Global warming bill is bad news for farmers and their customers

By BEN LIEBERMANN

Farmers are known for keeping a close eye on the weather.

Well, the forecast from Washington is looking particularly ominous at the moment.

The latest threat comes from global-warming legislation called Waxman-Markey (after its congressional sponsors). It doesn’t target farmers directly, yet it’s far and away Washington’s most anti-agriculture proposal in years. It would significantly raise costs on America’s farmers while at the same time putting them at a global disadvantage.

Waxman-Markey, currently working its way through the House of Representatives, would limit emissions from fossil fuels — the coal, oil and natural gas that currently provides America with 85 percent of its energy.

Waxman-Markey starts with a 3 percent reduction in 2012. That rises to 17 percent by 2020 and 83 percent by 2050. It would work by raising energy prices so high that Americans are forced to use less. That’s how the ever-tightening targets will be met.

In other words, it’s an energy tax in disguise.

Economic pain

Proponents of Waxman-Markey argue that the environmental benefits make it worthwhile. But some experts doubt whether the approach in this particular bill would make any noticeable difference in world temperatures. In any event, there’s no question that Waxman-Markey will inflict significant economic pain to achieve any environmental gain.

Big energy producers and users would be directly forced to comply with the restrictions, including electric utilities, oil companies and natural gas producers. But the resulting higher costs would get passed on to energy users — homeowners, car owners, small business owners and, of course, farmers.

Farming is energy intensive. “On average, 65 percent of farmers’ input costs are fuel, electricity, fertilizer and chemicals,” says Gary Swan, director of Governmental Affairs and Communications with the Pennsylvania Farm Bureau. Waxman-Markey starts boosting energy prices as soon as it takes effect in 2012 — and the costs go up from there, as the required emissions reductions get tighter and tighter.

By 2035, a Heritage Foundation study has found, gasoline and diesel costs would be 58 percent higher and electric rates 90 percent higher.

Fertilizers

And that’s above and beyond anything else that may boost prices in the years ahead. In addition, the 55 percent higher cost of natural gas will raise the price of natural gas-derived fertilizers as well as other chemicals.

Beyond energy and fertilizer costs, Waxman-Markey would hurt farmers in other ways. Higher energy costs raise the price of almost everything, including the construction of farm buildings.

Increased manufacturing costs raise the price of tractors and other farm equipment as well.

Overall, farm profits are expected to drop 28 percent in 2012, and average 57 percent less through 2035.

Again, this is the impact of Waxman-Markey alone, above and beyond the cost of any other challenges agriculture is facing and will continue to face in the years ahead.

Worse, all of this pain would be one-sided, putting U.S. agriculture at a competitive disadvantage. Nearly all developing nations, including food exporters, have made clear that they will never hamper their own economies with energy price-boosting measures like Waxman Markey.

Beyond farmers, Waxman-Markey’s energy price hikes disproportionately hurt the rural economy in general. “Rural households spend 58 percent more on fuel than urban residents as a percentage of income,” notes Swan. Little wonder most of the support for this bill comes from congressmen representing urban districts.

And of course, the agriculture sector suffers whenever the overall economy is in bad shape and the public has less to spend.

Waxman-Markey will shrink the economy by an average of $368 billion per year from 2012 to 2035. Consequently, it will be more difficult than ever for farmers to pass on their higher production costs.

Economic hardship

There will be a lot of economic hardship to go around under Waxman-Markey. Indeed the Heritage Foundation estimates America will be $9.4 trillion poorer by 2035 because of it. Unfortunately, if the measure becomes law, plenty of that pain will be felt by America’s farmers in the years and decades ahead.

X Ben Lieberman is a senior policy analyst in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation, Washington, D.C. Distributed by McClatchy-Tribune Information Services.