Congressman's Column by Adrian Smith

House Ag Committee Takes a Look at Cap-and-Trade In April, I asked the House Agriculture Committee Chairman Collin Peterson to hold a hearing on a national energy tax and its potential harmful impact on agriculture. I am grateful on June 11, he honored my request for the Committee to take a hard look at climate legislation making its way through Congress, commonly referred to as "cap-and-trade." This bill supposedly combats global warming by setting strict limits on carbon dioxide emissions in the United States and requiring businesses to purchase "allowances" for their emissions, and in doing so it imposes enormous taxes and restrictions on energy use - placing an especially heavy burden on rural America and our nation's agriculture producers. To put it simply, this bill is a national energy tax which will disproportionately target rural America and middle class families. Estimates vary, but experts predict under this national energy tax, farm income will drop dramatically because agriculture is an energy-intensive industry. On average, 65 percent of farmers' variable input costs are fuel, electricity, fertilizer, and chemicals. An increase in operating costs could devastate farmers and ranchers. Farm income (after paying all expenses) is expected to drop $8 billion in 2012, $25 billion in 2024, and over $50 billion in 2035. These are decreases of 28 percent, 60 percent, and 94 percent, respectively. Construction costs of farm buildings also will increase by as much as 10 percent by 2034. Additionally, as higher energy prices hit other areas of our economy, farmers and ranchers will pay more for seed, equipment, steel, and other supplies. As the cost of production increases, so will the price of food on the shelves in urban areas. We are not alone. As I write, nearly 50 agriculture groups including the Nebraska Farm Bureau Federation, American Farm Bureau Federation, American Farmers and Ranchers, National Corn Growers Association, and the Fertilizer Institute have expressed their opposition to this bill. These groups realize agriculture is a prime target for a national energy tax because higher operating costs could cripple the industry. Whether it's the fuel in the tractor, the fertilizer for the crops or the delivery of food to the grocery store, agriculture uses a great deal of energy throughout production. Although agriculture will be significantly impacted by this legislation, this bill largely ignores our farmers and ranchers. The measure is more than 1,100 pages long and mentions "agriculture" only seven times. Even then, it does not specifically recognize the role agriculture can play in providing carbon offsets, and it does not provide a meaningful way for farmers to participate in carbon credit programs. Some groups have supported this legislation under the assumption agriculture producers would receive credit for cropland management practices, such as conservation or no-till practices which preserve soil carbon by maintaining a ground cover after planting and by reducing soil disturbance compared with traditional cultivation. However, according to recently released information, the Environmental Protection Agency's revised 2009 projections are significantly lower than previous estimates, which were based on agriculture practices of the late 1990s, effectively zeroing out any benefit from soil conservation. I am saddened drafters of this bill have misled those who will be negatively impacted by its adoption. This legislation is one of the most significant this Congress will consider. The bill will span the working lifetime of every young farmer and rancher. It will have a monumental impact on our economy. We must take time to fully understand this impact because it will be far-reaching and felt for generations to come. It is disappointing to me the House Agriculture Committee was not able to make significant changes to this bill. Instead of putting forth a national energy tax which will lead to higher energy prices and tougher times for rural America, we should instead be looking at legislation like the American Energy Act - an "all of the above" plan which will provide energy independence, more American jobs, and a cleaner environment. The bill I support increases our domestic supply of energy by lifting exploration restrictions on ANWR, the Outer Continental Shelf and oil shale in the Mountain West. It renews America's commitment to the environment by encouraging development of renewable energy sources - such as wind, solar, hydropower, nuclear and biomass. The American people deserve better than a national energy tax which will impact rural America the hardest. They deserve an energy policy which helps Americans by protecting our environment, providing affordable energy, and creating jobs.