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Food products over the potential impact of business climate bill

13 August 2009 1,555 views No Comment

Some of the nation’s biggest food and agriculture companies are planning to release a flurry of studies in coming weeks that scrutinize the potential impact of climate-change legislation, warning that it could lead to higher food prices.

A group of agriculture giants including Cargill Inc., along with meat company Tyson Foods Inc. and food maker General Mills Inc., is concerned the companies might bear a disproportionate share of the costs of such legislation, according to a memo reviewed by The Wall Street Journal.

The group also is worried that a House bill passed in July doesn’t provide sufficient incentives for food and agricultural companies to receive and generate carbon credits to offset their carbon emissions.

The meat industry is anxious that the legislation might put restrictions on the ability of livestock operations to generate carbon credits that could offset their greenhouse gas emissions. Livestock and food companies emit greenhouse gases in a number of ways, including using trucks to transport food and slaughterhouses that run on natural gas.

Under the proposed climate-change legislation, a carbon offset, or credit, can be generated when a company reduces the amount of greenhouse gas emitted into the atmosphere through a variety of approved projects. Livestock facilities, for example, would like to generate offsets by trapping methane from manure lagoons, among other things.

The resulting offsets can then be sold to other polluters or used by the producer to reduce its overall emission totals. Certain companies would have to pay penalties if they emit more than allowed without offsets.

Other members of the food coalition include the Grocery Manufacturers Association, the National Turkey Federation, the American Meat Institute and the American Frozen Food Institute.

The coalition, which formed informally about two months ago, is becoming more active after concluding that member companies didn’t win enough concessions in the House climate legislation, industry lobbyists said. The Senate is expected to take up its own climate bill when senators return from recess next month.

The farm lobby won several favorable provisions in the House bill, including an exemption from having to cap many carbon emissions from farms. The House bill also sets up a number of programs that will allow farmers to generate carbon credits that will offset their emissions.

But the big food and agriculture companies feel they came up short. In a letter sent last month to Sens. Barbara Boxer, the California Democrat, and Republican James Inhofe of Oklahoma, the coalition said the House bill “will increase food and feed prices and reduce the international competitiveness of our businesses.”

The letter said Congress “must take extreme care to avoid adverse impacts on food security, prices, safety, and accessibility to necessary consumer products.” The letter also criticized the House bill for failing to provide transitional assistance to “low-income households struggling with rising food prices.”

When the group’s studies are released, possibly by the end of August, they are likely to reignite tensions between food and ethanol producers that have raged since 2007 when Congress passed energy legislation that gave a big boost to the corn-ethanol industry.

The food industry has complained that the energy bill pushed up prices for corn and other key food ingredients that resulted in higher consumer prices as the ethanol industry siphoned more corn to make ethanol. The ethanol industry accused the food companies of using the argument as a smoke screen to raise prices.

                                                                                                                               By LAUREN ETTER

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