Feds, farmers, remain far apart over impact of carbon tax on grain-growers

Feds, farmers, remain far apart over impact of carbon tax on grain-growers

OTTAWA — Grain farmers are adamant that Agriculture and Agri-Food Canada was wrong when it concluded this week grain farmers were, at most, paying $819 a year in carbon tax to dry their corn, wheat, barley and other grains, in an analysis the government says was based on numbers the farmers themselves provided.

Markus Haerle, chair of the Grain Farmers of Ontario, says the carbon-tax bill for drying corn from his 800-hectare farm in St. Isidore, Ont., was $8,500 last fall, and that he is not alone.

Ontario farmers, along with grain-growers in Alberta, Saskatchewan and Manitoba, are asking Agriculture Minister Marie-Claude Bibeau to reconsider her determination not to exempt grain-drying from the carbon tax. She says an exemption isn’t needed because the cost is, at most, equivalent to about 0.5 per cent of farmers’ total operating costs.

“It’s very disappointing,” said Haerle.

Ottawa does exempt fuel used to run farm vehicles, and partially exempt fuel to heat commercial greenhouses, mainly because of competitive pressures with American farmers who don’t pay the carbon tax, plus a lack of greener alternatives.

Ottawa’s carbon tax, which started at $20 per tonne of greenhouse-gas emissions produced and is rising $10 each year until it hits $50 in 2022, is applied in provinces without their own equivalent prices. Right now it applies at $30 a tonne in Alberta, Saskatchewan, Manitoba and Ontario.

At $20 a tonne, the price adds about 3.9 cents to a cubic metre of natural gas and 3.1 cents to a litre of propane, the two fuels used to run grain dryers.

After a wet, late spring and an early, snowy fall, farmers last year were turning to grain-dryers more than usual and upped their lobbying efforts to get grain-drying exempted from the carbon tax as well. Bibeau asked provincial governments and farm groups to submit their costs.

The Alberta government estimated the carbon tax costs its farmers $2.7 million at $20 a tonne, and will rise to $7 million at $50 a tonne. Agricultural Producers of Saskatchewan said their producers were paying another 50 cents per acre of planting for using grain dryers in 2019, and that will rise to $1.26 per acre in 2022.

Keystone Agricultural Producers in Manitoba did a survey of its members and found that for corn, the added cost for grain-drying from the carbon tax was $3 an acre at $20 a tonne.

And the Grain Farmers of Ontario said for its producers the carbon tax cost about $5.50 per acre of corn.

Bibeau’s department then took the numbers provided by the farmers and did its own analysis, adjusting the submitted figures so they could be compared directly to each other. It was that adjustment that came up with the figures Bibeau released this week, that the carbon tax cost between $210 and $819 per farm for grain drying.

Todd Lewis, chair of the Agricultural Producers of Saskatchewan, said the numbers don’t make sense to him, with some of his farmers spending upwards of $10,000 in carbon tax on grain drying.

Haerle said he thinks the government must have taken the total costs and divided them by the total number of grain farms, rather than just those that have grain dryers on their own properties. A spokesman for Bibeau said that was not the case.

Haerle also said unlike most businesses, farmers don’t set the prices they get for their products, so they can’t raise their prices to pass on the cost to consumers.

Lewis said there are ways to make grain dryers more efficient but they are very expensive up-front and the tax is so much it is going to mean farmers don’t have the money to invest in upgrades.

Bibeau said in a statement the government is willing to work with provincial governments and farmers on that, pointing to the recent $2-million joint program with Alberta to cover up to half the costs of making dryers more efficient.

“We are always open to working with our provincial counterparts on cost-shared Canadian Agricultural Partnership programming, such as this,” Bibeau said.

She also said the carbon tax is being rebated 100 per cent to households and through the Climate Action Incentive Fund, which helps businesses, including farmers, improve their energy efficiency.

This report by The Canadian Press was first published June 12, 2020.

Mia Rabson, The Canadian Press

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