Senator's Column

December 15, 2009 USDA Analysis Confirms Cap-and-Trade Damages Agriculture

by Mike Johanns The U.S. Department of Agriculture (USDA) has provided a summary of its latest analysis of the cap-and-trade bill, and we now have a clearer picture of just how much damage the bill would do to agriculture. Several of my Senate colleagues and I requested the analysis in July, and it's taken USDA nearly six months to provide it. While the Senate has yet to be provided a copy of the actual analysis, the USDA testimony confirms we are right to be very worried.

USDA's claim that the legislation will result in a net gain of $22 billion in income for farmers notes that the increase is primarily because skyrocketing input costs significantly decrease production. This will likely drive many producers out of business, leaving whomever is left standing to benefit from higher prices as the overall food supply goes down significantly. The details of USDA's own testimony paint a far more troubling picture.

USDA testified that the costs of fuel, oil, and electricity will increase by about 22 percent. And here's a staggering estimate: the bill drives 59 million acres of cropland and pasture out of production by 2050. With millions of acres coming out of production and energy prices going through the roof, it's not surprising that USDA also predicts a significant decline in farm production. USDA's testimony shows that corn production will decrease by 22 percent, soybean production will drop by 29 percent, beef production will decline by 10 percent, and pork production will sink by 23 percent. This decline in production will threaten our nation's food supply, and is estimated to drive up food prices by as much as five percent.

Yet the Administration supports this bill. How can USDA support a policy that so drastically and negatively impacts agriculture? Hit hardest will be the small and mid-sized family farms like many in Nebraska, many of whom cannot incur the cost increases imposed by this bill. Moreover, the net effect of the House bill is to take 59 million acres out of production as the world's population is projected to increase by 2 billion people. Two billion more mouths to feed, 59 million less American acres from which to feed them, while China, South America, and our other global competitors gobble up the demand.

While our farmers will be sitting on the sidelines, planting productive acres into trees, our global competitors unencumbered by the cap-and-trade dagger will be planting more crops. This is not a vision for American agriculture, it's a death sentence. The Administration-backed cap-and-trade bill passed by the House represents a paradigm shift in the wrong direction for American agriculture. It is a dangerous public policy proposal that would dramatically impact farmers and ranchers, driving many out of business. I find that unacceptable; the Administration needs to go back to the drawing board.