The way both the U.S. Environmental Protection Agency and USDA are portraying the consequences of climate change legislation is flawed to the point of preventing the American public from getting the full story on the devastating impact that could be caused on the U.S. economy and American agriculture, according to TFI, which last week responded to presentations made by USDA and EPA to a Senate committee. The House barely passed the bill, but it awaits Senate approval.
USDA projects that the American Clean Energy and Security Act (Cap & Trade) would have a minimum negative impact on farm costs in the short term and income and benefits over the long term. TFI said it was “incredibly disappointed” to learn of the unrealistic energy production, consumption, and price assumptions that are being utilized in the EPA and the USDA economic analyses of the recently-passed House legislation.
“Energy prices are determined by the intersection of supply and demand, and the EPA and USDA economic analyses underestimate new energy demand while overestimating new U.S. energy supply that could come on-line,” said TFI President Ford West. “These numbers are at odds even with other government sources, particularly the U.S. Energy Information Administration, the nation’s premier source of unbiased energy data.”
Historically, TFI points out, the cost of natural gas has exacted a heavy toll on America’s nitrogen fertilizer producers and the farmer customers they supply. Since 2000, the U.S. nitrogen industry has closed 26 nitrogen fertilizer production facilities, due primarily to the high cost of natural gas. Currently, only 29 nitrogen plants are still operating in the U.S., and today 55 percent of the U.S. farmer’s nitrogen fertilizer is imported. Of this imported fertilizer, 82.7 percent comes from countries without climate-change policies in place to regulate carbon, and a majority of these countries are those from whom we are striving for energy independence.
“We urge USDA to evaluate other scenarios utilizing more realistic assumptions than those contained in the EPA analysis,” said West. “Only when more reliable data is available, can we ascertain the impact of cap and trade legislation on the U.S. farm economy.”
TFI also warned that the global food supply remains precariously low and the food crisis of 2008 could return. “We urge the Senate to ensure that any future climate change policy does not harm America’s remaining nitrogen fertilizer production,” said West. “Specifically, we ask that the Senate ensure that we do not outsource our nitrogen fertilizer industry and in doing so, risk the nation’s food security and in turn U.S. national security.”
Prepared by USDA Chief Economist Joseph Glauber, the analysis finds that between 2012 and 2018, the bill’s provisions would increase farm costs by three-tenths of 1 percent while farm income would decline by nine-tenths of 1 percent. Glauber states that farm production costs would be higher than the medium-term years of 2027 to 2033 and long-term years of 2042 to 2048, but that revenue from agricultural offsets will rise faster than costs from cap-and-trade legislation. The study assumes no technological change and acknowledges that the effects on sectors within agriculture and among regions will vary. The study covered the crop and livestock sectors, but not fruits and vegetables.
Agriculture Secretary Tom Vilsack and EPA Administrator Lisa Jackson testified July 22 before the Senate Agriculture Committee. Vilsack stated that the analysis “demonstrates that the economic opportunities for farmers and ranchers can potentially outpace – perhaps significantly outpace – the costs from climate legislation.” He added that he considered the figures conservative because the study does not include potential income from biomass production for bioenergy or technological change.