EPW POLICY BEAT: DOWN ON THE FARM
June 11, 2009
Posted by: Matt Dempsey Matt_Dempsey@epw.senate.gov
In March, the House Agriculture Committee sent a lengthy questionnaire on various aspects of climate change policy to members of the agricultural community. The committee cast a wide net, having sent questions to “a diverse group, including commodity, conservation, forestry, research, energy, business, and nonprofit interests.” The questions covered everything from allowance allocation, offsets, commodities trading, and regional economic impacts (the responses are posted here: http://agriculture.house.gov/inside/pubs/Questionnaire-P1.pdf). That last topic piqued our curiosity, as it is incontestably clear that cap-and-trade harms consumers in the Midwest, Southeast, and Great Plains—regions that are heavily rural and coal-dependent—much more so than denizens of the East and West coasts.
In reading through the answers, one finds serious concerns from farmers about what cap-and-trade would mean for rural communities. The following response from the American Farm Bureau Federation on this topic illustrates why members representing rural districts are leery of, if not outright opposed to, cap-and-trade: it will raise prices for farm implements, fertilizer, fuels, and food—all of which could stifle agricultural production, destroying jobs and devastating rural communities.
[From the Questionnaire] "Will enactment of a carbon reduction program have negative impacts for regions or populations whose welfare is of special interest to the agricultural community? Such groups could include: residents of rural areas; populations served by USDA nutrition programs; agricultural producers and forest landowners; or input, transportation, and processing sectors of agricultural and forest products."
AFBF: “As a general farm organization with a national constituency, this question is of extreme importance for us and our members. In some ways, farmers, ranchers, and rural residents will be more adversely affected than other sectors. Farming is an energy-intensive industry that will be hit hard by higher energy, fertilizer, and fuel costs that are predicted with any of the climate change legislative proposals we have seen to date. If related agricultural industries, such as fertilizer producers, implement dealers and rural energy producers incur highers costs, make layoffs, or go out of business, America’s farmers and ranchers will face further adverse effects. It is important to keep in mind that unlike many other industries, higher input costs in agriculture cannot be passed on to consumers.”
“Rural areas in general will also face significant adverse affects from climate change legislation. Rural residents have to drive longer distances and have no access to public transportation alternatives, so fuel cost increases will have a greater impact than in urban areas. Increased energy costs will have an especially negative impact on the rural poor, who pay a higher proportionate share of their income for these necessities.”
“It is also important to note that not all agricultural sectors will be impacted equally. While costs will rise for all of agriculture, some agricultural goods—and the parts of the country where those goods are produced—will feel the impacts more severely. A Doane Advisory Services study of the Lieberman-Warner bill provides a useful illustration of this point. This study finds that all major crops will experience an increase in input costs as a result of the legislation, but some crops are hit harder than others. While soybean producers are predicted to face $10-20 per acre increases in production costs, rice growers will have to contend with enormous input cost increases of $79-153 per acre. Corn production cost increases are pegged at $40-78 per acre. The result of these increases could be devastating to some crops and could lead to dramatic shifts in what is produced on our agricultural land in this country. Given the public reaction to food price increases in 2008, it is not unreasonable to believe that the loss of agricultural production acres or the shift away from some crops that are critical to the food, feed or fuel supply in this country could have adverse effects throughout the U.S. economy.”