Another Incomplete Story by Climate Obstructionists: Waxman-Markey’s Climate Protection Bill, ACESA, Will Supposedly Devastate Missouri Farmers

ACESA will provide billions of dollars to American farmers who, among other things, can lease land for wind turbines, sell biomass waste for bio-energy production, and sell offset credits to help emitting firms comply with the carbon cap. But in a July 14th hearing of the Senate Environment and Public Works (EPW) Committee, the opposition painted a very different picture for Missouri. By incorrectly calculating increased energy costs for the average MO farm, and excluding all of these benefits, their story is scary, but fictitious.

During the hearing, Senator Kit Bond cited an $11,000 cost for the average Missouri farmer in 2020 that would result from higher energy prices. The estimate was from a study by the Food and Agricultural Policy Research Institute at the University of Missouri-Columbia (FAPRI-MU), commissioned by the Senator himself and released for the hearing.

Setting aside a far lower estimate by Bruce Babcock of Iowa State University's Center for Agricultural and Rural Development, FAPRI's math is simply wrong. Rather than being 1,900 acres in size, as assumed by FAPRI, the average MO farm is only 269 acres. This means that instead of costing a typical farm over $11,000, the number is closer to $1,650. Per acre, that's $6.13.

Moreover, from this cost figure one needs to add the benefits Missouri farmers are well-positioned to see from ACESA. Notably, Senator Bond left out a critical caveat from the FAPRI-MU study he relies upon to make his case:

This report is not a full analysis of the impact of H.R. 2454 on Missouri crop producers... [It] does not incorporate likely responses by producers to...changes in production costs...such as [adjusting] input usage and the mix of crops produced, with implications for crop yields, production, and prices...[It does not] consider biofuel production...or the value of any carbon credits that producers might be able to sell."

                                                                                      FAPRI-MU, study cited by Senator Kip Bond 

How much do the benefits to farmers of H.R. 2454 add up to? A lot more than $6.13/acre.  From the biomass waste on corn farms alone, MO could earn $8.5 million in revenues, amounting to approximately $5.21 per acre in net profit.[1] Adding to that the money farmers would earn from other activities, such as leasing land for wind turbines, selling offsets, or replacing some of the energy they purchase with on-farm renewable energy production, farmers could easily bring in more than the supposed $6.13/acre in increased energy costs.

What's more, the state will get thousands of new clean energy jobs and additional government revenues. Replacing 20 percent of Missouri's coal usage with locally grown biomass and the operation of 25 moderate-scale wind farms will create over 11,000 jobs. These wind farms would increase property tax revenue by $15 million dollars, helping balance government budgets. For a complete analysis of how Missouri is in a prime position to become a national leader in homegrown renewable energy development, see NRDC's Missouri Report.

Conveniently ignoring the positive effects of H.R. 2454 on farmers won't change the facts: opportunities in clean energy under climate legislation create large benefits for farmers, lots of new jobs, and more resources for government to help agricultural states balance their strained budgets. Don't listen to messengers telling only part of the story.

[1] This estimate was derived by the following calculation: MO has about 3% of U.S. farmland. Assuming it would get this percent of a national biomass market of 75 million dry tons of biomass waste (as estimated by the US Departments of Agriculture and Energy), MO's share would be 2.25 million tons. Estimates in the literature suggest that the energy waste could bring $50-$80 per ton in gross revenue for a farmer. Taking the conservative end of $50, and subtracting off approximately $12/ton in baling costs, net profit would be about $38/ton. 2.25 million tons x $38/ton gives MO farmers a total of $85.5 million in biomass profits, about $5.21/acre of cropland (MO has 16,405,595 acres of cropland). Since this is averaged over all farm acres, the amount of money earned per year by a farmer growing corn would be much higher. One way to calculate this number would be to multiply the number of tons of biomass waste per corn acre, .824, by the average 269 acre farm and $38/ton, which equals $8,423/yr from growing 269 acres of corn.