Nalivka: The Elusive Goal of Reducing GHGs
While Americans wrestle with the likely consequences of the proposed New Green Deal, Oregon residents are faced with proposed state legislation with the same lofty goals - reducing greenhouse gases and “saving the planet.” The following is a letter that I recently wrote to the Oregon House of Representatives as public testimony against the passage of House Bill 2020. We straddle the Oregon-Idaho border which is critical to this argument as Idaho is business friendly. The proposed legislation, if passed in its current form, would further reduce the ability of eastern Oregon farmers to compete.
As a resident of Malheur County, Oregon, and agricultural economist, I am against HB2020 and its stated goal of reducing greenhouse gases to positively impact climate change. This proposed Cap and Trade legislation will increase fuel and energy prices and place undue economic burden upon businesses and private citizens in eastern Oregon. The Oregon legislature, under the guise of a lofty goal such as reducing greenhouse gases and the impact of climate change globally, is attempting to pass legislation that will negatively impact Oregon businesses.
The economy of Malheur County is based largely on agriculture and food production. Energy plays a critical role in sustaining that economy. Production agriculture and food processing are constantly challenged to keep their costs competitive in order to be sustainable businesses. Energy costs represent a relatively large share of those costs and managing all costs is an on-going challenge to business. Agricultural producers in Malheur County have increasingly incorporated technology-driven improvements in order to increase efficiency and manage costs. This is seen in farming practices, new irrigation systems that reduce water use, and machinery with the newest technologies. The goal is always managing costs as farmers and ranchers are for the most part price-takers.
Laws and regulations such as HB2020 that raise costs only add to the very real challenge of managing the businesses P&L and balance sheet. Eventually, if all options become exhausted, small family-owned farms sell to larger farms or investor-owned outside businesses or families. Increased costs through legislation and regulation drive consolidation of businesses.
Americans enjoy the benefits of agricultural production and food distribution efficiency in the form of relatively low food prices. We spend only 8%–10% of our disposable income on food. Eventually, increased costs of production and processing will drive up the price consumers pay for food in the grocery store.
When the final vote for HB2020 comes before the legislators in Salem, they must seriously ask themselves – is this elusive goal of reducing greenhouse gases worth the very real price that will be paid by Oregon business and families through lost family farms, jobs, and higher food prices?