Vilsack Discusses Cap and Trade

Ag secretary talked about climate change meeting at White House.

Published on: Aug 25, 2009

On Monday Secretary of Agriculture Tom Vilsack and Secretary of Commerce Gary Locke met with a broad group of interests from rural America at the White House to talk about the economic benefits of the proposed cap and trade legislation. Following the meeting, Vilsack briefed farm broadcasters on the meeting during a conference call.

 

"We believe based upon our analysis at USDA and our understanding of the possibilities and opportunities, that there are economic benefits to agriculture from cap and trade legislation that will likely outweigh the costs," Vilsack said. "Both in the short term and the economic benefits from offset markets will easily outpace increased input costs over the long haul for agriculture."

 

Vilsack says this is because the House bill as passed creates an offset market that creates opportunities for domestic offsets and the agriculture sector will benefit most directly from the offset market. USDA's analysis is that in the first several years of operation the climate change legislation will result in an annual net income of about $1 billion. Vilsack says over the course of time that number could reach $15 to $20 billion.

 

"I think it is important for those who are concerned about the rural economy to recognize that with energy, with the offset markets, with the work we are doing to link local producers to local consumers, and the broadband initiative from the American Recovery and Reinvestment Act, what we have is the foundation for I think a much stronger and more sustained rural economy than we've seen for some time," Vilsack said.

 

During the conference call Vilsack was questioned about the increase in prices of energy and inputs if the legislation is implemented and the possibility that those increases would be more than the carbon offsets could handle in the end.

 

"On the fertilizer side you have to understand that as the legislation is currently crafted provides allowances and assistance and incentives to the fertilizer and other industries that could potentially be impacted by this, so we do not anticipate in the early going that you're going to see any significant increase in fertilizer cost that can be directly attributed to cap and trade," Vilsack said. "As far as energy costs are concerned, our assumption was that energy cost would go up, but the assumption was also based on the fact that farmers would take no steps whatsoever to adjust to increased energy costs, in terms of figuring out ways to use less energy or use less expensive energy. Well you know farmers, I know farmers, there's no question they are going to be looking for alternatives. They are going to be looking for technology changes, for renewable energy sources, for biofuels all of which could potentially benefit them in terms of lower costs."

 

Vilsack also made the statement that for those who want to defend the status quo, if they think the cost of oil is going to remain static and continue to be low they are just not thinking correctly and that as the world economy begins to pick up the price of oil will skyrocket again.

 
"This is an opportunity for us to move away from our addiction of foreign oil, to create new energy sources here in America and create new income opportunities for farmers and ranchers," Vilsack said. "We should be embracing this. We should not be fearful of this. Fear has never ever moved the United States in the right direction. It has always been our willingness to embrace risk, embrace innovation, embrace change and be an international leader. Now is not the time for us to become fearful, now is the time for America to continue its leadership."