Congressional Letter on Climate Change Legislation

According to a press release, today, a coalition of food and farm trade associations wrote to U.S. House Speaker Nancy Pelosi and Minority Leader John Boehner on the group’s perspectives on comprehensive climate change legislation that emerged from the Energy and Commerce Committee, and how such legislation may impact the ability to place safe, abundant and affordable food on the tables of all Americans.

The following letter was sent:

Dear Speaker Pelosi and Minority Leader Boehner:

As a coalition of food, feed, and beverage processors, manufacturers, distributors, and retailers,
we are writing to provide our perspectives on comprehensive climate change legislation that has
emerged from the Energy and Commerce Committee, and how such legislation may impact our
ability to place safe, abundant, and affordable food on the tables of all Americans. Collectively,
we represent the chain of food suppliers that ensures Americans have access to healthy, safe, and
reasonably-priced food products necessary for everyday life.

Climate change legislation will have significant direct and indirect impacts on the nation’s
supply chain of food and beverage providers, and, in turn, profound impacts on the food security
of our nation. These are paramount considerations that Congress must consider and prioritize
among the issues it is addressing. Legislative approaches must be carefully crafted not only to
reduce greenhouse gas (GHG) emissions, but also to avoid adverse impacts on food prices and
food accessibility.

While food, feed, and beverage producers account for 1.21% of the nation’s direct GHG
emissions, (Carbon Risks and Opportunities in the S&P 500 at 12), we will be more affected by
cap-and-trade legislation than this suggests. All members of the food supply chain are
disproportionately vulnerable to indirect costs passed through by suppliers. When considering
the total GHG emissions from each sector, including suppliers, the food, feed, and beverage
sector has the fourth largest exposure to carbon costs—more than the chemical, retail, basic
resources, and automobile and parts sectors (Carbon Risks and Opportunities in the S&P 500 at
13). The food, feed, and beverage sector is also exposed to significant trade pressure. Yet, to
date, Congress has not accounted for these disproportionate impacts on a sector that provides
indispensable goods to American families.

We believe that cap-and-trade will work best if allowances are distributed proportionately to
each industry’s emissions, thereby mitigating the direct and indirect impacts on all regulated
industries. Such a proportionate allocation would be the fairest system, because it would avoid
arbitrarily picking winners and assist all industries making the challenging transition to a low-
carbon economy. A fair distribution of allowances would allocate an appropriate percentage of
allowances to the food, feed, and beverage sector. It would also avoid the impression that the
allowances represent subsidies to favored industries—an accusation that could subject the United
States to World Trade Organization disputes and American companies to retaliatory tariffs. We
cannot demonstrate international leadership by approving greenhouse gas legislation that
undermines our international credibility on trade liberalization.

H.R. 2454 appears to pursue a plan of offering transition assistance to ensure a stable and
affordable supply of necessities to American consumers—offering allowances to control price
increases in electricity, natural gas, and home heating oil, and auctioning allowances to fund
further assistance to lower income households. While we agree with developing a program that
will help to offset increases in energy costs, the same consideration should be given to another
indispensable necessity: food. The impact of rising domestic food prices will fall most heavily
on the poorest 20 percent of Americans who spend roughly one-third of their after-tax income on
food.

In addition to pressing for the equitable distribution of allowances, we intend to discuss other
issues with H.R. 2454, including the inappropriateness of Clean Air Act regulatory authority for
numerous facilities that emit less than 25,000 tons of CO2e per year; limitations on opportunities
for offset projects; and tax and trade ramifications.

We respectfully request that Congress more thoroughly address the above concerns.
Unfortunately, H.R. 2454 in its current form fails to resolve these issues. Without these
corrections, we respectfully ask that Members not support passage at this time. We look forward
to working earnestly with Congress on climate change approaches that balance greenhouse gas
reductions with the necessity of an abundant and affordable food supply.

Sincerely,
American Feed Industry Association
American Meat Institute
National Chicken Council
National Council of Farmer Cooperatives
National Grain and Feed Association
National Meat Association
National Oilseed Processors Association
National Turkey Federation
North American Millers Association