What will happen to farming income?
Projections on increased costs from cap-and-trade to agriculture vary widely. Analysis by Iowa State University economist Bruce Babcock indicates “relatively small” production costs of roughly $4.52 per acre for corn and soy farmers in Iowa, on the order of 1-2%. To put this potential cost increase into perspective, the variable cost of producing corn and soybeans in Iowa in 2009 is somewhere around $300 per acre. Babcock also cites that the amount of soil carbon that can be increased from adoption of no-till farming is typically on the order of one ton of CO2 per hectare, or about 0.4 tons per acre annually. At a $20-per-ton carbon price, this amounts to $8.00 per acre. USDA analysis of ACES also indicates only marginal production cost increases. In fact, USDA found the near-term impact of ACES on net farm income is less than a 1% decrease. While USDA predicts the cost of fertilizer and production will increase over the medium and longer term, these increases are still predicted to be
