Canadian carbon price worries farmers, fertilizer makers

WINNIPEG/TORONTO, Oct 18 (Reuters) – Canada’s plan to price carbon emissions may weaken the farm sector in one of the biggest grain-shipping countries, raising farmers’ costs and discouraging investment in fertilizer production, industry groups say.

Ottawa this month promised a price on carbon emissions by 2018, and will let provinces choose a tax or cap and trade system. Carbon pollution will cost C$10 a tonne in 2018, rising gradually to C$50 in 2022.

At C$50, it would raise fertilizer prices C$2 per acre for farmers, and some experts peg the total farm cost at C$6 an acre, according to CIBC bank.

“Everyone is paying attention to this, especially in a downtime for the economy,” said Robin Speer, executive director of Western Canadian Wheat Growers, which has gathered 2,500 petition signatures opposing the price.

Reduced soil tilling and more fuel-efficient machinery have made farming more environmentally friendly, and crops absorb carbon from the air and leave it underground, Speer said.

Agriculture accounted for 10 percent of Canada’s 2014 total greenhouse gas emissions, according to Canada’s environment department.

Nitrogen fertilizer producers, among major polluters in western provinces, are leery of a carbon price.

Higher costs will discourage expansion and shift production elsewhere, said Garth Whyte, chief executive of industry group Fertilizer Canada. Provinces should instead credit fertilizer makers for reductions in nitrous oxide, a production byproduct, he said.

Agrium Inc and CF Industries will not be subject to Alberta’s new carbon tax of C$20 per tonne when it takes effect next year, but the separate emitter tax that fertilizer companies pay will rise to C$30 per tonne of carbon from C$20 per tonne, according to Fertilizer Canada. It will be replaced in 2018 by another regulation that charges a carbon price.

Fertilizer producers can justifiably argue they need provisions to stay competitive, and farmers should also receive support, said Keith Brooks, programs director at Environmental Defence.

“You want the price to influence everyone’s behavior but we don’t want it to mean farmers can’t make a living,” he said.

At a committee meeting on Tuesday, Liberal government legislators rejected an opposition motion to study how the carbon price will affect the farm sector, Conservative legislator David Anderson said.

Ottawa’s carbon price does not directly impose costs on pollution from farm vehicles or their fuel, and the government lets provinces choose how to use carbon revenue, said Caitlin Workman, spokeswoman for Environment Minister Catherine McKenna.

Saskatchewan Premier Brad Wall on Tuesday pitched an alternative approach to carbon pricing, focusing instead on clean energy technology and renewable power.

British Columbia gives farmers an exemption from its carbon tax on farm fuel purchases. Alberta plans to do the same. Ontario’s emissions cap does not cover agriculture.

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