Farmers’ cap/trade costs – EWG
Oct 30, 2009 10:30 AM, By David Bennett, Farm Press Editorial Staff
“So, we focused most our attention on the July 29 USDA study from the USDA’s Office of the Chief Economist and the Economic Research Service. That study focused solely on what the impact of increased energy costs would have on farmers’ cost of production.
“The results of that analysis showed there would be increases in cost, but they’d be quite small — 45 cents per acre for soybeans, 66 cents per acre for wheat, and $1.19 for corn. Some of the cost increases were higher for other crops. Rice was the highest at slightly over $3 per acre.
“Then we looked at other studies that came out about the same time to see if the USDA cost estimates were confirmed or if others were coming up with similar estimates.
“One of those was from the Center for Agriculture and Rural Development (CARD) at Iowa State University. That analysis came up with about $4.52 per acre in cost increases for Iowa corn and soybean producers. That’s actually in line with the USDA study.”
On an added complication…
“I’m sorry for this added complication — but there is a provision in the House climate bill that protects what are called ‘energy intensive and trade exposed industries.’ One of those is the fertilizer industry. So, there are provisions in the House bill that shelter the fertilizer industry, among others, from the impact of the climate bill.
“In the USDA study if they didn’t account for the protective provisions for the fertilizer industry, they came up with costs comparable to the CARD estimate.
“So even though the $4.52 per acre is higher than what the USDA reported, it’s actually seen to confirm the agency’s analysis.
“We also looked at the FAPRI (Food and Agricultural Policy Research Institute) study from Missouri (for more, see Cap and trade costs — FAPRI). That study looked at representative farms in the state and came up with a 1.6 to 4 percent increase in costs. Again, they didn’t account for the protective provisions. They also used higher estimates than USDA did regarding energy prices.
“Again, it appears that the USDA (conclusions were) in the ballpark.
“A more recent study from the Nicholas Institute also confirmed the USDA predictions of cost increases.
