406 Dirksen EPW Hearing Room
Christopher S. Bond
STATEMENT OF SENATOR KIT BOND
SENATE ENVIRONMENT AND PUBLIC WORKS COMMITTEE HEARING
ON IMPACTS OF CAP & TRADE LEGISLATION ON FARMERS
July 14, 2009
Madame Chairman, thank you for holding this hearing on proposed cap and trade legislation and its impact on farmers and agriculture. This hearing is timely because just yesterday we received a disturbing report that proposed cap and trade legislation will cost the average Missouri farmer up to $30,000 per year.
We have long suspected that the higher energy prices from cap and trade will hurt farmers with higher production costs. In President Obama words, “electricity prices will necessarily skyrocket” under cap and trade.
Farmers use energy in just about everything they do. They need diesel fuel to power their tractors and combines. Natural gas is a key ingredient to make fertilizer. Farm equipment uses energy for irrigation pumps and drying grain before storage.
A new report by the Food and Agricultural Policy Research Institute at the University of Missouri - Columbia details how Missouri farms will face tens of thousands of dollars each year in new, higher energy costs from the House cap and trade bill.
FAPRI examined farm production costs at representative Missouri farms across the State. They found that the Waxman-Markey cap and trade legislation recently passed by the House and due for consideration here in the Senate would drastically increase farmer costs.
FAPRI found that a representative farm in Missouri, such as a 1,900 acre feedgrain-soybean farm in Lafayette County east of Kansas City, would face $11,649 in higher energy costs in 2020, rising to $30,152 in 2050 under the Waxman-Markey bill.
Farmers would face higher costs for seed, fertilizer, chemicals, custom hire and rental, machinery fuel, drying and irrigation energy, machinery repairs and operating interest.
I can only tell my colleagues here on the committee, many of whom are from the East Coast or West Coast and may not be familiar with farm costs, that $11,000 rising to $30,000 per farm is a jaw dropping number for farmers. Forcing farmers to pay $11,000 rising to $30,000 per farm each year for cap and trade would be a bit more than the postage stamp per day we were told earlier - it would be unconscionable.
Some say that cap and trade legislation is an opportunity that will benefit farmers, but those claims are popping as quickly as they are made.
The Des Moines Register reported on June 7th that, “plans to cut greenhouse gas emissions have been sold to farm groups as a potential cash cow for growers, but new government estimates suggest farmers would make a lot less money than previously believed.”
The Congressional Research Service also last month found that, “of particular concern to many in the U.S. agriculture sector, EPA’s current estimates of the mitigation potential from agriculture soil activities - such as conservation or no-till - are sharply lower...or only as much as 10% of EPA’s previous projections.”
Some suggest that big carbon gains are to be had from planting trees. I am a big fan of planting trees, having planted over 10,000 trees on my farm in Mexico, Missouri. I can tell you that this would be an expensive commercial proposition. A Missouri nursery quoted us a price of $1,200 per acre to plant Eastern Cottonwood trees, the ideal tree for that Lafayette County farm.
But planting that 1,900 acres would cost over $2 million. The farmer would then earn - assuming a 2.6 ton per acre sequestration rate and $28 per ton price of carbon - only $75 per acre in sequestration revenues for that $1,200 per acre cost. No Missouri farmer would make this investment.
No Missouri farmer can afford $2 million to go into the forestry business. Nor can they afford the other suggestion of Secretary Vilsack who last week suggested manure methane capture as a revenue source for livestock and dairy operators.
The problem is, “Making a Cash Cow out of Manure Isn’t Easy” as a headline in the trade press ClimateWire read last week. That article put the cost of installing a system to capture methane released from cow or pig manure at $3 million. No Missouri livestock or dairy operator can afford $3 million for a manure methane digester.
So, we see that the “cash cow” climate supporters are trying to sell us is really a “pig in a poke” - an $11,000 rising to $30,000 per farm “cat in the bag” that this FAPRI study just let out. I can tell you that as a Senator from the Midwest, where farmers and agriculture are the lifeblood of our State, I am not going to let climate legislation leave our farmers “holding this bag.”
I support reducing carbon emissions with zero-carbon nuclear power, low-carbon biofuels and clean coal technology, low-carbon hyrbid and plug-in vehicles, and solar and wind power where it makes economic sense. But we should not support a cap and trade bill that hurts farmers much more than it helps them.