American Energy

For Farmers, Cap and Trade is a Permanent Drought Season

June 10, 2009

From Heritage

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.

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