Midlands Voices: Energy bill scary for ag industry

The writer, a Republican, is Nebraska’s junior U.S. senator. He is a former U.S. secretary of agriculture.

Cap-and-trade legislation emerged recently out of the House of Representatives and has since been endorsed throughout the Obama administration, notably by the U.S. Department of Agriculture (USDA).

The bill’s proponents assert that cap-and-trade would reduce greenhouse gas emissions by raising carbon-based energy costs. This much was confirmed nearly verbatim in a report by the nonpartisan Congressional Budget Office. Yet that train of thought is incomplete.

Let me finish it: Those rising energy costs would come back down hard on Nebraska consumers. Every study I’ve seen indicates that agricultural producers — who consume large amounts of energy — would be hit hardest.

Even the USDA, which heartily supports the bill, knows this. In July 14 testimony before the Senate Environment and Public Works Committee, a USDA official testified that “the agriculture sector will face higher energy and input costs” due to cap-and-trade. A few breaths later, he outlined the USDA’s belief that “the opportunities from climate legislation will likely outweigh the costs.”

With this bombshell, the USDA indicated that it has thoroughly analyzed increased costs against projected benefits yet provided no evidence to connect those two statements. This rhetoric conveyed nothing about the impact cap-and-trade would have on American agriculture.

After reading this testimony, I wrote to Senate Agriculture Chairman Tom Harkin and requested a hearing to lay all the facts on the table. I hope today’s hearing will do that. Here’s what I want to know: What will the costs be for Nebraska’s farmers? State-by-state analyses, as well as commodity-specific analyses of cost increases, will be essential.

We also must know how American agriculture as a whole will be affected. What will be the effect on U.S. agriculture input costs?

The American Farm Bureau Federation says it will increase $5 billion annually, with coal costs doubling, over the next 10 years. On electricity costs? The Farm Bureau Federation expects them to increase by one-third by 2040. On corn? The Fertilizer Institute estimated that previous cap-and-trade proposals would raise the cost of corn production by as much as $79 per acre annually. On gas and diesel fuel? The Heritage Foundation charts cost increases of 58 percent and 90 percent, respectively, by 2035. Heritage also projects annual farm income to drop $50 billion by 2035, along with a drop in Nebraska gross state product of nearly $1 billion by 2012.

Don’t let the increasing regularity of the word “trillion” in federal deficit projections cloud your judgment; $50 billion is a frighteningly absurd amount of money to lose as an industry.

And if you think this across-the-board increase in costs affects only farmers and ranchers, think again. If you’re reading this column with a side of eggs and a glass of juice, it affects you. If you’ve just grilled a nice steak or hamburger, it affects you.

The agriculture producers being teed up for all these cost hikes are producing our beef, chicken and pork; our fruits, vegetables and dairy; our corn and wheat products. American producers would feel the biggest sting, but we’d all have to shoulder the burden. You can’t increase energy and production costs without the impact rippling across geographic, economic and social boundaries.

We could sort through a whole host of statistics from many respected agriculture organizations, and still the harsh fact remains that no one knows if cap-and-trade would significantly lower U.S. carbon emissions levels. In fact, our best guess is that it won’t have any effect. Even Environmental Protection Agency Administrator Lisa Jackson stated that “U.S. action alone will not impact CO2 levels.”

Reducing global emissions will require a global approach. The argument that the United States must lead the way with cap-and-trade doesn’t inspire me. Considering the significant difficulty we’ve had getting countries like Russia, China and Brazil to import our beef, I’m not holding out much hope that they’ll follow our lead when it comes to handicapping their economies. India has already made that clear, calling cap-and-trade “a non-negotiable stand.”

I’m very eager to hear why the USDA believes the benefits of cap-and-trade outweigh the costs and risks to our agricultural producers. I’m looking forward to the hearing today, which I certainly hope will be very thorough and enlightening.

To outweigh all of these overwhelming costs of cap-and-trade, USDA will have to show me — and agricultural producers across the country — a great deal of benefits.

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