Big Ag’s Free Ride Should Be Eliminated from Cap-and-Trade Bill

Farm belt congressmen who voted for the Waxman-Markey cap-and-trade bill committed – to borrow from the New York Times’ Paul Krugman – a form of treason.  It was treason against the agricultural communities they represent.

Sure, they got a few pay-offs for supporting the bill, including a provision designed to preserve the economically and environmentally-indefensible corn ethanol program.  But they also planted the seeds of the U.S. agricultural sector’s destruction.

Led by Congressman Collin Peterson (D-MN), a group of farm state congressmen persuaded the bill’s sponsors to include a provision blocking the Environmental Protection Agency from measuring the true carbon foot print of ethanol.

The EPA wanted to count carbon emissions from changes in land use – such as clearing rainforests to produce food that American farmers used to grow before becoming so intoxicated by ethanol – as a cost of the fuel’s production.

Princeton’s Tim Searchinger estimates that bio-fuels contribute nearly double the carbon as gasoline in their first 30-years of production.  That’s because it takes years to offset the enormous amounts of carbon released into the atmosphere when grasslands and forests are converted for ethanol-related agriculture.

Had the EPA been allowed to implement its plan, it might have spelled doom for corn ethanol.  By law, ethanol produced in plants built after 2007 must produce 20% less carbon than gasoline, not double the carbon.

Ethanol producers can’t show they meet this target if they must count their entire carbon contribution, so thanks to Peterson, they won’t have to.  I’d like the same deal in reporting my income to the IRS, please.

Increased carbon emissions are only one of the costs of the ethanol program.  The CBO estimates that between April 2007 and April 2008, production of the bio-fuel accounted for 10%-15% of food inflation during the period, costing consumers between $5.5 and $8.8 billion.  Other estimates put the costs much higher.

Despite higher costs – or perhaps because of them – the farm lobby applauded Peterson’s efforts.

The American Farm Bureau Federation, which continues to oppose the Waxman bill, heaped praise on Peterson for his “stellar efforts” to “win vital changes for America’s farm and ranch families.”

Since the Farm Bureau represents livestock producers as well as farmers, the group might have found something more appropriate to heap on the congressman.

After all, if not for Peterson, the Waxman-Markey cap-and-trade bill likely would have died in the House of Representatives.

Peterson’s “stellar efforts” gave farm state congressmen the political cover they needed to vote for the bill against their constituents’ interests.  Yes, they voted for the bill, but in a Kerryesque fashion, they can argue they were against it before they were for it.

The Waxman-Markey climate change bill – or perhaps more aptly, economic climate change bill – would be a disaster for American farmers.

According to the Heritage Foundation, higher energy costs resulting from the regulations would push farm incomes down by 28% by 2012, 60% by 2024, and 94% by 2050.  Many farms and ranches, already operating on razor thin margins, would buy the proverbial farm.

The damage wouldn’t be limited to farmers, though.  Heritage estimates that this energy rationing plan would destroy an average of 1.15 million jobs per year and cost a family of four an average $8.16 per day between 2012 and 2035.

Hardest hit would be the poor and this may in part explain why African-Americans are particularly resistant to higher costs associated with the plan.  Fifty-two percent of blacks are unwilling to pay anything more for either gasoline or electricity, according to a recent poll by The National Center for Public Policy Research.

Proponents had promised the plan’s costs would be much more modest – less than the price of a postage stamp per day.  This number is based on a CBO study that – remarkably – doesn’t count lost income through unemployment or reduced hours as a cost.  I’d been wondering where Enron’s creative accountants landed and now I have a pretty good idea.

The farm lobby may think it won a free ride in the first round of the cap-and-trade debate.  Instead, it advanced regulations that can devastate American agriculture one step closer to reality.

When cap-and-trade causes fuel prices to soar, no ride will be free.

David A. Ridenour is vice president of  the Washington, D.C.-based National Center for Public Policy Research.

The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.