Cap-and-trade bill will hurt farmers -- and consumers

Democrats already have a problem with coal-producing states over their cap-and-trade bill, and Harry Reid will likely find the Senate Democrats from those states less than enthused about killing their local economies.  Senators from agricultural states may want to take a close look, too.  A new study shows that, while some farmers may gain in the short term through the sale of carbon credits, the cap-and-trade system will hurt a wide swath of the American agricultural sector:

A new study making the rounds of Capitol Hill shows Iowa farms could potentially benefit from a cap-and-trade bill passed by the House to reduce carbon emissions.

However, the study shows many types of farms in other areas of the country are likely to lose money under the legislation.

The study was done by economists at Texas A&M University who analyzed the impact of government policies on representative farms around the country. The finding: Seventy-one of 98 model crop and livestock operations would see their cash reserves decline by 2016 under the House-passed cap-and-trade bill, even with the opportunity for farms to earn money from carbon credits. Virtually all rice, cotton, dairy and cattle farms modeled in the study stand to make little or nothing from the credits and would lose money under the bill.

Why would Iowa farms gain?  The bill helps corn farmers, more than likely due to its support for ethanol production.  Farmers in the upper Midwest have benefited from the higher prices of corn, even though those higher prices led to starvation and increased poverty.  Despite the growing evidence that ethanol expands misery rather than reduces it, Barack Obama continues to be joined at the hip to the ethanol lobby.

For the rest of us, higher costs to farmers mean higher costs at the grocery store.  We can expect to see increases in many staples, such as beef, milk, and rice.  Clothes will become more expensive as cotton prices go up.  This comes on top of the higher costs of energy we’ll all be paying separately, as well as the price increases that come from fuel price increases in the distribution chain that brings all of these good to market.

And while all of these prices go up, wages will go down.  Let’s not forget this handy chart from Heritage:

Just as with any other market, the more unemployed people we have looking for jobs, the slower wages will rise as demand underperforms against supply.  Prices will continue to sharply rise while wages remain flat or decline, leading to a net loss in buying power that will hammer the working class and middle class.  This study shows that the price increases will come faster and higher than first predicted — and will probably put small farmers out of business entirely.

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