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Tennessee Study Determines Farmers Can Profit with Cap-and-Trade

posted on November 12, 2009

Hello, I'm Mark Pearson. With less than a month remaining before a high-stakes "Climate Summit" in Copenhagen, President Obama is trying to resurrect hopes for an agreement with two of the world's other largest emitters of greenhouse gasses -- China and India

On Sunday, Obama begins his first trip to China, which has now surpassed the U.S. as the planet's top emitter of carbon. One week later, the president plays host to the Prime Minister of India, whose nation ranks 4th in carbon emissions.

All three leaders have pledged to act on climate change. But "the devil is in the details," and the leaders now find themselves at odds over how to curtail greenhouse gasses.

Reaching a compromise with China and India could help prospects for the controversial climate change bill winding its way through Congress. Several agricultural interests have expressed downright disdain for the proposal. And one of the most vocal opponents has been the American Farm Bureau.

Tennessee Study Determines Farmers Can Profit with Cap-and-Trade

Bob Stallman, American Farm Bureau Federation: "If carbon prices get as high as projected by the EPA analysis, roughly 40 to 60 million acres of crop land that is used to produce food could move into forestry, that will downsize American agriculture, That will allow us to produce less food, that will cause consumer food prices to increase, and, at a time that we are talking about the need for increased food production by 2050, it makes no sense to downsize American agriculture."

But a study released this week may have found answers to these concerns. Commissioned by the renewable energy promotion group 25x'25, the University of Tennessee's Bio-Based Energy Analysis Group, or B-E-A-G, has determined it is possible for America's farmers, ranchers, and foresters to play a significant role in meeting the country's energy needs while making a profit. The authors do point out that a program regulated by EPA under the current scenario will cause net farm income to drop. But if properly managed, farm revenues could be increased by as much as $13 billion per year.

The key, according to the report, is multiple offsets for agriculture, including bio-energy crop production that manages crop residue removal in a carbon-neutral fashion.

The increase in farm income would be aided by conversion of pasture land to hay and other energy crops. Despite taking some pasture land out of the grazing rotation, B-E-A-G concluded there would be no impact on beef prices.

The result would push the price per bushel for wheat upward by 48 cents, for corn by 71 cents and soybeans by $2.04 by 2025. The increase would boost agricultural income $180 billion dollars. If achieved, B-E-A-G claims the resulting multiplier effect would create $700 billion of economic activity and create 5.1 million jobs, mostly in rural areas.

And, researchers determined, the combined efforts of the agricultural community would provide enough feedstock to produce 86 billion gallons of ethanol. An amount, B-E-A-G believes, has the potential to reduce U.S. gasoline consumption by 59 billion gallons in 2025.


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