NCGA Opposes House Cap-and-Trade

Study finds there would be significantly higher cost of production under House legislation.

Published on: Jan 21, 2010

For a long time the National Corn Growers Association remained neutral on cap-and-trade legislation. But, now NCGA has come out in opposition to the House passed bill H.R. 2454.


"Although our neutrality has often put us at odds with the majority of other mainstream agricultural groups, we believe it was critical to remain engaged with lawmakers while the economic impacts were analyzed," said NCGA President Darrin Ihnen.


NCGA based its decision on a recently completed economic analysis which indicated that every corn grower in the country will experience increased costs of production resulting from H.R. 2454. In the early years of this legislation, these higher production costs will be relatively minor. However, over time these prices will significantly increase, placing an unnecessary burden on growers.


"In the early years assuming the nitrogen manufacturers get all of the necessary allowances and use those, and pass those on to growers, the cost of production of corn would probably go up about two dollars maybe two and a half dollars per acre," said Paul Bertels, NCGA director of agricultural economic analysis. "If those allowances don't come through we'll see that cost of production increase be closer to $10 an acre, so it's a fairly dramatic increase in the cost of production."


Bertels says that when examining the longer term effects when those allowances to the manufacturers go away, the cost of production could increase $50 per acre by 2035.


"While this does offer opportunities for carbon offsets and while it does give a chance for some growers in certain regions of the country to use this as a profit center, most areas of the country would be a net loser just because we can't adopt continuous no-till," Ihnen said. "It would in turn affect our ability to produce and use our land as efficiently as we can."


Ihnen also said the study shows that there will be some land diversion, although much less than shown in the USDA model, and in a time when we are talking about energy security and growing corn for food and fuel, to divert acres into afforestation or some other crop would be a detriment to energy security. He also says it could end up impacting food security if less corn is produced, some of the livestock that depends on corn could move to other countries.


"It's a broader issue than what it looks like on the surface," Ihnen said. "We thank Chairman (Collin) Peterson and our allies in the House for the work they have done, but now we've come out in opposition. Overall our position remains neutral on the Senate side. If  the Senate is going to take up this kind of legislation we want to be part of the process to make it better, because it needs to be much better than what we currently have."