Vilsack Speaks Up on Climate

By BILL TOMSON and IAN TALLEY
WASHINGTON -- The benefits of an agriculture cash-credit program in proposed climate legislation would outweigh the costs of the legislation for farmers, U.S. Agriculture Secretary Tom Vilsack said Wednesday.
A new report unveiled by the Obama administration is designed to persuade reluctant senators from rural, Midwestern states concerned about the economic impact of the legislation to support the measure. It is likely to be a controversial study, as many farm groups say the benefits to farmers are dubious.
Mr. Vilsack, who testified before the Senate Agriculture Committee Wednesday, said the agriculture industry could counter rising energy, fertilizer, shipping and other costs expected as a result of the bill through the cash-credit "offset" program.
The analysis predicts the bill, designed to slash greenhouse-gas emissions in the U.S., will result in a short-term 1% decrease in net farm income that will eventually turn into a 3.5% decrease and then a 7.2% decrease.
But the analysis also estimates that annual net returns to farmers from offsets would range from about $1 billion a year in 2015-20 to almost $15 billion to $20 billion in 2040-50. Those numbers don't account for the costs of implementing offset practices, however.
Under the proposed cap-and-trade system, the government would give away hundreds of billions of dollars in emission allowances as a way to neutralize higher costs under the bill, particularly for energy.It also creates an "offset" market that allows emission-reduction projects to get cash credits for the greenhouse gases saved from being emitted into the atmosphere.
Farm groups opposed to the legislation, however, dispute the USDA's positive findings. They say that while some sectors in the agriculture industry would be able to benefit, others wouldn't.
Write to Bill Tomson at bill.tomson@dowjones.com and Ian Talley at ian.talley@dowjones.com