TFI takes issue with study on climate change

Washington-A study analyzing the effects of climate change legislation on the agricultural economies of a few western states has concluded that while energy and fertilizer costs would rise, improved revenues would result from higher crop prices, new bio-fuels markets, carbon-sequestration, and offsets. The study, Impacts of Climate Change Legislation on Agriculture in the Rocky Mountain States: Arizona, Colorado and New Mexico, was sponsored by American Farmland Trust (AFT), and was conducted by researchers at New Mexico State University, Colorado State University, and the University of Arizona. “It’s clear that there will be a relative rise in energy and fertilizer costs,” said Dr. Chris Goemans, a co-author from Colorado State University. “But we were surprised to learn that provisions in the legislation would likely limit fertilizer cost increases to between 0.3 percent and 2 percent by 2020, and that estimates from a variety of studies show energy cost increases of between 4 percent and 13 percent in 2020. Although modest increases, it’s always a factor for farmers who operate on thin profit margins. However, in many cases, the higher commodity prices that are estimated by many studies will contribute to farm revenues and could largely offset these projected cost increases.” The study’s preliminary findings suggest the possibility for increases in state-level, net farm income of 1.2 percent in Arizona, 2.9 percent in Colorado and 4.1 percent in New Mexico in 2020, based on expected patterns of cost and price changes. Kathy Mathers of The Fertilizer Institute cautioned that the study most likely looks at last year’s climate change legislation, and therefore “shouldn’t be used to ‘predictively’ analyze any bill that emerges in this session of Congress.” Mathers also told Green Markets that “TFI strongly disputes that anyone can accurately identify a single factor (climate legislation) and quantify its impact on fertilizer prices, which … are determined by multiple and complex global factors. There is no doubt that the cap-and-trade legislation introduced in the last session of Congress would encourage additional natural gas demand, which could lead to higher natural gas prices. We only need to look to the significant loss of nitrogen production capacity during the last decade to see how such a dynamic could impact the domestic fertilizer supply.”