Flaws fill USDA’s analysis of cap-and-trade benefits


Omaha World-Herald
By Mike Johanns
August 26, 2009

The writer, a Republican, is Nebraska’s junior U.S. senator. He is a former U.S. secretary of agriculture.

Agriculture Secretary Tom Vilsack’s Aug. 23 commentary about cap-and-trade offered incomplete and largely speculative analysis to justify the costs to American farmers and ranchers.

His rhetoric falls in line with the Obama administration’s pattern of nice-sounding ideas unsupported by facts. Unfortunately, the costs of cap-and-trade are real, while so far the benefits for farmers and ranchers are theoretical.

Nebraska producers are realists. And realists sift through rhetoric to focus on facts.

I commend the secretary for acknowledging that energy costs would go up and rural America is more likely to feel the pinch. But nowhere does his essay acknowledge how many acres would come out of production under cap-and-trade, nor would the secretary answer that question when asked by the Senate Agriculture Committee in a hearing last month.

Isn’t that a basic question?

The fact is that the Farm Bureau estimates that 40 million acres would come out of production and another analysis predicts a loss of 78 million acres to trees. That’s nearly 20 percent of our nation’s total cropland.

The secretary’s argument appears to hedge on one of two options: America’s farmers have the land, time and resources to increase their acreage by 20 percent, or they can convert 20 percent of current cropland to trees without a significant loss in output and income. Neither option makes sense.

The secretary suggests farmers and ranchers would “embrace” the “new opportunities” presented by cap-and-trade. I asked a full week before our hearing to be provided with an analysis for all of American agriculture, including state-by-state projections.

What analysis did we get? There was no estimate of the impact of increased costs on livestock production. This industry represents 57 percent of ag income in Nebraska and more than 50 percent of ag sales nationwide — apparently hog, cattle and poultry are not “agriculture” by the administration’s definition.

There was no state-by-state analysis of the impact of cost increases on agriculture production. Nebraska producers pay costs based on local prices, not national averages. And there was nothing regarding the fruit and vegetable industry, representing 15 percent of ag sales nationwide.

So let’s add that up — the USDA’s analysis ignores roughly two-thirds of American agriculture. Yet it unequivocally states that cap-and-trade is good for American agriculture?

Furthermore, the USDA has assumed that free allowances would be sufficient to keep fertilizer prices from rising but provides no explanation for how many allowances will be needed. In a recent letter, the Fertilizer Institute called this portion of the analysis “incorrect and misleading.” The USDA has failed to model the total impact of the bill, focusing on only a few hundred of the bill’s 1,427 pages.

Lastly, the secretary fails to mention perhaps the most critical point: The bill would fail to achieve its purported environmental goal of stopping climate change because agriculture producers and manufacturing in China, India and Brazil would in no way be affected by the bill. Without them, the impact on temperature is negligible, a fact acknowledged by the Environmental Protection Agency.

It’s also worth noting that the secretary wholeheartedly supported the bill long before he “instructed” USDA staff to review its impact. One wonders if the incomplete analysis accounts for the secretary’s support, or if the analysis was instead driven by the support.

So what are we left with? A bill that would place additional tax burdens on American businesses during a severe recession for no discernible environmental gain. A bill that would ask Nebraskans to trust the federal government to provide enough free allowances so the increased energy costs would not put them out of business.

Like the secretary, I am supremely confident that American agriculture can adapt. But that’s no justification to support a bad bill.

While Americans will face down any challenge facing them, their lawmakers should not be in the business of creating additional ones.


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