Climate change legislation currently debated in Congress that would encourage cropland conversion to forests and over time increase the cost of carbon use allowances would result in less cropland and higher commodity prices, gradually reducing hog and cattle production and raising prices, Joseph Glauber, USDA’s chief economist, told a House agriculture subcommittee last week.
Glauber said by 2015, corn production could be expected to decline by 1.4 percent below the baseline of production expected in the absence of the legislation. By 2030, corn production would be 7.2 percent below baseline. Consequently, corn prices could be expected to average $4.32 per bushel by 2015 compared to the baseline of $4.03 per bushel without the legislation. By 2030 average corn prices were predicted at $3.77 per bushel, compared to $3.26 per bushel without the legislation.
Soybean production would be expected to decease by 3.5 percent below baseline by 2015 and decline by 9 percent by 2030, but soybean prices are expect to trend with baseline forecasts until 2025, when there is a slight increase to $9.02 per bushel compared to the $9.01 baseline increasing to $9.06 per bushel in 2030 compared to $9.00 per bushel in the absence of the legislation.
Hog production would be expected to fall 5.7 percent below baseline by 2015 and decline to 9.9 percent below baseline by 2030. Hog prices would consequently rise to 4.4 percent above baseline in 2015 to $43.60 per hundredweight. By 2030, prices would be 12.1 percent above baseline at $41.96 per hundredweight compared to $37.43 per hundredweight in the absence of the legislation.
Fed beef production was seen at 0.4 percent below baseline by 2015 and 3.4 percent below baseline by 2030. Glauber predicted fed beef prices would rise 1.2 percent above baseline by 2015 and to 3.9 percent above baseline in 2030.
Glauber’s opening statement remarks before the House Agriculture subcommittee on conservation, credit, energy and research can be viewed here – http://agriculture.house.gov/testimony/111/h120309/Glauber1.pdf
Source:
MeatingPlace.com
By Rita Jane Gabbett on 12/7/2009