Cap-and-trade hurts farmers

Agriculture is simply an energy intensive industry. It relies on energy for tractor fuel, fertilizer, livestock feed, and more. Any increase in petroleum and natural gas would have a direct effect on the cost of production. A new analysis of the cap-and-trade bill narrowly passed by the House in June (H.R. 2454), by Sens. Kay Bailey Hutchison (R-Texas) and Kit Bond (R-Mo.), estimates that it amounts to a $3.6 trillion gas tax increase, which translates into higher fuel costs for farmers and ranchers of $550 million in 2020 and $1.65 billion in 2050.

{mosads}According to a Heritage Foundation economic analysis of H.R. 2454, farm income would decrease by 94 percent in the next 25 years, which begs the question: Will America’s agricultural heritage survive cap-and-trade? But, even if you can get past this threshold issue for rural America, any cost increase inflicted upon farmers will surely trickle down to consumers, ultimately increasing the cost of food for all families.

 And, farmers have families, too. As they’re watching their income plummet, their expenses will be skyrocketing along with other grocery-buying Americans. Plus, rural families tend to have higher fuel costs simply because they have to drive farther for routine errands. According to the Federal Highway Administration, rural households drive 25 percent more miles than urban households. And, they spend more on fuel as a percentage of their income than urban residents. Also, it’s more expensive to provide electricity where the population is more spread out. Rural Electric Cooperatives serve 40 million Americans averaging around seven consumers per mile, whereas other utilities average 35 customers per mile. So, rural Americans will be hit coming and going.

 Environmental Protection Agency (EPA) Administrator Lisa Jackson recently admitted that unless other nations, like China and India, follow our lead, cap-and-trade would not even impact global temperatures. And, most economists and foreign policy experts are skeptical that these other nations would follow our lead. With 25 to 58 percent of farm cash receipts coming from agriculture exports, U.S. farmers would be at a severe disadvantage. And, this at a time when our trade deficit has reached $840 billion and economists are calling the outlook for American trade “cloudy.” Again, rural Americans get hit with a double-whammy.

 Furthermore, the House bill provides allowances to offset energy prices, with definite states and regions as clear winners while others are obvious losers. California and New England states like Massachusetts — both represented by the co-authors of the House bill — would receive nearly or, in some cases, more than enough of an allowance to offset the additional costs inflicted by this bill. On the other hand, Midwestern states, like Minnesota, would receive a maximum of 75 percent of the allowances required to fill the gap. Once again, rural America pays the price.

 Congressional Budget Office Director Douglas Elmendorf recently testified before a Senate committee that cap-and-trade would slow our already sluggish economy.

And, all evidence seems to indicate that the farming economy would come to a virtual standstill.  With so much at risk and so little expected to be gained, why are Democrats pushing such harmful legislation?
 
Bachmann is a member of the House Financial Services Committee and a member of the Subcommittee on Domestic and International Monetary Policy, Trade and Technology.