Farmers need to play a role in climate change legislation or face higher input costs, says a national issues specialist for the Minnesota Farm Bureau Federation.
"This won't make economic sense for agriculture, even though we can participate in programs" that allow farmers to use ag lands in cap-and-trade deals, Staci Bohlen, Minnesota Farm Bureau Federation national issues specialist, said Thursday night.
Climate change legislation, as well as health care reform and estate tax bills, are major Farm Bureau concerns this fall, Bohlen told Beltrami County Farm Bureau members at their annual meeting Thursday at Eckles Community Center.
The U.S. House passed its version of climate change legislation before the August recess, and action is now awaited in the U.S. Senate. Bohlen said the American Farm Bureau Federation has six concerns over the bill, and are reasons why the national group opposes the bill.
Three of those concerns, however, were handled through amendments by U.S. Rep. Collin Peterson, DFL-7th District, chairman of the U.S. House Agriculture Committee, she said.
The House bill, at 1,400 pages, passed in six weeks. "That makes me a little nervous, having gone through the farm bill, because the farm bill was comparable in size and it took us 2 ½ years to pass it," Bohlen said. "Chairman Peterson was a champion for agriculture when it came to this bill. He did a number of things that the bill was not looking at for all of agriculture. It was definitely more negative than it is now."
The bill focuses on reducing greenhouse gas emissions, which many experts say is a chief contributor to climate change. One way is to limit carbon emissions by utilities and smokestack industries through cap-and-trade programs.
Options include "cutting back on production, which obliviously isn't going to happen because we all expect our lights to come on when we flip a switch," Bohlen said. "They can put in new technology and ways to improve efficiencies to reduce greenhouse gas emissions. Or, in the cap and trade part of it, they can opt to buy offsets."
Putting in a new forest or farmers planting in the soil creates a carbon sink, she said, as trees and plants produce oxygen while consuming carbon dioxide. A farmer could figure out how much carbon is stored in the soil each year, and sell that figure in a trade with an electric utility which produces more than a set limit of emissions to fill the gap, she said.
Peterson fought to gain three concessions in the bill, Bohlen said.
One provision makes sure that the U.S. Department of Agriculture oversees any offset program that is agriculture related, she said. Originally the oversight was going to come from the U.S. Environmental Protection Agency, "and sometimes EPA and USDA have a few different ideas when it comes to agriculture."
Also, Peterson "made sure that agriculture is recognized for its contributions," Bohlen said, "so that whoever has opportunities to sequester carbon that they are recognized to be able to do that, because originally agriculture wasn't even going to be allowed to participate. Agriculture has a lot to offer when it comes to carbon sequestration programs."
Farm activities include methane digesters, tillage practices and forestry, she said.
Peterson also looked at biofuels and indirect land use, Bohlen said. "He worked on a provision that says that EPA can't use indirect land use when looking at greenhouse gas emissions from biofuels."
Bohlen said that Farm Bureau "is very appreciative of everything that Chairman Peterson did, because he did make the bill better for agriculture. Bur we're still very much concerned about the bill from agriculture's standpoint. We're very concerned with the implications of it."
Concerns also include moving rapidly from the use of fossil fuels because of capping emissions, she said. ""Our concern is by moving rapidly from fossil fuels - and Minnesota is a very cold energy dependent state - puts Minnesota in a unique position over the coastal states. ... How are we going to replace that energy? We need to make sure we're going to be able to plug that hole."
Farm Bureau is also concerned how the bill reacts with other countries, Bohlen said. "Let's not put the United States on an island. If other countries like China and India aren't going to take steps to reduce greenhouse gas emissions, are we put at an economic disadvantage? ... What are the trade implications?"
Lastly, the bill needs to make economic sense, she said. "There will be opportunities for farmers and agriculture if this bill moves forward, but our analysis at American Farm Bureau ... they don't believe this is going to make economic sense for agriculture."
