As the debate over who or what causes global warming rages on, there seems to be little argument that politicians’ solution will bring a distinct chill to the potato industry, according to growers and shippers in the San Luis Valley.
The central strategy — commonly known as “cap and trade” — in the U.S. House-approved bill designed to combat climate change is generating angst in the valley’s potato industry, although a number of growers and shippers offer measured comments about the plan.
Cap and trade, in short, is a system designed to reward industries that emit fewer pollutants and penalize those who spew more. The system sets a cap on emissions and allows clean companies to sell or trade credits to others who exceed limits on carbon emissions.
The House narrowly passed cap-and-trade requirements as part of its energy package over the summe. The Senate was still deliberating over its own proposals as autumn approached.
President Obama has voiced full-throated support for the concept.
Some San Luis Valley potato growers and shippers question the timing of such change.
“We’re meeting with (U.S. Department of Agriculture) Secretary (Tom) Vilsack and Sen. (Michael) Bennet (D-Colo.) about climate change. W are concerned with that legislation,” said Jim Ehrlich, executive director of the Monte Vista-based Colorado Potato Administrative Committee. “There are a lot of things in Washington that impact growers here.”
Erhlich said passage of cap and trade could wreak havoc on the industry’s cost structure.
“On a state level, our budget is such a wreck (that) it’s going to impact the state department of agriculture, and that has the potential to impact inspection services an how they’re going to be able to serve growers,” he said. “With the budget, it has the potential to cause (problems).”
Ehrlich also said he realized discussing the issue could be a delicate matter.
“I’ve got to be careful with what I say,” he said. “We’re concerned that for irrigated farmers, the impact is going to be more than for farmers that don’t have to irrigate. Specialty crop producers won’t be able to benefit from the carbon credit program that the corn farmers in Midwest can benefit from.”
No-till corn growers, such as those in Iowa, don’t take the hit from cap and trade that potato growers do, Ehrlich said.
“We’re growing crops with high residue,” he said. “When you till the soil, you break down the carbon. If you leave in a no-till situation, it doesn’t break down the carbon so the levels build up. Potatoes are not a no-till crop. You have to move the soil to plant potatoes.”
It isn’t just potato growers who need be concerned about cap and trade, Ehrlich said.
“I think vegetable growers in general may have a hard time,” he said. “I know with electricity costs, as the country shifts from coal, the cost of electricity is definitely going up. And, if you depend on irrigation, it has a direct impact on water lines.”
He went back to corn growers as having another edge under cap and trade.
“If you live in Iowa, and you don’t have to irrigate, you don’t have that cost to begin with — that is a built-in advantage,” he said. “Costs here go up three or four times what they are today, and that’s significant.”
Jed Ellithorpe, marketing director at Center, Colo.-based Aspen Produce LLC, said the legislation would bring higher costs on many fronts.
“Production costs are liable to go up quite a bit,” Ellithorpe said. “It takes quite a bit of energy to make a potato crop. Fertilizer is associated with it, and that can be a huge one. You’ve got energy associated with petroleum products, machine work, irrigation pumping and transportation. So if you look at the majority of the costs, largely a lot of them are energy-related.
“We expect if cap and trade goes through energy costs are simply going to go up,” Ellithorpe said.
What is the industry doing to plan for it?
“The first step is to try and lobby against it,” Ellithorpe said. “The second step is to maybe morph into a green-type of production, not necessarily for environmental reasons — not that that’s not a good reason — but for cost reasons. There are some farmers that have put solar panels in the corners of their fields.”
Alternative energy strategies may be in the future, he added.
“We’re doing net metering,” he said. “You have a system that’s tied into the grid and have the capability of turning the electric meter backwards if you’re using a photovoltaic system and you’re producing more energy than you’re using at a given point. Growers are starting to look into system s like that to reduce costs on the pump bills.”
Some producers are looking into using biofuels for their tractors, Ellithorpe said.
“Some grow canola and the farm is actually producing a product that can be made into biofuel for tractors,” he said. “As energy costs rise, these types of activities start to pencil out.
“We’re looking at all those things.”
John McCormick, partner in Monte Vista-based McCormick & Milne LLC, questioned the timing of cap and trade.
“I think it’s going to increase costs on a lot of businesses,” McCormick said. “We’re still going to be using fossil fuels for awhile. They’re going to penalize the electricity we use through fossil fuels. I don’t know for sure, but I don’t think they’ve thought all the way through how detrimental it can be to some companies. If you take electricity as an example, if you cap-trade it and it’s coming from a coal fireplace and they penalize it, your costs can go up 40%. That’s huge.”
Better planning for a smoother transition to such changes would be preferable, McCormick said.
“I think a lot of people see it as a good thing to generate new business in solar and wind, but I think you’d want to have an infrastructure figured out first. Implementation really is not that great right now, even if the idea is good,” he said.
Bill Metz, co-owner of Monte Vista-based Metz Potato Co. LLC, agreed.
“I don’t think it’s going to do a bit of good,” he said. “From all I hear and read, it’s a thorn in our side.”
Other comments ranged from “it all depends” to “wait and see.”