Buffeted by rising food prices due to biofuels, consumers face a bigger hike if climate-change legislation is passed. Farming costs will rise, more profitable to plant trees than crops.

Food Vs. Trees

Posted 12/30/2009 06:57 PM ET

Agriculture: Already buffeted by rising food prices due to biofuels, consumers face a bigger hike if climate-change legislation is passed. Farming costs will rise, and it may be more profitable to plant trees than crops.

If the cap-and-trade provisions of the Waxman-Markey bill become law, you can wave goodbye to those amber waves of grain as America's heartland falls victim to a perverse set of incentives and a process called "afforestation." Soybeans and wheat will give way to elms and oaks.

Agriculture Secretary Tom Vilsack wants a review of what amounts to an agricultural impact study of HR 2454, which shows it would make planting trees more profitable than planting food.

The study, which was released by the USDA earlier this month, reckons that as a result of cap-and-trade, farmers with energy-intensive crops would see their cost of production go up 10% over the next 50 years. Couple that with the money to be made from carbon offsets, and it may not be long before we're unable to see the farms for the trees.

The USDA projects that under cap-and-trade — or is it cap-and-trees? — fuel costs will rise as much as 5.3% from 2012 to 2018. "The conclusion of all the studies remains the same: that cap-and-trade has the potential to devastate the agricultural community with higher energy prices," says Rep. Bob Goodlatte, R-Va.

Food prices have risen worldwide as farmland has been converted to the production of energy-deficient biofuels such as ethanol. They'll rise even further as valuable acreage is taken offline for the planting of trees to absorb the carbon dioxide that was declared to be a pollutant in need of regulation.

But according to a model created at Texas A&M University and used by the Agriculture Department and EPA, cap-and-trade would give farmers incentive to convert up to 59 million acres of farmland into forests over the next four decades.

"If landowners plant trees to the extent the model suggests, this would be disruptive to agriculture in some regions of the country," Ag Secretary Vilsack says.

In a teleconference with reporters earlier this month, Vilsack said that the carbon offset market in the House bill could generate $10 billion to $20 billion for the farm sector. But, according to the Ag Department, the model projects that food prices would rise an additional 4.5% by 2050 compared with a scenario wherein cap-and-trade was ultimately defeated.

When the enemy was Big Agriculture, Willie Nelson started Farm-Aid and elites lined up to save the family farm. Now, it seems, saving the planet is more important. Who really needs cheap and plentiful food when we can hug trees and get rid of all those pesky barnyard animals and their greenhouse-gas emissions in the process?

The next great American novel may very well be "A Tree Grows in Iowa."

http://www.investors.com/NewsAndAnalysi ... ?id=516681