Agriculture Subcommittee Examines Effect of Energy Costs on Agriculture

May 2, 2001

Agriculture Subcommittee Examines Effect of Energy Costs on Agriculture

(May 2, 2001)

The Conservation, Credit, Rural Development, and Research Subcommittee continued its series of hearings to review energy issues that are affecting the agricultural sector of the American economy. In particular, testimony was presented on behalf of USDA regarding the impact of energy prices on production decisions, and the Energy Information Administration provided a forecast of future energy prices.

"Energy prices continue to be a timely topic for rural America," noted Subcommittee Chairman Frank Lucas (R-OK). Lucas continued, "It is this Committee's job to ensure that rural America helps in energy production and also that rural America has tools available to help deal with energy price volatility."

Keith Collins, Chief Economist of USDA, testified that farm expenditures for energy costs increased an estimated $2.9 billion in 2000. Based on USDA forecasts, spending on farm energy inputs is expected to increase another $2 to 3 billion in 2001, with higher fertilizer costs accounting for much of the increase.

Mr. Collins explained that farmers are limited in what efforts they can take to mitigate effects of rising energy prices.

Dr. Mark Rodekohr, of the Department of Energy, Energy Information Administration, discussed the near term outlook for energy markets with the Subcommittee. Mr. Rodekohr explained that due in part to tight supplies, energy markets in the U.S. today are characterized by high prices for both petroleum and natural gas.

Numerous agricultural producer organizations testified about the adverse impact energy prices are having on the producer's bottom line.

The Subcommittee is looking forward to working with the Administration to address energy supply and demand in rural America, Chairman Lucas noted.

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