Environmental Regulations Could Be Next Big Challenge

PurdueAgricultures

Environmental regulations could be next big challenge

A climate of change

By Steve Leer

Adam Moody wants to operate his business according to the law, but the laws don’t always make that easy. Take an incident last summer, for example.
On the one hand, if Moody denied inspectors access to his Zionsville retail meat shop, he would have violated a local ordinance. On the other, allowing inspectors to do what they wanted threatened to put Moody on the wrong side of another law.
The president and owner of Montgomery County-based Lone Pine Farms Moody Meats Inc. presented inspectors with the conflicting rules, and the situation was resolved.
A speaker at Purdue Agriculture’s Top Farmer Crop Workshop, Moody—who raises and processes pasture-fed beef cattle, hogs, chickens and lambs and operates four retail stores—has become familiar with rules and regulations of all kinds since he started his farm-gate-to-dinner-plate business in 2000. He’s had to—both to process meat products and sell them to the public.
Rules are rules
Moody is not alone. Today’s agriculture industry professional must navigate rules and regulations set by local, state and federal governments. The regulations are sometimes cumbersome and can be difficult for even the most conscientious farmer to understand.
Regulations touch a broad range of farming practices in both the crop and livestock sectors. Government mandates cover such practices as manure disposal, pesticide use, commodity marketing and management of livestock containment facilities. Other regulations not aimed directly at agriculture, like those dealing with land use and air quality, also affect food production.
At the federal level alone, the U.S. Code contains 112 chapters of laws pertaining to agriculture. Within the agriculture section are laws governing farming activities as specific as lime and avocado promotion, agricultural foreign investment disclosure and control of halogeton glomeratus, a noxious weed native to Western states.
Green revolution?
Some government policy observers, including Purdue University agricultural economists Ben Gramig and Otto Doering, believe more regulations are on the way, especially in the environmental area.
Gramig has followed landmark climate change legislation before Congress, while the U.S. Environmental Protection Agency (EPA) looks to Doering and the other members of the agency’s 45-member Science Advisory Board (SAB) for advice on the science behind its regulations and enforcement. The SAB does not recommend policy, but assists the EPA in ensuring that policy is science based.
Next to health care reform, the major legislative focus of the U.S. House and Senate is a comprehensive climate change bill designed to move the nation away from fossil fuels and toward renewable energy.
House Resolution 2454, the American Clean Energy and Security Act of 2009 (ACES), is commonly known as the Waxman-Markey bill, after its legislative sponsor (Rep. Henry Waxman-D, Calif.) and co-sponsor (Rep. Edward Markey-D, Mass.). The legislation narrowly passed the House in June and, in early 2010, was awaiting action in the Senate.
Cleaner and greener
Waxman-Markey would require, among other things, that electric utilities supply an increasing percentage of power from renewable sources like solar and wind; significant reductions in U.S. greenhouse gas emissions, which are believed to contribute to global warming; improved industrial and consumer energy efficiency; and the introduction of a “cap-and-trade” program to allow carbon dioxide (CO2) polluters to buy and sell the right to emit specific amounts of CO2.
“Agriculture is not directly regulated in this legislation, but ACES will have a big impact on agriculture, other industries and American households,” says Gramig, who specializes in environmental and natural resources economics.
Gramig says that the EPA’s 2009 U.S. Greenhouse Gas Inventory attributes 6 percent of the nation’s total greenhouse gas emissions in 2007 to the agriculture industry. Included in that total was 32 percent of the methane and 67 percent of the nitrous oxide emissions.
“This climate change legislation will impact producers’ liquid fuel, natural gas and electricity costs,” Gramig says. “Fossil fuels are an important agricultural input.”
The bottom line
Opinions vary on how Waxman-Markey would ultimately affect farmers’ bottom lines. The U.S. Department of Agriculture (USDA) estimates that the legislation would increase agricultural input costs and lower net farm incomes in the absence of technological change, input adjustments or increased revenue from bioenergy crops or commodities, Gramig says. While input costs likely would go up slightly between 2012 and 2018, farmers could see larger increases in per-acre variable production costs after 2025, when nitrogen fertilizer is no longer shielded from cost increases under the legislation, he says.
“We could see farmers spending about 4.5 percent more per acre to grow corn and wheat, and around 2.2 percent more on soybeans in 2027,” he says. “By 2042 we could see those percentages nearly double.”
Based on those figures, and without any increase in revenue, net farm incomes would drop by 1 percent within three years and fall 7.2 percent by 2042, Gramig says.
Trade secrets
Some of that lost income could be made up under the proposed cap-and-trade bill. “There are some benefits to agriculture from Waxman-Markey,” Gramig says. “One is that farmers are going to be able to market greenhouse gas emissions offsets.”
According to Gramig, most farm operators could collect offset dollars by adopting any of three environmental practices.
• Sequestering soil carbon through conservation tillage. In no-till planting systems, carbon remains trapped in the soil.

