Texas A&M Study Reveals Negative Impact of Waxman-Markey Climate Change Bill on Farms

Everything I have read about the cap and trade bill would be bad for business and especially Agriculture (big and small, in particular small farms). While there probably should be changes in some environmental regs, this bill is not the answer, especially at a time when our economy is still on life support.
A bill like this would handcuff business with new environmental regulations that would limit production and increase costs for all involved, especially consumers. With this being said, do you think that the economy could withstand more drawbacks? For instance, the stock market and the overall health of the economy is now (at this point in time) solely based on how many jobs are being created or kept open within the country. Today, the unemployment rate in the U.S. hit 9.7%, an increase of 9.4% from last month, subsequently the stock market futures went down to negative territory this morning after the report. The Waxman-Markey bill would continue to hamper business' ability to be profitable at a time when we can least afford it.
And as long as companies are not making profits, they won't be hiring, the economy will continue to trudge along in a long slow recovery. Oh, and those 2nd quarter profits from a few months ago, were not due to greater productivity, they were due to cutbacks in supplies, productivity, and firings, that's all. And companies won't hire as long banks don't lend, but that's a whole other topic...
Anyhow, back to agriculture. According to the study conducted by TAMU, the only area of the country that would reap any benefits would be in the Midwest corn belt. And they would only benefit from crops being taken out of production, thereby raising the costs of crops. This is where the profit would come from, not carbon offsetting as has been preached by the Secretary of Agriculture. Below is the press release from Senator Chambliss' office over the study, and below is a link to the actual study.

New Study Reveals Negative Impact of Waxman-Markey Climate Change Bill on Farms PDF Print E-mail
September 03, 2009
NEW STUDY REVEALS NEGATIVE IMPACT OF WAXMAN-MARKEY CLIMATE CHANGE BILL ON FARMS (WASHINGTON, D.C.) U.S. Senator Saxby Chambliss (R-Ga.), Ranking Republican Member of the Senate Agriculture Committee, today reiterated his call for additional hearings on comprehensive global warming legislation upon release of a new study conducted by The Agriculture & Food Policy Center (AFPC) at Texas A&M University. The study, which was performed at the request of Sen. Chambliss, examined 98 representative farms in the AFPC database to understand the farm gate implications of the House-passed American Clean Energy and Security Act and discovered that 71 of the operations would be worse off under the bill.

“Clearly the data outlined in the Texas A&M University study is troubling,” said Sen. Chambliss. “I have said before this bill, particularly the cap and trade program, will undoubtedly raise production costs for farmers and ranchers. Perhaps most troubling is that the Waxman-Markey bill will result in more than 7 million acres shifting out of production in the first 5 years, with nearly 50 million acres by 2050. It does not make sense to rush action on a policy of this scope when we are now just beginning to understand the tremendous costs associated with the bill.”

According to the AFPC study, nearly all of the 27 farming operations that realize benefits under the Waxman-Markey bill are located in the Midwest Corn Belt. The study indicated the benefits are predominantly the result of increase revenue from higher prices, a result of fewer acres planted to these crops, not from payments under an offset program. In other words, geographic disparities would exist as a result of the Waxman-Markey bill. Virtually all cotton and dairy operations would be worse off and no rice farms or cattle ranches would experience any benefit under the bill. This is in direct contrast to what U.S. Department of Agriculture Secretary Vilsack said while testifying before the Senate Agriculture Committee hearing in July, at which he stated that all agriculture would benefit from this plan.

“The study makes the point that despite what Secretary Vilsack says, the Waxman-Markey bill does not benefit U.S. agriculture, and in fact, will make it harder for farmers and ranchers across the country to make a living under cap and trade,” said Sen. Chambliss. “Payments from a carbon offset program provide some benefit to some producers, but are not a significant factor in the profitability of farms in the analysis. As pointed out by AFPC researchers, higher crop prices provide the bulk of new revenue for crop farms due to ‘the price increasing effect of shifting land out of commodity production to forestry.’ We need to pursue legislation that reflects the realities of producing food, fiber, feed, and fuel in the United States, and not favor one geographic region.” A link to the study can be found here:

http://www.afpc.tamu.edu/pubs/2/526/rr%2009-2%20paper%20-%20for%20web.pdf


In conclusion this bill will do more harm than good. I will try and expound on this subject more in future posts, but for now this is a brief explanation of what I think about cap and trade.