Agriculture and Climate Change
A 2007-2008 research study led by the U.S. Department of Agriculture (USDA) concludes that climate change is currently affecting U.S. agriculture, and will continue to do so in the future. Some specific findings include:

1. Grain and oilseed crops are maturing more rapidly, but warming trends increase the risk of crop failures, particularly if precipitation decreases or becomes more variable.
2. The growing season has increased by 10 to 14 days over the last 19 years across the temperate latitudes. Species’ distributions have also shifted.
3. Higher temperatures negatively affect livestock. Warmer winters reduce mortality but this will be more than offset by greater mortality in hotter summers. Warmer temperatures will also result in reduced productivity of livestock and dairy animals.
4. Much of the U.S. has experienced higher precipitation and stream flow, with decreased drought severity and duration, over the 20th century.
5. Weeds grow more rapidly under elevated atmospheric CO₂. Under projections reported in the assessment, weeds migrate northward and are less sensitive to herbicide applications.

In response, the USDA is encouraging farmers to reduce greenhouse gas (GHG) emissions, adopt sustainable production systems (for example, soil management, crop rotation, nutrient management, etc.), increase carbon sequestration through conservation programs, and increase water use efficiency.

Agriculture and the EPA's Final Mandatory GHG Reporting Rule

The final EPA rule under the Clean Air Act would directly regulate only about 100 of the very largest livestock and poultry facilities in the U.S. with manure management systems, but will indirectly influence agribusiness through increased energy rates, pressure on pesticide manufacturers, and revised land use. The industry-wide GHG information gathered by the EPA will likely be used to set climate change policy, which in turn will influence the price of fuel and everything dependent on it.

Climate change will present agribusiness with risks and opportunities in much the same way as commodity price volatility has. Just as sophisticated farmers use futures options for commodities like fuel and corn, carbon futures and cap & trade offsets may factor into decisions on crop and livestock production as well as land use management practices.

Potential Opportunities:

• New farm revenue from carbon offsets and carbon sequestration on farmland.
• Livestock feed management programs to reduce gas emissions.
• New markets for biofuels crops such as switch grass, which typically require less energy input than traditional crops.
• Alternative energy programs such as wind farms that generate rent from land.
• Land use programs that result in a net increase of soil carbon, such as no-till farming, conservation tillage, fertilizer management, and switching fields from crops to pasture or pasture to forest.

Potential Risks

• Higher energy costs for fuel, electricity, fertilizers, transportation, etc.
• “Leakage” of production and jobs overseas where costs are less.
• Increased regulation of agriculture activities.
• Greater weather extremes and the associated crop/livestock losses.

Agriculture and the Proposed Climate Bill

On the legislative front, the federal Waxman-Markey climate bill, officially called the American Clean Energy and Security Act of 2009 (ACES), narrowly passed the U.S. House of Representatives on June 26, 2009, and is currently stalled before the Senate. ACES proposes to establish a GHG emissions trading scheme beginning in 2012. The final House version contained amendments proposed at the 11th hour by House Agriculture Committee Chairman Collin Peterson (D, MN) that significantly affect agribusiness:

• The agriculture and forestry service sectors would be essentially exempt from the “cap” portion of cap & trade.
• Positive direct contributions from biofuels such as ethanol and wood pellets would be allowed in calculating life cycle emissions.
• The carbon offset program would allow GHG emitters to buy credits from forests and farms.
• The USDA Secretary, not the EPA Secretary, would develop the offset practices and credit program for agriculture and forestry.

What Are Stakeholders Saying About the Bill?

Overall, the agriculture industry does not support ACES, because of potential increases in energy costs and regulation. While the American Farm Bureau Federation applauded the amendments by Rep. Peterson, they strongly opposed the House legislation and are now urging the Senate to carefully consider the implications of the legislation. The Wisconsin Dairy Business Association submitted comments on the draft House bill, noting that an ongoing study to develop the necessary emission factors was not yet complete. The estimated number of livestock may not represent the actual reporting threshold, meaning some farms may incorrectly assume they do not have to report. Another stakeholder suggested a screening tool with default input values be developed to provide an off-ramp from further applicability determination efforts for facilities below a threshold. Others are concerned the rule would promote third-party lawsuits.