FarmPolicy

April 23, 2014

Climate Bill; Animal Agriculture; Rural Issues- Administration, Congressional Perspectives; and Peanut Conference

Categories: Climate Change

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.”

Also on the cost issue, Philip Brasher reported yesterday at the Green Fields Blog (The Des Moines Register) that, “A cap-and-trade bill making its way through Congress would have a ‘relatively small’ impact on farms, raising production costs for corn and soybean operations by less than $5 an acre, says Bruce Babcock, director of Iowa State University’s Center for Agricultural and Rural Development.”

Mr. Brasher explained that, “Babcock calculated the impact on production costs by doing a simple calculation of the impact of the greenhouse-gas emission permits on the price of farm inputs. He used a sample permit price of $20 per ton. Babcock calculated that the diesel corn and soybean farmers use emits about 40 kilograms of carbon dioxide per acre. At a price of $20 per ton, those emissions work out to 80 cents an acre. Making similar calculations for other inputs, Babcock came up with a total increase in production costs of $4.52 an acre, or about 2 percent. He estimates that hog farms would pay about 1 percent more.

“‘If the United States adopts a cap-and-trade policy to combat climate change, the negative impacts on agriculture will likely be relatively small, particularly if agricultural emissions remain uncapped,’ he writes.

“Economists with the American Farm Bureau Federation, which opposes the climate bill, is estimating bigger increases in production costs than Babcock – $8 an acre for soybeans and $33 an acre for corn. Those estimates are based on the EPA’s projections of what would happen to energy prices under the House-passed cap-and-trade bill, said Farm Bureau economist Bob Young.”

Meanwhile, in a Politico.com article from yesterday regarding the climate legislation, Jeanne Cummings noted that, “Those provisions, and others aimed at improving energy efficiency, led the Congressional Budget Office to conclude that the cost to consumers would amount to about 48 cents a day, or $175 annually, rather than the thousands predicted by Republicans.

“The Heritage Foundation, the conservative think tank that calculated the higher costs to consumers, argues that the CBO underestimated the costs of the program, in part, because it didn’t properly measure the negative economic consequences of the system.”

And recall that last month, a Heritage Foundation blog update noted that, “Farmers use a lot of electricity, a lot of diesel fuel, and a lot of natural gas-derived chemicals and fertilizers to grow crops and maintain their farms. So it shouldn’t be surprising that a cap and trade program that artificially drives up the cost of energy will unfavorably affect farmers. What may be surprising is how unfavorable these effects are, causing expected farm income to drop $8 billion in 2012, $25 billion in 2024, and over $50 billion in 2035. These are decreases of 28%, 60% and 94%, respectively.”

Climate Bill- Senate Perspectives

Lisa Lerer reported yesterday at Politico.com that, “President Barack Obama’s plan for climate change legislation faces an extraordinarily tough climb in the Senate. For proof, look no further than to some of Obama’s closest allies.

“‘We’ve got to be very careful with what we do with this legislation,’ Sen. Claire McCaskill (D-Mo.), a near—constant cable surrogate during Obama’s presidential campaign, told Missouri talk radio show host Mike Ferguson last week. ‘We need to be a leader in the world, but we don’t want to be a sucker.’

When it comes to climate change, McCaskill and other Midwestern Democrats are putting their home-state concerns ahead of one of the president’s biggest first-year priorities; many of them fear that the legislation, which narrowly passed the House earlier this month, will hurt manufacturing- and coal-dependent areas that are already struggling.”

Yesterday’s article added that, “Obama’s Senate mentor, Majority Whip Dick Durbin (D-Ill.), is expected to support the climate change bill eventually, but he’s been relatively quiet so far. On Thursday, he said it was ‘too soon’ to judge if he’ll vote for a climate bill.”

“‘This is not going to be easy, but the House has proven it can be done,’ [Durbin] said. ‘We have our work cut out for us.’

“Among the Democrats whom proponents will have to sway is Ohio Sen. Sherrod Brown, who made it clear last week that he’s not there yet.”

The AP reported yesterday that, “Iowa Sens. Tom Harkin and Charles Grassley say they oppose key parts of climate legislation that Midwestern utilities’ claim would force higher rates for their customers.”

