STALLMAN: Oh, I couldn't give you the percent. But based on my farm, I know I write a lot bigger checks than I used to.

INHOFE: Yes, and of course, the main ingredient there is natural gas. You're going to have -- this is going to cause that to go up. The chemicals -- the cost of everything, doing business, is going to go dramatically up.

So even if you were exempt, those costs would continue. And you -- you would like to be able to say that all those could be passed on. Some will be passed on, so the general public, my wife, going to the grocery store, my 20 kids and grand kids that are eating meals, are going to be paying more. But the farmers also are going to be paying more and getting less out.

STALLMAN: Absolutely -- 20 percent of our input costs in agriculture, on average, are energy related.

In his prepared testimony, Stallman wrote that, "Cost increases incurred by utilities and other providers resulting from climate change/energy legislation will ultimately be borne by consumers, including farmers and ranchers."  He also noted that increases in natural gas prices "as EPA projects would likely result from this legislation could threaten the remaining fertilizer manufacturing facilities in the United States.  This would make us even more dependent on fertilizer imports."

Cap-and-trade, according to Stallman, also would put U.S. agriculture at a competitive disadvantage relative to international trading partners that have no greenhouse gas restrictions.  And in his view, attempts to mitigate this inequity through border adjustments or other mechanisms simply won't work:

"The increased fuel, fertilizer and energy costs that will result from H.R. 2454 and S. 1733 will greatly impact the relationship of American producers with the rest of the world. U.S. agriculture is an energy-intensive industry that relies to a large extent on international markets.  These increased input costs will put our farmers and ranchers at a competitive disadvantage with producers in other countries that do not have similar GHG restrictions...

"Trade issues become more complicated, because any trade equalization measures seeking to ‘level the playing field' for our producers must also comply with our World Trade Organization commitments. Provisions such as those contained in the House bill effectively imposing border tariffs on goods from countries that do not have similar GHG restrictions will almost certainly be challenged in the WTO and are in serious jeopardy of being found to be non-compliant with our obligations. Moreover, such actions could very likely lead to retaliation."

Related:

Link to Testimony - Bob Stallman, President, AFBF

Inhofe Statement: Legislative Hearing on S. 1733, Clean Energy Jobs and American Power Act

FACT CHECK: CAP-AND-TRADE IS A TAX

EPW Committee Hearings Expose Costs of Cap-and-Trade Legislation

Farmers Lose Big in Climate Bill, Farm Bureau Warns

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