U.S. Senators Saxby Chambliss (R-Ga.) and Mike Johanns (R-Neb.) today raised issue with testimony delivered by U.S. Department of Agriculture (USDA) Chief Economist Dr. Joseph Glauber before a House Agriculture Committee hearing last week on the economic impacts of pending climate change legislation. The Senators have repeatedly said Waxman-Markey and Kerry-Boxer cap and trade bills will have profound and substantial impacts on the U.S. agriculture sector. The long-awaited USDA analysis confirmed initial concerns raised in July when U.S. Department of Agriculture Secretary Tom Vilsack first testified in front of the Senate Agriculture Committee on the same issue.
As noted in Dr. Glauber's testimony, cap and trade will increase the food consumer price index (Food CPI) by nearly 5 percent by 2050. The beef sector will see a 10 percent decline, while the hog and dairy sector will see reductions of 23 percent and 17 percent respectively. Additionally, cap and trade will take 59 million acres of cropland and pasture out of production. In short, according to USDA and other testimony at the hearing, cap and trade will increase food prices, reduce production and likely put farmers out of business.
"Based on USDA's own analysis, cap and trade will not benefit U.S. agriculture," said Sen. Chambliss, Ranking Republican Member of the Senate Agriculture Committee. "I do not know how anyone can come to any other conclusion. Our farmers and ranchers need to be producing more food, fiber and fuel in the future, not less. The current cap and trade plan will only push our agriculture production overseas, just as it does manufacturing jobs."
"This testimony confirms what we've known for some time: the cost of producing crops and livestock will increase, and energy prices will go up," said Sen. Johanns, member of the Senate Agriculture Committee. "American farmers will be asked to sacrifice 59 million acres of farmland while feeding a world population set to increase by 2 billion people. If this bill becomes law, producers will be driven out of farming; production will plummet as land shifts from food to trees; food prices will rise; and production overseas will increase. Perhaps most alarming, the testimony is from an Administration that wholeheartedly endorsed cap-and-trade legislation months ago. This is not a vision for American agriculture, it's a death sentence."
According to the U.S. Census Bureau the U.S. population is expected to increase 420 million by 2050, which means we will need to increase food production to feed a growing nation. As a result of cap and trade, the U.S. will be forced to increase food imports and reduce our ability to export into the international market. The agriculture sector is one of a few remaining that still has a net trade surplus, lowering our trade deficit every year. Additionally, agriculture is second to the aircraft industry, occupying six of the top 10 spots in exports in the last 10 years. The USDA data states that the U.S. will reduce exports by one billion bushels of corn, 430 million bushels of soybeans and two million bales of cotton. That is approximately 50 percent of current corn exports, 30 percent of current soybean exports and 20 percent of cotton exports.
Proponents of cap and trade cite testimony highlighting higher levels of "net farm income or producer surplus." While these figures might give some comfort, the higher income levels only result as farms across the country go out of business and the remaining ones get larger as commodity prices go up amid a smaller supply of commodities. Income from farmers selling carbon credits is a minor contributor to overall farm income under cap and trade. According to the Agriculture and Food Policy Center at Texas A&M University, the vast majority of farms analyzed, 71 out of 98, will have lower ending cash reserves if cap and trade is passed. In other words, for some farms to gain under cap and trade, many more have to lose.