•Planting trees on marginal or un-productive land. Trees absorb CO2 at a much greater rate than soil.

• Capturing livestock methane. This could be done with anaerobic digesters that rely on microorganisms to break down
biodegradable organic material in animal waste, and by capping manure lagoons.
The EPA estimates that gross annual revenue from carbon-offset trading could total $2.1 billion within a few years of Waxman-Markey becoming law. By 2042, when the emissions cap becomes more stringent, annual gross revenue could reach $28.4 billion, the EPA projects.
“Society may never have seen any piece of legislation with such far-reaching impacts as the Waxman-Markey bill,” Gramig says. “Likewise, we may have never seen anything with such far-reaching impacts as climate change.”
Potential nitrogen use regulations could come close.
Something in the water
The EPA does not regulate non-point source pollution, which includes nutrients like nitrogen that can become an environmental problem. Doering believes it is possible that the EPA could set nitrogen criteria for waterways and that such regulations could affect nitrogen use by agriculture.
A growing EPA concern is the excessive amount of nitrogen getting into the Mississippi River and moving downstream to the Gulf of Mexico. When an overabundance of nitrogen and phosphorus collects in Gulf waters, it stimulates the growth of large algae blooms. As that algae dies, it depletes dissolved oxygen and threatens marine life. The Gulf Coast is important to the commercial fishing industry, particularly shrimpers.
Nitrogen also can show up in drinking water supplies. High levels of nitrogen in drinking water have been blamed for respiratory and cardiac diseases in humans.
Much of the nitrogen flowing into the Gulf and drinking water supplies comes from agricultural states, where it is used as a fertilizer, says Doering, a public policy specialist.
“There are few regulatory constraints on nitrogen use now, and farmers have used a lot of nitrogen on crops,” he says. “In wet-weather conditions, you can have severe nitrogen runoff problems. Nitrogen runs off cropfields and leaches into streams and then makes its way to the Mississippi.”
Indiana is among nine states that contribute about 75 percent of the total nitrogen and phosphorus that winds up in the Gulf of Mexico, according to the EPA.
Take our advice
EPA regulators are consulting with Doering and other members of the Science Advisory Board on the nitrogen issue.
Doering believes the EPA could set national nitrogen standards and work with other federal agencies to ensure compliance. “The EPA is likely to join with the USDA, the U.S. Geological Survey and other agencies to work comprehensively on the issue of excess nitrogen,” he says. “There very well could be ambitious nitrogen target rates, but rates that are probably doable. We could see strengthened conservation compliance and mandatory Best Management Practices—a combination of efforts, coupled with stronger cross- compliance aimed at better controlling nutrients.
“What cross-compliance means is that if producers want to receive farm payments, they have to meet certain environmental standards. That includes commodity payments and anything else producers might be eligible to receive.”
Today, when producers sign up for a government farm program, they submit information about their land such as its erodible characteristics. They also are asked to provide information on how they are addressing problem areas like erosion.
“If you don’t meet those cross-compliance standards, you don’t get payments,” Doering says. “So we may see a similar cross-compliance system with nitrogen that says, ‘If you’re going to get government payments, you have to have a nitrogen management plan, you have to abide by that management plan and you have to do certain Best Management Practices in terms of nitrogen use.”

Plain language
How the EPA writes its nitrogen regulations will be critical to the nation’s crop farmers.
“The approach will likely be a mix of regulations and incentives to encourage farmers to change behavior,” Doering says. “Both the regulations and incentives will have to be clear, consistent and based on a good understanding of agricultural production. Producers need to see the logic and understand the reasons for action.”
For people like Adam Moody, who have chosen agriculture as a livelihood, fair and understandable regulations are welcome. It’s part of the cost of doing business, he says.
“I’m not against regulations. Regulations are needed,” Moody says. “My passion for agriculture overrides the headaches that come with compliance.”

Contact Steve Leer at

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