FarmPolicy

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Climate Bill- Ag Cost Estimates

The Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri released a report yesterday entitled, “The Effect of Higher Energy Prices from H.R. 2454 on Missouri Crop Production Costs.”

“At the request of Missouri Senator Kit Bond, the Food and Agricultural Policy Research Institute at the University of Missouri-Columbia (FAPRI-MU) has analyzed the effect of higher energy costs from the recently House-passed legislation, ‘The American Clean Energy and Security Act of 2009’ (H.R. 2454) on Missouri crop production costs. This analysis uses increases in energy costs as estimated by CRA International in its analysis of H.R. 2454. FAPRI-MU uses the results from CRA International since models of energy markets that would allow analysis of energy price changes from H.R. 2454 are not maintained by FAPRI-MU. This analysis hinges directly on the energy price effects as reported by CRA International,” the report said.

FAPRI indicated that, “This report is not a full analysis of the impact of H.R. 2454 on Missouri crop producers. This report does not incorporate likely responses by producers to these changes in production costs. As input costs increase, producers could adjust input usage and the mix of crops produced, with implications for crop yields, production and prices.”

On page four, the FAPRI report stated that, “Producers use many energy inputs in the production of agricultural commodities. The direct impact of a policy change that increases energy costs will be to reduce farmers’ bottom lines. This analysis shows only the direct effects of higher energy prices that are expected to result from H.R. 2454. This analysis does not provide a complete analysis of H.R. 2454. The analysis does not consider possible impacts on input usage, biofuel production, crop production and prices, or the value of any carbon credits that producers might be able to sell.

“Using the 11, 34 and 45 percent increases found by CRA International in motor fuel, natural gas and electricity prices, respectively, by 2050 as a result of H.R. 2454, estimated Missouri crop operating costs increase by 8.1, 8.8, 4.4 and 10.4 percent for dryland corn, irrigated corn, soybeans and wheat respectively.”

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Posted by Keith Good • July, 14, 2009 • 4:43 am