Johanns sounds warning about impact of cap-and-trade on American agriculture

WASHINGTON -- Sen. Mike Johanns spoke on the Senate floor today regarding the impact cap-and-trade legislation would have on American agriculture. In advance of a hearing to be held on Wednesday in the Senate Agriculture Committee, Johanns outlined how agriculture will be hammered with increased production costs as a result of cap-and-trade. He reiterated that state- and commodity-specific analyses of cap-and-trade are essential for a successful evaluation of the true costs and Administration-promised benefits.

Highlights of the speech as prepared for delivery:

"Different studies come up with varying numbers, but they all paint the same picture: agriculture loses. None of this should surprise anyone, because the bill is specifically designed to increase the cost of energy. In fact, according to the Congressional Budget Office, 'Reducing emissions to the level required...would be accomplished mainly by stemming demand for carbon-based energy by increasing its price.' We also know that farmers in America's Heartland get hit the worst by these energy cost increases. And we know that USDA agrees. Last week, USDA officials indicated in testimony to the Senate Environment and Public Works Committee that as a result of cap-and-trade legislation, 'the agriculture sector will face higher energy and input costs.'"

"As I mentioned, USDA knows what cap-and-trade will do to energy prices. Here's the kicker: At the same time, the Department also has indicated that 'USDA believes the opportunities from climate legislation will likely outweigh the costs.' Let me repeat that: USDA says energy prices will increase, but they think the opportunities from climate legislation will likely outweigh the costs. This kind of claim must be based on hard data. Surely, such a sweeping conclusion would not have been drawn unless the impact had been studied. If USDA has conducted analyses of increases in farm input costs and weighed them against measured opportunities, I applaud them. But, if that is the case, it is mystifying that the Department has not shared this analysis, despite having testified before the Senate twice in the two weeks preceding this one."

"That's why, last week, I sent a letter to current Secretary Tom Vilsack, who will testify at the Ag Committee's hearing this week. The letter requested USDA provide the following: a state-by-state analysis of the cost of cap-and-trade on agricultural industries; a crop-specific analysis; an analysis of how the legislation will affect livestock producers; and finally, USDA's assessment of how many acres will be taken out of production as a result of this bill, and what impact that will have on the availability and cost of food, fiber, feed, biofuels, and other agri-products."

Remarks as prepared for delivery by Senator Mike Johanns Regarding Health Care Legislation:

"Mr. President, I rise today to discuss a Senate Agriculture Committee hearing scheduled this week. The hearing is titled, "The Role of Agriculture and Forestry in Global Warming Legislation," and I look forward to participating in it. This is the Committee's first effort this year to tackle the ongoing climate change debate, and it will be an important hearing. Much discussion in both houses of Congress has centered on potential new legislation and regulations relating to climate change. Any kind of new climate-related law would have sweeping consequences that touch every corner of American life.

"Thus, I have made clear that any climate legislation requires a robust, open, and extensive debate on the Senate floor. Numerous studies have been released about how cap-and-trade would affect American life, including agriculture. During last year's debate over cap-and-trade, the Fertilizer Institute released a study stating that the legislation would result in a $40 to $80 increase in the cost to produce an acre of corn. That means higher input costs for livestock producers as well. That same study indicated the cost of producing soybeans would increase between $10 to 20 per acre. Wheat would jump $16 to $32 per acre.

"According to one recent analysis, the Waxman-Markey cap-and-trade bill would also have a severe impact on agriculture. If the bill is enacted, farm income is estimated to decrease as much as $8 billion in the year 2012. By 2024, farmers stand to lose $25 billion. An eye-popping $50 billion would be lost by 2035.

"Gasoline and diesel costs are expected to increase by 58 percent. Electric rates would soar by as much as 90 percent. Agriculture is an energy-intensive industry, and those kinds of increased costs would certainly put people out of business.

