Man. hog sector says carbon tax on heating will swallow profits

Manitoba’s proposed new carbon tax could cost hog farmers thousands of dollars a year, says the province’s hog farming organization.

Farm fuel such as diesel and gasoline will be exempted from the carbon tax of $25 per tonne, but so far there is no guarantee that the levy won’t be imposed on propane and natural gas used to heat hog barns.

“We’re not going to shut down barns or not heat them, but … it eats into the margin,” said Andrew Dickson, general manager of the Manitoba Pork Council.

Heating is common in Manitoba’s frigid winter conditions and costs can add up.

For instance, the pork council said a number of its members have assessed what a 5.7 cents per cubic metre of natural gas tax and a 4.6 cents per cubic metre of propane tax would cost.

One member said that would have cost his sow barn $5,700 on top of the $12,000 in natural gas he used last year.

A 3,000 farrow to finish operation would have seen its heating bill jump by $9,400, Dickson said.

One major production company estimated its cost would be $59,000 more with the 5.7 cent and 4.6 cent taxes.

Manitoba’s carbon tax is being imposed reluctantly by the provincial government, which has fought against the federal government’s desire to require a $50 per tonne of carbon tax within the next five years.

It determined it did not have the legal power to refuse to collect a carbon levy but could implement its own if it had a roughly similar impact to the federal plan.

Farmers are being specifically exempted from the tax, at least for fuel, but the status of energy sources used for heating has not been determined, Premier Brian Pallister and Agriculture Minister Ralph Eichler said at the announcement.

The purpose of carbon taxes is to discourage use of carbon-emitting substances and activities by making them more expensive.

The problem for export-oriented or North American priced commodities such as pork and most western Canadian farm products is that producers do not have a direct ability to pass on their increased costs to customers. The world price is the world price.

That’s why the provincial government has objected to the tax demand and tried to shelter farmers from its immediate impact.

The federal government has not said it will accept Manitoba’s plan as sufficient.

Dickson said hog farmers’ reliance on heating fuel makes them susceptible to a substantial hit if heating fuel is not also exempted.

Higher prices won’t make them more efficient because they are already hyper-conscious of costs after years of tight margins and periodic losses.

“You can put taxes on, but you are just making us less competitive,” said Dickson.

If the government does decide it has to impose the carbon tax on propane and natural gas, it should take the money raised to help farmers reduce their energy costs.

“Why don’t you put it in things like rural infrastructure that you can actually use?” said Dickson.

Building water and natural gas lines to hog production areas would help a lot, he added.

“The big one is getting away from propane,” Dickson said about the relatively more expensive heating source.

Dickson cautioned that British Columbia’s experience with imposing carbon taxes on heating for greenhouses saw many close and move across the border to Washington state.

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