By Jim Snyder - 12/03/09 01:00 AM EST
Farm incomes would be significantly increased by climate change legislation, Agriculture Secretary Tom Vilsack said Wednesday.
Vilsack said carbon offsets and other provisions in the House-passed climate change legislation would not only erase the extra operating expenses due to higher energy costs, but could offer a chance for a windfall for farmers and ranchers.
“Bottom line: We think this will be a net benefit for farmers and ranchers,” Vilsack said.
Vilsack gave his comments in a conference call to reporters on Wednesday morning before his department’s chief economist, Joseph Glauber, testified at a House Agriculture subcommittee hearing on the potential impacts of climate legislation by crop and region. On Thursday, Glauber was expected to testify before the subcommittee on how those costs could be mitigated through offsets and other efforts.
The administration is seeking to build support in rural America for climate change legislation in the face of a lobbying campaign by one prominent farm group against a cap-and-trade bill.
Farm-state votes are critical to passing climate legislation. Democrats like Sen. Tom Harkin of Iowa, Byron Dorgan of North Dakota and Ben Nelson of Nebraska have criticized parts of the climate bill passed by the House, or a cap-and-trade system in general.
That may explain why Vilsack sought to paint a broader picture of the potential cost impacts before Glauber’s testimony on offsets on Thursday. He said the opportunity for new income through offsets would “overwhelm” higher energy costs.
Vilsack also said the review by the U.S. Department of Agriculture (USDA) found that climate legislation’s effect on food prices would be “extraordinarily small.” Food prices could increase by 2 percent by 2030, he said.
The Conservation, Credit, Energy and Research hearing Wednesday focused on how changes in energy costs brought on by climate legislation would affect various producer groups, from rice growers to corn farmers.
Glauber said costs for energy and fertilizer, which is tied to the price of natural gas, its main feedstock, are about 15 percent of the production expenses for the agriculture sector. Those costs are higher for wheat and feed grain farmers.
USDA found that farm incomes could fall as much as $1.76 billion from 2012 to 2018 largely because of higher production expenses.
For fruit and vegetable growers, farm incomes could fall $7,747 due to higher energy prices.
But that decline doesn’t factor in the availability of offsets, Glauber noted in written testimony.
Vilsack, a former two-term governor from Iowa, stressed the costs of not acting. Climate change could lead to more severe weather patterns that could lower crop yields, he said.
Failure to address the issue could also make it harder for farmers to sell their goods overseas because customers may choose to purchase products from countries that have tried to address climate change, Vilsack said.
Farm groups have remained worried about the legislation and are mounting a grassroots lobbying push to kill the climate bill. The American Farm Bureau Federation, for example, has urged its members to tell Congress, “Don’t Cap Our Future” as part of its lobbying push against the climate bill.
The group maintains a cap-and-trade bill in Congress will raise energy costs and hurt the ability of farmers in the United States to compete globally.
Meanwhile, 14 Democrats have written Senate leaders seeking changes that would benefit farm states.
Vilsack explained the opposition by noting the long history of farmers casting a wary eye toward change. They resisted efforts to use fertilizers, plant hybrid seeds or use mechanized farm equipment.
The climate bill provides a “real opportunity for farmers,” Vilsack said.