COMMENTS

Opinion
Jul 24, 2009

Liars can figure

COMMENTS

 Liars can figure

 If you listen to USDA rant about cap and trade, you would think the program will be a big cash machine for agriculture. Last Wednesday, USDA Secretary Tom Vilsack, along with Environmental Protection Agency (EPA) boss Lisa Jackson, testified in a Senate Ag Committee hearing that cap and trade will be good for farmers in the near term and in the long term. The economic benefit from a robust carbon credit offset market easily trumps increased production costs for farmers, they claimed. Cap and trade was being framed as a panacea for agriculture.

I suppose timing is everything. USDA’s Office of the Chief Economist produced an analysis of the effects of cap and trade, as passed by the House, just before the hearing. The economists who authored the report suggest that cap and trade would provide income opportunities for farmers and ranchers to receive payments for carbon offsets. Vilsack said, “I believe there are significant opportunities for landowners in a cap and trade program that can help revitalize rural America through the creation of jobs and wealth. The production of low carbon energy from biomass, anaerobic digesters and wind will provide land owners with new sources of revenue that have significant value in a low carbon economy.” Last time I looked, wind energy and anaerobic digesters are already in use and supported by a free market economy. Biomass, switchgrass and other crops for biofuel are already in the pipeline. However, they have a long way to go before we see any commercial production. Again, the free market economy is at work on this new technology.

Vilack said he realized that the cap and trade legislation would increase farm production costs by only $700 million, or 0.03 percent between 2012-2018.

Those additional production costs would be offset by $1 billion a year, near term, and by up to $15 billion by 2040 in carbon credit offsets. EPA’s Jackson added that carbon offsets would be worth $3 billion by 2020 for farms, ranches and forests.

USDA’s analysis concludes that the House version of cap and trade would have small, but significant effects on crop and livestock producers, but over the short run, impacts are negligible. Agriculture is shielded from some energy costs because it is recognized as an energy intensive business and free from caps. Former Ag Secretary Mike Johanns, currently a Republican senator from Nebraska, attempted to pin Vilsack and Jackson down on how much pasture and crop land would shift into trees if a carbon offset is created. The pair had no clue. Farm Bureau suggested that 40 million acres of farm ground would shift into trees, roughly 10 percent of the total tillable farm ground in the U.S. A skeptical Johanns said the USDA cap and trade analysis is “flawed” and called the benefits it predicts “questionable.”

“This is the Obama wing-and-a-prayer, hope-anda-promise plan for agriculture, and we have no idea that anything they are saying will happen,” he said. USDA does seem to realize that the removal of crop land and pastureland for afforestation would place upward pressure on crop prices, benefitting producers of livestock feed. But, ironically, there is no mention of global food needs. This bill may sound great if you’re a grain producer, but it doesn’t sound so good if you’re a livestock feeder. Frankly, I don’t like the idea of pitting one segment of agriculture against another in today’s political climate any more than we already have. As it stands, there is no mention of the market effects that ethanol has already had on the values of feed stocks.

It’s clear that we have a lot of fuzzy math at work here and a big sales job from the Obama administration. I still want to see the debate finished on what has caused the earth to warm up one degree in 30 years. The entire concept still needs a lot of work. The only thing that would surprise me in today’s politics is someone using some common sense. US- DA’s report and the testimony from Vilsack and Jackson were nothing more than a sales job and bad politics. USDA’s analysis is a sham and perhaps demonstrates just how obnoxious Washington politics have become. I’m starting to believe the Obama administration will say just about anything to pass some of this insane legislation. — PETE CROW

 

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