U.S. Sens. Pat Roberts of Kansas and Mike Johanns of Nebraska are skeptical of USDA’s projections for the impact climate change legislationwill have on farmers and ranchers. U.S. Ag Secretary Tom Vilsack told members of the Senate Ag Committee yesterday economic opportunities for agriculture under the proposed cap-and-trade system could potentially outpace increased energy costs as a result of the legislation.
Vilsack said agriculture will benefit directly from allowance revenues allocated to fund incentives for renewable energy and ag emissions reductions during the first five years the law is in place. Funds for ag emission reductions are estimated to range from about $75 million to $100
million annually from 2012 through 2016.
The creation of an offset market will create opportunities for the ag sector too, according to Vilsack. USDA analysis shows net returns to ag producers will range from about $1 billion per year for 2015-20 to almost $20 billion in 2040-50.
He used the example of a northern plains wheat producer who might see an increase in production costs of 80¢ per acre by 2020 due to higherfuel prices. Based on a soil carbon sequestration rate of .4 tons per acre and a carbon price of $16 per ton, Vilsack said a producer could
mitigate those expenses by adopting no-till and earning $6.40 per acre.Roberts and Johanns questioned how much pasture and cropland would shift into trees if a carbon offset market is created. Johanns suggestedmost of the income projected by USDA would go to forestry projects, while most crop and livestock producers would have no way of offsettinghigher energy costs.