By DAVE BLOWER JR.
Farm World Editor

INDIANAPOLIS, Ind. — The Indiana Farm Bureau (IFB) believes the Waxman-Markey Climate Change bill, also referred to as the cap-and-trade bill, will grease an already slippery slope of rising input costs for Midwest farmers.

“This is probably the biggest issue we face when the Senate gets back in session in September,” said IFB Executive Director Don Villwock. “The bill on the table right now will increase costs on about everything that is used by someone in production agriculture.”

The IFB, along with the American Farm Bureau Federation (AFBF), have been vocal opponents of cap-and-trade. Villwock said rising input costs for production agriculture are already pinching margins for growers. He added that cap-and-trade will only tighten it more.
Villwock said the most obvious increase will come from higher fuel costs for farm machinery. However, he added that increased pressure on Midwest electric power plants, which are commonly fueled by coal, may cause some to switch to natural gas – thereby increasing competition for fertilizer supplies. Anhydrous ammonia is made from natural gas.

“This is going to make us even more dependent on foreign sources for fertilizer, which I don’t think anyone really wants,” Villwock explained.

Cap-and-trade supporters claim that growers will earn income by practicing carbon-sequestering farm techniques and trading carbon credits to companies that can’t meet government-determined restrictions on CO2 emissions. Villwock said the nickels and dimes gained from carbon credits aren’t going to offset the dollars lost in rising input costs.

“The ag offsets that are in the bill – for no-till or for turning wetland into cropland or for putting in a methane digester – would be positive, but not enough to offset the increased costs,” he predicted.

Villwock added that a frustrating aspect to cap-and-trade is that it will not impact worldwide CO2 levels.

“China and India are exponentially increasing their CO2 output, and they’re not going to slow down,” he continued. “Cap-and-trade is just going to make (America) less competitive for jobs, and jobs that are here now – potentially – could be sent overseas.”

Farm Bureau not alone

The National Cattlemen’s Beef Assoc. also believes cap-and-trade will be too costly for ranchers, said Jim Magagna, Executive Vice President of the Wyoming Stock Growers Assoc.

He said that approximately 45 percent of agriculture production costs are energy related; these increased costs could push many operations over the edge, forcing ranchers to sell off their land to developers.

“There is nothing green about a rural subdivision as compared to livestock roaming the range,” Magagna added.

In addition to increased input costs, Magagna said concerns about decreased agriculture revenues. He said producers are “price-takers” and will not be able to pass increased energy costs on consumers.

He said the bill’s effects on international trade would put U.S. producers at a disadvantage compared to other countries due to the increased costs. Magagna noted that cap-and-trade could have unintended environmental impacts; increased energy and input costs could force ranchers to cut back on widely used environmentally sustainable farming practices such as rotational grazing.

The American Soybean Assoc. (ASA) believes that agriculture should not be subject to GHG emission caps established in federal climate change legislation. ASA presently does not support GHG regulation under the Clean Air Act.

ASA said government should look for options to the cap-and-trade approach to climate change legislation.

American Agri-Women (AAW) insists that any climate change legislation must directly address increased input costs and the potential to force fertilizer production and petroleum refining overseas, where competitors are not regulated.

AAW president Marcie Williams stated, “because of the importance of this issue to America’s farmers, we all need to speak to our Senators now, so they understand how much we are affected by their decisions on climate change legislation this fall.”

The agricultural sector, Williams said, is highly energy intensive and relies on natural gas, refined petroleum products and other energy inputs for food processing, irrigation, crop drying, heating farm buildings and homes, crop protection chemicals and nitrogen fertilizer production.

Climate policy is not just about energy cost increases., but also availability, she added. Williams said climate change legislation must not place an unbearable burden of increased prices for petroleum products, fertilizer, electricity and other agricultural inputs on the backs of American farmers.

A regional divide
Villwock admitted, though the AFBF is solidly against cap-and-trade, there is a divide between lawmakers from coastal states and those from the Midwest.

In Indiana, only two Democrat representatives, Rep. Andre Carson and Rep. Baron Hill, voted for the Waxman-Markey bill. Three Indiana Democrat lawmakers voted against the bill – Rep. Pete Viscloskey, Rep. Brad Ellsworth and Rep. Joe Donnelly. All of Indiana’s Republican Congressman voted against the bill.
“We were a little surprised by Rep. Hill’s vote because there is so much coal and coal-related industry in his district,” Villwock said.
All but one of the eight Republicans who voted for the Waxman-Markey bill are from coastal states. The one non-coastal GOP lawmaker was Rep. Steven Kirk of Illinois.

Villwock said this is because many power plants on the East Coast and the West Coast have shifted away from coal and other fossil fuels. The Waxman-Markey bill strictly focuses on the reduction of fossil fuel usage.

He said, similar to the national healthcare debate, many Congressmen are getting an earful about cap-and-trade during their August break. “Rural electricity bills will likely go up by one-third to one-half as a result of cap-and-trade,” he added. “People on fixed incomes are not going to be happy about that.”

He doesn’t think the Senate will tackle the issue this year.
“We’re seeing so much push back on this that I don’t think we’re going to see a vote on cap-and-trade in the Senate,” Villwock predicted. Nevertheless, he said Farm Bureau members have been contacting their lawmakers to voice their concerns about cap-and-trade.