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US Climate Change Bill “No big deal” for agriculture.

- Sunday, July 19, 2009

Iowa State University agricultural academic Bruce Babcock believes the impact of the proposed US climate change legislation on US farmers will be minor. US agriculture seems to be much better treated by their proposed legislation than will be the case in Australia.

In a recently released analysis, Babcock concludes;

"If the United States adopts a cap-and-trade policy to combat climate change, the negative impacts on agriculture will likely be relatively small, particularly if agricultural emissions remain uncapped (as specified in the legislation currently before the US Senate). Adding up the extra costs from diesel, fertilizer, and propane at a price of $20 per ton of CO2 results in a cost increase of $4.52 per acre for Iowa's corn and soybean farmers, assuming that farmers make no adjustments to their operations. A different price for CO2 would change this cost estimate proportionately.

To put a cost increase into perspective, the variable cost of producing corn and soybeans in Iowa in 2009 is somewhere around $300 per acre. Thus even a $10.00 increase in the cost of production represents a 3.3 percent increase. To add more context to this increase, Iowa corn and soybean farmers receive approximately $20 per acre in direct payments as part of the 2008 farm bill. In addition, most farmers receive between $5.00 and $20.00 per acre in crop insurance subsidies.

Similarly, the benefits from providing carbon offsets to capped sectors of the economy will be modest as well. Benefits will accrue as more crop farmers will move to no-till farming, and a price for carbon will enhance the economics of methane recovery systems in livestock operations."


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