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  • For Farmers, Cap and Trade is a Permanent Drought Season

    Economists at The Heritage Foundation’s Center for Data Analysis are digging deeper into the effects of the Waxman-Markey climate change legislation that includes a cap and trade plan to reduce carbon dioxide by 17 percent below 2005 levels in 2020 and by 83 percent below 2005 levels in 2050. Today’s victim: Farmers. Our CDA analysts found that Waxman-Markey would adversely affect farmers in a number of ways:

    • Farm income (or the amount left over after paying all expenses) is expected to drop $8 billion in 2012, $25 billion in 2024, and over $50 billion in 2035. These are decreases of 28%, 60% and 94%, respectively.
    • The average net income lost over the 2010-2035 timeline is $23 billion – a 57% decrease from the baseline.
    • Construction costs of farm buildings will go up by 5.5 percent in 2025 and 10 percent by 2034 (from the baseline).
    • By 2035, gasoline and diesel costs are expected to be 58 percent higher and electric rates 90 percent higher.

    And for the rest of us, including those of us on fixed incomes and already struggling in these tough economic times:

    • The cost of producing everything from wheat to beef will increase. Indeed, the price deflator for private farm inventories goes up over 20 points by 2035. This increase gets quickly translated into much higher food prices for consumers at the grocery stores.

    Most of our readers know cap and trade is an energy tax in disguise. The goal of cap and trade is to drive up energy costs so much that Americans use less. But there’s a fundamental problem with this. Just about everything we do and everything we consume uses energy, so even after consumers turn up their thermostats in the summer and down in the winter, consumers are still using a lot of energy. But under a cap and trade, they’ll be paying an exorbitantly high price for it.

    Farming is no exception; in fact, farming is very energy-intensive, with fuel, chemical, electricity and fertilizer costs. They have to purchase a lot of equipment and have to construct a lot of buildings. The Heritage Foundation’s CDA estimates that the price of constructing farm buildings will go up by 4.5 percent in 2024 and by over 10 percent in 2034 (from the baseline) solely because of the upward pressure cap and trade puts on energy prices.

    The price of tractors– and every other piece of farm equipment you can think of– will increase as well.

    Worst of all is what happens to farmers’ net income. Farmers live off their gross income; what they earn in addition to that is their net income or marginal income. Waxman-Markey significantly shrinks farmers’ net income pie. Farm income is expected to drop $8 billion in 2012, $25 billion in 2024, and over $50 billion in 2035. These are decreases of 28%, 60% and 94% from the baseline, respectively.

    Waxman-Markey increases the costs of farm inventories, which in turn raises the cost of food sold to the consumer. At first glance, this may appear to be a good thing for farmers. Higher prices equals higher profit. But this would only be true if all other things were equal. That’s certainly not the case here. Higher energy prices hurt the overall economy, which means less demand for all goods, less production, higher unemployment, and reduced income. This overall economic slowdown reduces demand for agricultural goods, too.  And, as we’ve seen above from the charts, a lot changes for farmers; particularly, their overall cost of operations rise and their net incomes fall.

    Waxman-Markey’s effect on farmers should raise a red flag for those in the farm belt and will put U.S. agriculture at a tremendous competitive disadvantage if enacted. Consumers will feel the pain as well, not only from the increase in their own energy prices, but increased food prices. And for what? A change in the temperature too small to notice.

    For more, check out The Heritage Foundation’s Rapid Response Page

    Posted in Energy [slideshow_deploy]

    39 Responses to For Farmers, Cap and Trade is a Permanent Drought Season

    1. Daver Ft. Worth says:

      Long range projections are becoming a complete waste of time. If Obama doesn't completely collapse the currency by 2012, then we will probably have a reverse pendulum political effect, meaning fiscal conservatives in office and things like cap and trade would be immediately axed.

      We need to know more about what the short-term step implications are to protect our interests and preserve our ability to respond if we indeed have a future after "Hope and Change" have run their course?

    2. Frank Huber, Maple says:

      Good piece. Scientist know that fifteen percent of the current food grown today worldwide is a result of the increase levels of CO2 in the atmosphere.If the cap and trade is successful reducing CO2 levels, then farmers can expect less output from what they grow. It also raises the question, who will go without food. Obviously it will be the poorer people in the less developed parts of the world. Of course it is more likely that the cap and trade scheme will do nothing to reduce CO2 levels but will reduce the level of our economy.

    3. Zeke, Kentucky says:

      It is a shame our country has turned to profit for those that we elect. Two classes in this world. The paying citizens and the private corporations that run our country. What happened to pride in Americans. To suffer for such a small drop in temperature around the world. China and India more coal burning electric plants for energy. Who will stop them?

    4. Truth Hurts, The Rea says:

      I just discovered the EPA's wonderful methane tax on cattle and hogs.80$ a head on beef cattle,125 a head on dairy cattle and25$ a head on hogs.Would someone please explain how this is not taxation with out representation?Whatever happened to Mr.BSO's promise to tax only the rich?I come from a ranching family of over a 100 years and all of a sudden some bonehead do nothing who never built anything of lasting value is attacking small business all over the nation.Car dealers,Farm Families and from the looks of the agenda Doctors ,Bankers and every family that breathes oxygen and exhales CO2!Are we being taxed into the stone age???Good luck if your a dumocrat being elected to any position!