The article stated that, “Democrat Harkin, chairman of the Agriculture Committee, says coal-burning utilities ought to be allowed more allowances to cushion the impact on customers.

“Grassley, ranking Republican on the Finance Committee, opposes the bill because he says it puts the United States at a competitive disadvantage.”

(For an extended analysis on the cap and trade climate bill from Sen. Grassley, listen to this audio clip, “The implications of cap and trade,” that was posted at his webpage on Friday).

Matthew L. Wald reported in today’s New York Times that, “While most lawmakers accept that more renewable energy is needed on the nation’s grid, the debate over the giant climate-change and energy bill now before Congress is exposing a fundamental rift. For many players, the energy not only has to be clean and free of carbon-dioxide emissions, it also has to be generated nearby.

The division has set off a fight between Eastern and Midwestern politicians and grid officials over parts of the bill dealing with transmission lines and solar and wind energy. Many officials, including President Obama, say that the grid is antiquated and that thousands of miles of new power lines are needed to allow construction of wind farms and solar fields in the most promising spots. Many of the best wind sites are in the Midwest, far from the electric load in populous East Coast cities.”

Today’s Times article added that, “An influential coalition of East Coast governors and power companies fears that building wind and solar sites in the Midwest would cause their region to miss out on jobs and other economic benefits. The coalition is therefore trying to block a mandate for transcontinental lines.

“They want the wind farms built in rural New England and offshore from Massachusetts to Delaware, and for now it appears that they may get a chance to do that. They are campaigning to keep a provision out of the legislation that would mandate a huge super-high-voltage grid, with the cost spread among millions of electric customers.”

Climate Bill- Executive Branch Perspective

Lisa Lerer reported yesterday at Politico.com (“Is cap and trade Dems’ next ‘BTU’?”) that, “The president and the Democratic leadership believe that energy is a fight they can win, selling the legislation as a pivotal moment in American history comparable to the Apollo Project or the 1996 Telecommunications Act that ushered in broadband Internet.

“They say that the bill will decrease dependence on foreign oil, help the country move to a greener economy and produce millions of new jobs in renewable fuels and energy efficiency technology.

“Most importantly, they say, Democrats are acting with the support of a majority of Americans who believe that global warming is a major threat to the planet.”

Climate Bill- Opinion

Mindy S. Lubber, president of Ceres, a coalition of investors, environmental groups and other public interest organizations, argued yesterday at Politico.com that, “Climate change is a planetwide threat to the very fabric of life. The vast majority of worldwide, peer-reviewed, independent science attests to the threat, including our own National Academy of Sciences.

“Now let’s consider costs. Perhaps the most maddening aspect of debate over the Waxman-Markey bill has been the consistent omission by opponents of the costs of doing nothing, the enormously high and disruptive price science tells us we’ll pay if we don’t act now.”

And Sarah Palin opined in today’s Washington Post that, “American prosperity has always been driven by the steady supply of abundant, affordable energy. Particularly in Alaska, we understand the inherent link between energy and prosperity, energy and opportunity, and energy and security. Consequently, many of us in this huge, energy-rich state recognize that the president’s cap-and-trade energy tax would adversely affect every aspect of the U.S. economy.

“There is no denying that as the world becomes more industrialized, we need to reform our energy policy and become less dependent on foreign energy sources. But the answer doesn’t lie in making energy scarcer and more expensive! Those who understand the issue know we can meet our energy needs and environmental challenges without destroying America’s economy.

“Job losses are so certain under this new cap-and-tax plan that it includes a provision accommodating newly unemployed workers from the resulting dried-up energy sector, to the tune of $4.2 billion over eight years. So much for creating jobs.”

***

Recall that the Senate Environment and Public Works Committee will be holding a hearing this morning on the climate bill at 10:00 Eastern- entitled, “Economic Opportunities for Agriculture, Forestry Communities, and Others in Reducing Global Warming Pollution.”

Animal Agriculture

Reuters writer Charles Abbott reported yesterday that, “The Food and Drug Administration believes antibiotics should be used on livestock only to cure or prevent disease and not to promote growth, a common use, said a high-ranking FDA official on Monday.

“Principal deputy FDA commissioner Joshua Sharfstein said restrictions on livestock use would reduce the opportunity for bacteria to develop resistance to drugs used by humans.”

