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Posted: August 25, 2009

Climate legislation and Colorado farmers

Secretary of Agriculture’s visit raises questions on cap-and-trade

Allen Best

Colorado’s farmers and ranchers are puzzling over whether the new push to limit emissions of greenhouse gases will benefit them. Conservative by nature, and invariably Republican in affiliation, they distrust government intervention in the market economy.

But Democrats claim that farmers can benefit handsomely from new legislation now being considered by Congress. The legislation, called the Waxman-Markey bill, proposes a cap-and-trade mechanism that would effectively impose a price, if still small, on emissions of carbon dioxide, methane, and other greenhouse gases.

In a recent Colorado appearance, Secretary of Agriculture Tom Vilsack claimed that climate change legislation provides “one of the best opportunities we have seen in a very long time for rural communities.”

Adopting no-till farming practices, using different cover crops, and capturing methane form feedlots will allow rural areas to gain $10 billion, $15 billion or even $20 billion in additional income, he said.

Vilsack admitted that farmers would pay more for fertilizer, fuel, and transportation of commodities to market under the legislation the U.S. Senate plans to tackle this fall. However, those costs will be more than balanced by additional income to be made by sale of what are called carbon offsets

“You have multiple opportunities for rural areas to profit, areas that have not existed up to this point,” Vilsack said.

A Department of Agriculture study that found a narrow gain for farmers under the Waxman-markey bill, but it made two assumptions that Vilsack believes are incorrect: that farmers will not adopt new technology nor will they adapt to rising energy costs by becoming more efficient. In the face of increased fuel costs in the 1970s, farmers became more efficient, and they can do it again, he said.

Major food firms are skeptical. The Wall Street Journal on Aug. 13 reported that a group that includes Cargill Inc., Tyson Foods and General Foods worry that the legislation passed by the House in July provides insufficient incentives for food and agriculture companies to receive and generate carbon credits to offset their carbon emissions.

 In a letter sent a letter to both Democratic and Republican senators, the coalition warned that the bill, as written, “will increase food and feed price and reduce the international competitiveness of our businesses.”

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Vilsack made his comments at the University of Colorado-Boulder in a forum about biochar, which many proponents advocate as a promising way to convert such things as beetle-killed trees into gas and other useful products, while burying carbon in the ground and taking it out of the atmosphere.

Democrats will continue to make their case to the agriculture community on Sept. 2 when U.S. Sen. Michael Bennet hosts a meeting about climate change in Fort Morgan.

The meeting is being organized by the Rocky Mountain Farmers Union, a group traditionally aligned with Democrats. It tends to represent smaller-acreage farmers and early on became an advocate for climate change action.

Bill Midcap, director of renewable energy for the group, said rural areas such as Fort Morgan remain greatly skeptical that they will benefit from the Waxman-Markey bill. “Very much so,” he said.

Midcap said the meeting is intended to help explain the potential profits. There’s little incentive to modify agriculture practices now, he said, as the price for carbon in August has been 60 cents per ton, compared to $8 as recently as May. But the $20 per ton that utilities have been talking about might be enough to interest farmers. Even better, he said, would be the $35 currently charged in the European Union.

Carbon offsets, currently traded on the Chicago Climate Exchange, are traded in terms of tons of atmospheric carbon dioxide. If a farmer can sequester carbon through modified farming techniques, it’s the same as reducing the carbon emitted by a smokestack. This is called an offset.

The new agriculture practice wouldn’t prevent the smokestack pollution, but it results in less than would otherwise be the case. That offset gives it value in the current voluntary market and, if legislation is adopted, may increase the value.

In his speech in Boulder, Vilsack cited “significant risks” of not taking action in response to curb greenhouse gases, including altered growing seasons, compromised animal health, and more serious illnesses. The United States, he said, must lead in climate change when representatives of the world’s nations gather during December in Denmark.

If America fails to lead climate change action, it “will also have an impact on our ability to lead in a variety of other areas,” he said.

“This is not something one nation can solve. It requires a community of nations.”

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