USDA sees House bill yielding long-term benefits for agriculture

The Agriculture Department released its analysis of the House-passed climate bill today showing the cap-and-trade legislation having modest short-term costs for agriculture and long-term net benefits for the sector.

USDA's analysis shows that short-term costs to agriculture are low, in part because of provisions in H.R. 2454 that reduce the bill's impacts on fertilizer costs. Net farm income would decrease by less than 1 percent in the short term, the study found. Over the medium term, the analysis shows, net farm income could decrease by between 3.5 percent and 7.2 percent.

However, benefits from an agricultural offsets market will rise over time and will likely overtake costs in the medium and long term, USDA says. The analysis defines the short term as 2012-2018, medium as 2027-2033, and long as 2042-2048. USDA also says its analysis overestimates the impact of climate legislation on costs.

Senate Agriculture Chairman Tom Harkin (D-Iowa) pointed to the analysis today in response to Republicans' criticisms that the House legislation would impose tremendous costs upon the agricultural sector.

"With good reason, we hear a lot of concern expressed about projected costs to consumers, farmers, ranchers and other businesses from proposed energy and global warming legislation," Harkin said. "I share those concerns, and that is why I believe we must do our best to analyze costs to find the most economical, common-sense ways to achieve critically important results of energy independence and reduction of greenhouse gas emissions."


Sen. Saxby Chambliss (R-Ga.), ranking member of the committee, blasted the House legislation, saying it would undoubtedly raise production costs for farmers and ranchers.

"Like most of my Senate colleagues, I want to support a bill that provides greater energy security for Americans and address climate change," Chambliss said. "Unfortunately, the House bill is not the answer."

He added, "According to the Farm Bureau, by the time this bill is fully implemented farm income will drop $5 billion according to the baseline."

Last week, Chambliss urged agency chiefs who will be testifying before the panel later today to release new economic analyses of the House cap-and-trade bill.

Click here to read USDA's analysis.

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