Industry News - PM
Vilsack says ag would make money on climate change bill
By Rita Jane Gabbett on 7/22/2009
USDA analysis shows the economic benefits to agriculture from proposed climate change legislation recently passed by the House will likely outweigh the costs in the short term, and the economic benefits from offsets markets will easily outpace increased input costs over the long term.
"The agriculture sector will benefit directly from allowance revenues allocated to finance incentives for renewable energy and agricultural emissions reductions during the first five years of the HR 2454 cap and trade program. Funds for agricultural emissions reductions are estimated to range from about $75 million to $100 million annually from 2012-2016," Agriculture Secretary Tom Vilsack said in testimony before the Senate Agriculture Committee.
"Our analysis indicates that annual net returns to farmers range from about $1 billion per year in 2015-20 to almost $15-20 billion in 2040-50, (a)not accounting for the costs of implementing offset practices," he said, adding, "We believe these figures are conservative because we aren't able to model the types of technological change that are very likely to help farmers produce more crops and livestock with fewer inputs."
Higher grain prices
Vilsack also said farmers will likely receive higher commodity prices "as a result of enhanced renewable energy markets and retirement of environmentally sensitive lands domestically and abroad."
He used the following example to illustrate possible financial consequences of the bill:
A Northern Plains wheat producer, for example, might see an increase of $.80 per acre in costs of production by 2020 due to higher fuel prices. Based on a soil carbon sequestration rate of 0.4 tons per acre and a carbon price of $16 per ton, a producer could mitigate those expenses by adopting no-till practices and earning $6.40 per acre.
(b) "It's quite possible that this wheat farmer could do even better if technologies and markets progress in such a way that allows for the sale of wheat straw to make cellulosic ethanol," Vilsack concluded.