December 3, 2009

Climate change bill would boost US farm revenue

A new government study set to be released next week will show that most US farmers would profit substantially if a climate-change bill approved by the US House of Representatives were to be made law, US Department of Agriculture Secretary Tom Vilsack said Wednesday (December 2).

Those new revenues, generated from an "offset market" that would allow farmers to be paid for reducing carbon emissions, Vilsack said, would more than make up for the increased energy costs associated with the bill's mandates for greenhouse gas emission caps on industry.

"Our analysis finds that even under conservative assumptions, climate-change legislation will be a net gain for agriculture," Vilsack said.

And those net gains will only increase over time, he said.

"In the short term, returns to agriculture from the offset market are likely to outpace costs associated with higher prices," Vilsack said. "Over the medium and long term, our analysis suggests the benefits from offsets will overwhelm any increase in costs."

The US House of Representatives approved the bill, the American Clean Energy Security Act, in June, but Senate leaders announced on Nov. 17 that they won't likely vote on their version until sometime next year.

There are farmers, including some fruit and vegetable producers that would likely be hit harder by energy and input cost increases associated with the bill, Vilsack said, but the USDA could help mitigate the impact and proposals have been made by lawmakers to help producers.

In addition, food prices would rise if the bill is made into law, Vilsack said, but he promised the increases would be small.

"Our analysis suggests that such impacts will be extraordinarily small with increases of somewhere between 0.1 percent and 0.2 percent in the short run and somewhere between 1 percent and 2 percent by the year 2050."