    5. Lynn B. DeSpain says:

      If your point is that Obama tilts at 'Windmills'. it is a point well taken! Never in the history of the United States have we had a President that has had such an obvious hatred for the Nation he supposidly represents!

      Take Heart America, we do not have to continue making and supporting the same mistake! We can just learn to say, "NO", to this man and any Congress person who suppports his agenda.


    6. Concerned, Raleigh says:

      We need a 'separation of sound business and state' amendment to the constitution.

    7. DMG says:

      Here we go again–Obama against business. Farming is a business. How does this admin. expect to keep farms operational? I am an HR Mgr outside the home because we cannot sustain our livlihood on the farm alone. We cannot pass on escalating costs to produce crops,raise cattle, etc. because there is a middleman that controls the producer’s price. Consumers ultimately pay when the middleman passes on the additional costs, but it is erroneously believed that the farmer is getting rich on these price hikes. So many factors control the farmer’s outcome and now this administration is adding a permanent drought to the equation. When is this controlling nonsense going to end?

    8. Pingback: For Farmers, Cap and Trade is a Permanent Drought Season « American Energy Freedom Center

    9. danny says:


    10. Whicket Williams Kin says:

      Thank you danny That is the first time I have seen anybody post the most obvious answer to this run away government. "Never vote for ANY incumbent, regardless of Party." They are still acting like there is no problem in washington. I just pray that there are enough people who have awakened from their lethargy by 2012, who are not fooled by that old " the other guy did it" lie to save us from the insanity I am really worried about our old folks. I have an aging family, and I am getting up there myself, and soon I will not be able to keep raising my income to keep up with the rising taxes, cost of living, and inflation.

    11. Whicket Williams Kin says:

      We supply much of the worlds food Many people will starve if this goes through. Please, if you have compassion for starving childern, write your reps, and remind them of this fact

    12. Pingback: Julie’s Fresh Air » Proposed Climate Bill Is More Harm Than Good for Farms

    13. Pingback: How much will Cap and Trade cost you? - theBubbler

    14. Pingback: Amazing NASA Discovery: The Sun, Not Man, Causes Warming « Start Thinking Right

    15. Pingback: Obama’s Plan To Destroy America’s Farms Moving Full Steam Ahead « Start Thinking Right

    16. Pingback: Julie’s Fresh Air » Call Your Congressional Representatives and tell them to Vote “No” on Cap & Trade Legislation

    17. Pingback: Top 10 Facts on Why Speaker Pelosi’s National Energy Tax Is a Bad “Deal” for America

    18. Pingback: Sound The Bell! » Blog Archive » Congress Wants All of the U.S. to be Bankrupt Like California

    19. get out and make som says:

      before it's too late!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    20. CJ Illinois says:

      President Zero and his merry Chicago Thugs are unbelievable! Illinois is the state that has brought you more EX Governors in prison that any other state! For a country that has UNLIMITED RESOURCES for FACTUAL INFORMATION this country is overwhelmed by MORONS…..they are disguised as LIBERAL DEMOCRATS and Brain Dead Republicans!

    21. Michael Lewis, Tampa says:

      The Concept of CO2 Cap and Trade is Absurd

      The real reason Cap & Trade is being foisted on the world is it creates a 3 trillion dollar commodity market for you guessed it: hot air. Finally politicians have found a way to put a price on their most abundant resource! And for politicians there is no downside as nothing has to be actually produced.

      The real beneficiaries are the rich special interest who will get wealthier setting up and trading in this new commodities market. But citizens will pay more taxes to operate new regulatory bureaucracies and more for goods as business passes the cost along.

      And all this is based on the premise that operating automobiles is resulting in global warming. Question: did Fred Flintstones truck fleet cause the last period of global warming or is global warming a cyclical event that is more affected by sun spot cycles. The Earth has had multiple tropical and glacial ages over the millennia. The most recent news is that the oceans of the world will be cooling for the next 25-30 years.

      Furthermore, it is my understanding that the most prevalent hot house gas is water vapor. Should citizens of earth try to stop the rain cycle?

      And if we are going to implement Cap and Trade who will decide what the optimal CO2 carrying capacity of Earth is?

      And there are questions about how to implement financial controls and reliably audit such a system. Will every person and business on the planet be issued C02 permits? Is the permit an asset a business can liquidate when it goes out of business? If a business in California goes out of business and sells its CO2 permit to a company in England, will a new company in California have to find another seller to open his business and replace lost jobs? After all, if there is an optimal CO2 carrying capacity then an increasing population of people and businesses means a lower standard of living and reduced CO2 allotment for each new person or business.

      Upon their death can Mom and Dad leave their CO2 permits to their children? Should Mom and Dad be limited to having two children?