"But these are not isolated studies. The American Farm Bureau Federation -- the largest agriculture organization in the country -- also studied the costs. Farm Bureau reported that if Waxman-Markey were to become law, input costs for agriculture would rise by $5 billion compared to a continuation of current law. Other studies have indicated in various ways that the likely impact of cap-and-trade includes increased electricity and heating costs, construction costs, fertilizer prices, and also higher gas and diesel prices.

"Different studies come up with varying numbers, but they all paint the same picture: agriculture loses. None of this should surprise anyone, because the bill is specifically designed to increase the cost of energy. In fact, according to the Congressional Budget Office, 'Reducing emissions to the level required...would be accomplished mainly by stemming demand for carbon-based energy by increasing its price.' We also know that farmers in America's Heartland get hit the worst by these energy cost increases. And we know that USDA agrees. Last week, USDA officials indicated in testimony to the Senate Environment and Public Works Committee that as a result of cap-and-trade legislation, 'the agriculture sector will face higher energy and input costs.'

"Now Mr. President, at the very least, all of this tells us that this is a complicated issue--perhaps as complex as any we will deal with in Congress--not to mention costly. Given the gloomy predictions about cap-and-trade proposals, it seems clear to me that we need to take an approach that is extensive, methodical, and well thought-out. We need specific and clear analysis to make sure we know -- and more importantly, the American people know -- just exactly what the passage of this bill would mean.

"As I mentioned, USDA knows what cap-and-trade will do to energy prices. Here's the kicker: At the same time, the Department also has indicated that 'USDA believes the opportunities from climate legislation will likely outweigh the costs.' Let me repeat that: USDA says energy prices will increase, but they think the opportunities from climate legislation will likely outweigh the costs.

"This kind of claim must be based on hard data. Surely, such a sweeping conclusion would not have been drawn unless the impact had been studied. If USDA has conducted analyses of increases in farm input costs and weighed them against measured opportunities, I applaud them. But, if that is the case, it is mystifying that the Department has not shared this analysis, despite having testified before the Senate twice in the two weeks preceding this one.

"Having been Secretary of Agriculture, I know that USDA has an outstanding team of economists with expertise in such analysis. That's why, last week, I sent a letter to current Secretary Tom Vilsack, who will testify at the Ag Committee's hearing this week. The letter requested USDA provide the following: a state-by-state analysis of the cost of cap-and-trade on agricultural industries; a crop-specific analysis; an analysis of how the legislation will affect livestock producers; and finally, USDA's assessment of how many acres will be taken out of production as a result of this bill, and what impact that will have on the availability and cost of food, fiber, feed, biofuels, and other agri-products.

"Without detailed analyses, USDA's assertions about costs and benefits simply ring hollow. Why wouldn't USDA provide this information for us to evaluate? Isn't this why the Department exists? Agriculture is going to be directly impacted by this legislation, yet we have no analysis from the peoples' Department. If the people who feed the world are going to get hammered by this, we should know it before we vote on it, not after.

"So I hope the third time is a charm for USDA, and they bring more than rhetoric to Wednesday's hearing. Cap-and-trade will not affect states, crops, or regions equally. It will have a different impact on a corn farmer in Nebraska than on a chicken farmer in Arkansas. Similarly, it will impact the dairy farmer in New York differently than the orange grower in California. We need state-by-state and commodity-by-commodity analysis. A one-size-fits-all analysis simply will not give us a true picture of this legislation's impact. A national average won't paint a true picture.

"When you are camping, you can have one foot in the cooler and one foot in the campfire, and on average you're just right. The same goes for loose assessments that are riddled with averages. We have a responsibility to seek a full understanding of this legislation's effect on our nation's farmers and related agricultural industries.

"The information I requested is critical to helping the Senate and America's producers develop a clearer picture of cost increases for farmers and ranchers, which parts of the country will be hit hardest, and which industries within agriculture will incur the greatest losses as a result of this bill. I have asked for a copy of this analysis prior to the hearing. I believe the entire committee deserves an opportunity to review it. I am puzzled by the passage of nearly a full week since my request and no analysis has been provided. I trust the Administration has nothing to hide.

"I will remain engaged in this debate, and I look forward to Wednesday's hearing."