Friday, November 9, 2012

Farm and Forest in Vermont: Bruce Shields Guest Post

Bruce Shields, President of the Ethan Allen Institute
Tree farmer in Vermont
I am Bruce Shields, President of Ethan Allen Institute, a Vermont organization promoting free markets and individual decision making.  I have been active in agriculture and forestry in Vermont since 1977.

Agriculture and forestry at about 20% of Vermont’s economy provide a stable and widely distributed base of employment.  Thousands more derive their living indirectly -- paper mills, Cabot Cheese, Ethan Allen Furniture and hundreds of self employed truckers, mechanics, and financial service workers.

These people look to State government to provide a stable and predictable economic framework in which they may operate.  Energy is key to the success of farming and forestry.  No other sector of Vermont has more rapidly and profoundly modernized its production process, and electrical energy is their indispensable base.   One modern farmer with several hundred horsepower of electrical motors on his farm creates more value than 50 farmers like my grandfather did.  An electric sawmill with 5 or 6 hands can put up as much lumber in a day as 30 or more hands could 50 years ago.

Both farming and forestry are dominated by small family businesses who have little influence over their selling price.  The market provides our income: we can only control our expenses.  Electricity is one of the largest expenses for the typical farm.   In 2009, Vermont Gross Farm Income was $589,827,000.  The National Agricultural Statistical Service [NASS] shows that electricity cost our farms $17,423,000 -- 2.95% of GFI.  After all expenses are deducted, Net Farm Income for 2009 was $97,099,000.   Electricity cost equals 17.95% of NFI.  Both the low net operating margin, and the high cost of electricity are consistent with prior years.  But the trend is adverse: in 2003, electricity was 2.72% of GFI, and just 11.87% of NFI.   That upward trend in electrical costs is a negative for business viability.

Vermont Yankee has anchored the power costs of all New England.  Steady and predictable generation smooths price volatility across the region, helping to cap spikes and fill in voids.    Other power sources may move in concert with dominant economic indicators and thus impact farmers and sawmills concurrently with other stressors like high oil costs, or a drought.  For Vermont’s economic health we need to maintain as many counter-cyclical mechanisms as possible.

An operational Vermont Yankee will also inject about $100 million per year into the Vermont economy, and pay millions in statewide education taxes which already fall heavily on farm and forest land. If Vermont Yankee remains open, some of that $100 million in economic benefit will find its way to the wood products makers and farmers. But if it closes, a share of those millions in lost taxes would be inevitably transferred to them, as well. I see no upside to closing Vermont Yankee for farmers and wood products manufacturers.


This is the first in a series of posts which share statements made in favor of Vermont Yankee at the Public Service Board hearing on November 7, 2012.   I will have pictures from the meeting for most of the posts.

Shields is President of the Ethan Allen Institute, and my Energy Education Project is part of the Institute.   Quoting from his biography on the Ethan Allen site:

Bruce, a family tree farmer, has been active in farm and forestry work for many years. He has served as state treasurer of the Vermont Farm Bureau since 1994 and as vice president and president of the Lamoille County Farm Bureau for 13 years. He has been active for many years in leadership positions in the Vermont Timber Truckers and Producers Association, the Vermont Sugar Makers Association, the Vermont Forestry Foundation, and the Vermont Forest Products Association. (Bruce is on the board of directors of the Vermont Forest Products Association.)

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