      What about the countries that do not subscribe to Cap & Trade. Will multi-national companies export new construction and jobs to 3rd world non-subscribing countries? And the flipside, will the people of the Amazon miss out on new opportunities because an American company bought 1000s of acres to be left unused to acquire carbon sequestration credits.

    22. Michael Lewis, Tampa says:

      Germany fought WWII with gasoline made from coal. It is proven technology developed in 1917.

      America is the Saudi Arabia of coal with 1/4th of the deposits on the planet. The US could eliminate American dependence on foreign oil.

      And reducing America’s trade imbalance would keep money, technology and jobs here in America. It is estimated that every billion in trade deficit equals 13,000 US jobs lost. And we could quit sending billions to countries that sponsor terrorism.

      But coal is rich in CO2. Isn’t the timing interesting? The world is in recession, US unemployment figures are hovering around 10% and the EPA determines CO2 is a pollutant that must be regulated.


      The United States agreed to transfer jobs and technology to developing countries under INTERNATIONAL AGREEMENT Algiers Declaration Algiers, Algeria, 4-6 March 1975

      In this context, they emphasize the necessity for the full implementation of the Programme of Action adopted by the United Nations General Assembly at its VI Special Session, and accordingly they emphasize the following requirements [excerpt from full declaration]

      "With regard to the depletable natural resources, as OPEC’s petroleum resources are, it is essential that the transfer of technology must be commensurate in speed and volume with the rate of their depletion, which is being accelerated for the benefit and growth of the economies of the developed countries"

      A major portion of the planned or new petrochemical complexes, oil refineries and fertilizer plants be built in the territories of OPEC Member Countries with the co-operation of industrialized nations for export purposes to the developed countries with guaranteed access for such products to the markets of these countries. [Excerpt from declaration] Read sections 10 and 11]

    23. Casey Peck, Seymour, says:

      Nick, this is a great write up. However, I need a one pager so I can hand them out to our neighbors at our County Fair next week. Can you help me out. I will not touch your copyright material without out your permission. I can put our Senator contact information on the reverse side. What ever you can do to help me out will be greatly appreciated. Thank you so much for doing this research, our nation needs people like you. Thanks!

    24. Pingback: Wonk Room » New USDA Analysis: Economic Benefits Of Waxman-Markey For Farmers ‘Easily Trump’ The Costs

    25. Pingback: I Am Back « naturalistjourneys

    26. Pingback: Of Interest: Links We Like | E4 Capital, LLC

    27. Pingback: Green Design » Blog Archive » USDA: Economic Benefits Of Climate Bill For Farmers ‘Easily Trump’ The Costs

    28. Pingback: USDA: Economic Benefits Of Climate Bill For Farmers 'Easily Trump' The Costs - Go Green - SustainLane

    29. Mattie Mileski says:

      The Waxman-Markey Bill (H.R.2454) – if it gets passed – is going to cost us BIG! Our energy costs will increase by 25% and many of us may be losing jobs, with all the ones that are going to India and China….Please call your state representatives and ask – NO, BEG, them to vote against H.R. 2454 – the Waxman-Markey Bill!


    30. Abdullah says:

      You americans are so stupid! You will vote for for the best liars you can find. Enough said?

    31. Cassie Draves says:

      Cap and Trade will devastate our agriculture Industry. Farmers will not be able to keep up with the rise in fetilizer prices and the rise in gas prices. Not only will the prices of oil increase because of the taxes the goverment will put on large corperations such as oil companies but also production costs will also skyrocket. To make Cap and Trade work the goverment is going to fine corp. for going over their carbon emmisons. Plus to buy the carbon credits they are going to have to pay more money to the goverment. Where do you think these cost are going to filter down to? Thats right you and me the consumer. Not only that but we will lose maufacturing jobs when companies send them overseas because of cheap labor. Can we really afford to lose more jobs?

      Did you know that they tried a Cap and Trade program in Europe and now their carbon emmisions have increased since they started the program. Companies have had to shut down for part of the day also because they couldnt generate enough electricty to keep them open the whole day. All of those hours are now cut for the workers. Do we want to have that happen here in the U.S?

      I do agree that we must find a solution for the carbon we are emmiting into the atmoshere but not with Cap and Trade. The people we elect to run our country and they come up with a hairbrained idea that already failed in other countries. Wow way to go!

    32. Cassie Draves says:

      This is directed to Abdullah. Judging by the fact that countless people have migrated here to American to get away from their own country I dont think were doing so bad for ourselves. Stick with your dictator. Seems to work out just awsome for you.

    33. Worried for my count says:

      Came across this article and comments researching cap and trade. I'm not sure what's worse: the uninformed comments or Mr. Loris ridiculous use of stats and references to advance a motivated agenda. So much for the 4th pillar. Heaven help us all.

    34. Pingback: Window Dressing Cap and Trade Won’t Make the Costs Go Away | Step Down Obama

    35. Pingback: Window Dressing Cap and Trade Won’t Make the Costs Go Away | Conservative Principles Now

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