The article added that, “‘Purposes other than for the advancement of animal or human health should not be considered judicious use’ and not allowed, Sharfstein said in a statement for a House hearing. ‘Eliminating these uses will not compromise the safety of food.’”

Gardiner Harris reported in today’s New York Times that, “The Obama administration announced Monday that it would seek to ban many routine uses of antibiotics in farm animals in hopes of reducing the spread of dangerous bacteria in humans.

“In written testimony to the House Rules Committee, Dr. Joshua Sharfstein, principal deputy commissioner of food and drugs, said feeding antibiotics to healthy chickens, pigs and cattle — done to encourage rapid growth — should cease. And Dr. Sharfstein said farmers should no longer be able to use antibiotics in animals without the supervision of a veterinarian.”

The Times article explained that, “The hearing was held to discuss a measure proposed by Representative Louise M. Slaughter, Democrat of New York and chairwoman of the Rules Committee. It would ban seven classes of antibiotics important to human health from being used in animals, and would restrict other antibiotics to therapeutic and some preventive uses.”

Philip Brasher reported yesterday at The Des Moines Register Online that, “The National Pork Producers Council and other farm groups insist that farms use antibiotics responsibly.”

***

In other news, an update posted yesterday at the Ohio Farm Bureau Online indicated that, “The following statement was released jointly by farm groups and agricultural commodity groups across Ohio in response to the Ohio Senate and Ohio House of Representatives’ passage of Amended Senate Joint Resolution 6 (Am. SJR 6), which would authorize a statewide ballot measure creating an Ohio Livestock Care Standards Board.

“Action today by the Ohio House of Representatives and the Ohio Senate to approve Amended Senate Joint Resolution 6 is an important step forward in continuing Ohio livestock farmers’ excellent treatment of farm animals, maintaining safe food production practices and ensuring the continued availability of nutritious, affordable, locally produced food for Ohio consumers.”

Rural Issues- Administration, Congressional Perspectives

A news release issued yesterday by USDA stated that, “U.S. Secretary of Agriculture Tom Vilsack today visited Michigan and held a ‘Rural Tour’ community forum to discuss efforts by the Obama Administration to rebuild and revitalize rural America, listen to local residents talk about how USDA can assist them, and discuss solutions to challenges facing their communities. This event follows the launch of the Obama Administration’s ‘Rural Tour’ in June, and is the ninth similar forum Vilsack has led since being sworn in as Secretary.”

A news release issued yesterday by the Rural America Solutions Group (Co-Chairs- Rep. Frank Lucas (R-OK); Rep. Sam Graves (R-MO); and Rep. Doc Hastings (R-WA)) stated that, “On October 16, 2007, candidate Obama said:

“‘It’s time that we had a president who understood that when we strengthen our rural communities, we lift up our entire nation So, after I am elected president, I’ll ask Democratic and Republican leaders to join me in a summit here in Iowa to discuss these issues. And we’ll come together in a bipartisan way to take action on a rural agenda during my first 100 days.’

“Unfortunately, although we are over 140 days into his Administration, President Obama still hasn’t found time to hold a rural summit.”

Yesterday’s release added that, “Instead of sending surrogates to conduct listening sessions and mentioning rural America as a side note, it’s time for President Obama to finally fulfill his pledge to host a rural summit. After all, rural unemployment rose sharply from 10.3% to 15.8% between the first quarters of 2008-2009 – so these Americans need help too.”

Peanut Conference

The Southern Peanut Growers Conference (SPGC) is underway in Panama City Beach, Florida and an update posted yesterday at AgWired.com noted that, “The theme of the 11th annual conference is really a tribute to the U.S. peanut industry for overcoming adversity in 2009.”

The AgWired update added that, “Everyone knows that this year has been a tough one for the industry, starting out with the salmonella issue in January. But, Georgia Peanut Commission executive director Don Koehler says the industry has come back stronger than ever after what could have been a complete crisis.

“‘Farmers are really resilient and even though it wasn’t a crisis they caused themselves, we have made it through,’ Don says. ‘And the really good news is that our May 2009 numbers for peanut butter were 13 1/2 percent over what we did in May 2008.’”

See all the coverage of the peanut conference here on the SPGC blog.

Keith Good

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