Corn growers shift stance on climate bill

Jan 22, 2010
by DTN

With the potential of higher production costs and shift in crop acreage, the National Corn Growers Association (NCGA) shifted its position last Wednesday to oppose the House climate legislation that passed last June.

Leaders from NCGA also signed a letter with other farm organizations supporting a potential resolution in the U.S. Senate to block the Environmental Protection Agency (EPA) from regulating greenhouse gases under the Clean Air Act.

Sen. Lisa Murkowski, R- AK, has proposed to either introduce an amendment to legislation or offer a disapproval resolution, which translates into a congressional rejection of EPA’s finding that greenhouse gases are a danger to public health. While Murkowski’s efforts are gaining support, the proposals still are not likely to pass the Democrat-led Senate.

NCGA is late to the table among other agriculture and commodity groups opposing the House bill, H.R. 2454. The group waited to state its position until NCGA leaders received an analysis of the climate bill by Informa Economics. Before that, NCGA had remained neutral on the House bill.

“Now, based on the recently completed economic analysis, NCGA has no choice but to oppose H.R. 2454,” stated NCGA President Darrin Ihnen, a farmer from South Dakota. “The results of the Informa study indicate that every corn grower in the country will experience increased costs of production resulting from H.R. 2454.”

According to the Informa study, corn production costs would rise minimally through 2025 if the fertilizer industry qualified for free carbon allowances given to trade-vulnerable industries. After 2025, however, those free carbon allowances go away. The Informa study shows corn production costs then begin to increase dramatically, rising nearly $50 an acre by 2035.

In soybeans, Informa showed lesser fertilizer impact with production costs rising about $11 an acre by 2035. Wheat growers would see production costs increase about $21 an acre by 2035, according to the study.

Ihnen said one of the challenges for farmers benefitting from the House bill is the demand for no-till crop production, which Ihnen said is not practical for farmers throughout the country.

“The ability to adopt continuous no-till production is driven by both economic and agronomic factors,” Ihnen said. “Those growers unable to adopt no-till production will experience serious economic hardship resulting from H.R. 2454. This burden will fall disproportionately on growers in the northern Corn Belt.”

Like other studies, Informa’s study found there would be an acreage shift from crops to forestry under the House climate bill as the price of carbon credits increases over time. Informa forecast that by 2035, anywhere from 16 million to 27 million acres of corn, soybean and wheat acres could shift to forestry or perennial crop production for energy. This would result in a 7 percent to 12 percent loss in acreage and as much as a 7 percent decline in production.

“Although our analysis shows dramatically less acreage diversion than noted by the U.S. Department of Agriculture, it still diverts land needed to feed and fuel a hungry world and therefore affects both food security and energy security,” Ihnen stated.

“While NCGA opposes H.R. 2454, we are very appreciative to the leadership provided by House Agriculture Committee Chairman Collin Peterson (D-MN) and the work of other allies in the House for their efforts to make this legislation as friendly to farmers as possible,” Ihnen said. “NCGA still remains neutral on cap and trade as a policy issue, and will continue to work with U.S. Senate staff to craft legislation that benefits agriculture.”

Informa noted in the study that, “As with any analysis forecasting 20-plus years into the future, there is a high degree of uncertainty and a set of assumptions are required in order to reach meaningful conclusions.” — Chris Clayton, DTN