Among those testifying before the subcommittee was Dr. Patrick Westhoff, co-director of the Food and Agricultural Policy Research Institute at the University of Missouri-Columbia. Westhoff joined economists and academics who were testifying specifically on the economic and structural changes to agriculture caused by cap-and-trade policies and climate change.

“Today’s testimony reaffirmed my belief that the national energy tax passed by the House this summer will be particularly bad for Missouri agriculture. The president himself has admitted the legislation would cause everybody’s energy prices to skyrocket, but the news for the families who operate Missouri’s 108,000 farms and ranches is even more troubling,” Luetkemeyer said. “As somebody who raised livestock for a living, I understand that agriculture is a high-cost and low-profit-margin business. Farmers are price takers, so even a small increase in operating costs can be devastating to a producer’s bottom line. Under the bill, those input costs are expected to, well, skyrocket.”

Late July the USDA released a preliminary analysis of the potential impact of the legislation on U.S. farmers. The USDA analysis finds that energy costs increase substantially after 2018.  As a result, over the long term, average annual net farm income declines by $4.9 billion per year. The current USDA analysis is incomplete by only including a per-acre production cost for select crops that only includes direct energy input costs. As these higher energy prices ripple throughout the economy, producers will pay more for fertilizer, pesticides, seed, equipment, machinery, steel, and other supplies needed for their agriculture operations. The study only includes a limited analysis of the livestock industry and no analysis of the specialty crop sectors. This analysis is based on flawed EPA assumptions and significantly underestimates the cost to farmers and ranchers.

The Food and Agriculture Policy Research Institute at the University of Missouri (FAPRI-MU) analyzed the effect of higher energy costs from the House passed national energy tax.  FAPRI used energy cost estimates from CRA International to determine energy price effects on Missouri producers.  This analysis does not consider gains from CO2e credits. Models show that direct energy cost increases of fuel, natural gas, and electricity from the House’s national energy tax will increase alternative energy prices by up to 45 percent by 2050 for Missouri producers.

“There is considerable uncertainty over the possible impacts on climate change legislation in the U.S. agricultural sector,” Westhoff stated in his testimony.  “The House-passed legislation would raise energy costs, and this would translate into higher farm production expenses.”    

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