One analysis shows agriculture would lose $5 billion in net farm income by 2020 if the bill becomes law, she said. "What we're really concerned about in Minnesota, specifically, is energy prices. Will these energy prices go up, because if utilities are capped by offsets or have to put in new technology in place, that is going to cost money. Or if they are restricted in coal use, that's going to cost money."
A good portion of farm input costs are tied to energy - about 65 percent, she said.
No bill has yet been introduced in the Senate but is expected in a few weeks.
She passed out postcards for Farm Bureau members to sign to be delivered to Minnesota representatives and senators, asking them to oppose climate change legislation as "farmers will face production and fertilizer cost increases and lower farm income if this bill is enacted." And, "all consumers will see increased fuel and energy prices."
Only 100 of 435 U.S. House members represent rural areas, Bohlen said, while all 100 senators are ag senators. "That changes the dynamics as senators have to look at it differently than do House members."
Bohlen hopes to hand-deliver about 5,000 postcards on Oct. 7 to the Minnesota congressional delegation.
Congress is currently embroiled in health care reform legislation, but Bohlen doubts it will pass this year, despite pressure from President Barack Obama. For one thing, Congress needs to pass 12 appropriations bills by Oct. 1 that make government run, and work has only progressed on three of them.
She predicted a continuing resolution to keep government running at current levels while those bills are finalized.
It also doesn't appear that the House and Senate are ready to agree on a health care bill, with two differing bills in the House and one in the Senate. Even then, a conference committee would have to hammer out differences between House and Senate bills.
"The more complex, the more time it's going to take to get a health care bill passed," Bohlen said. "Obviously there is pressure from the president to get a health care bill passed, and the U.S. House and Senate are targeted to adjourn at the end of October. That's a lot of stuff that has to happen before then."
Another issue Farm Bureau is watching is that of estate taxes, with current exemption of $3.5 million from taxes and 45 percent tax rate for above that set to be repealed June 2010, she said. It comes back in 2011 at a $1 million exemption rate and 55 percent tax rate.
"We're really concerned about the $1 million - as you all know, it doesn't take long when you start looking at land and all the capital that is involved in a farm," Bohlen said. It also will make it harder for farm families to transfer the farm from one generation to another.
Options include extending the estate tax for another year, but then it still would jump back to that $1 million exemption rate in 2011," she said. Farm Bureau is seeking a permanent repeal of estate taxes, but would argue for a $5 million exemption if the tax is kept, and indexed for inflation.
In answer to a question, Bohlen said Farm Bureau is also concerned about the Clean Water Restoration Act, yet to be introduced by U.S. Rep. Jim Oberstar, DFL8th District, who did introduce it in the last session of Congress. A bill is now being considered in the Senate, however.
Bohlen said the act gives jurisdiction over waters to the U.S. Army Corps of Engineers over all waters, rather than all navigable waters, as the current law states." We don't think it would be good for agriculture."
The group gave its annual Beltrami County Farm Bureau Friend of Agriculture Award to Terry Frenzel of Blackduck, sole proprietor of Frenzel Fertilizer who also farms 400 acres and has a 75-head cow/calf operation. He was also cited for his support of 4-H and Future Farmers of American programs.
Beltrami County 4-H's Ann Marie Ward thanked the Farm Bureau for its support of 4-H and cited a 47 percent growth over four years in 4-H youth participation.
Mark Friesen, Blackduck FFA adviser, was nominated by the Beltrami County Farm Bureau as Minnesota Farm Bureau Ag Teacher of the Year
The local group, with 113 members, considered two resolutions for the annual Minnesota Farm Bureau meeting in November, and approved one and tabled the second.
Approved was a resolution to oppose efforts to mandate fire sprinkler systems in new home construction, citing cost of the systems would make homes unaffordable and also possible damages to new homes from malfunctioning systems.
The state of Minnesota considered such measures earlier this year but put off implementation for at least three years.
In Beltrami County Farm Bureau elections, Don Cloose was re-elected as president and Tim Neft re-elected as vice president. Re-elected to the board were Dave Horn and Linda Binkley, and added to the board was Chelsey Morgan.