CALGARY — Nutrien chief executive officer and president Chuck Magro sees agriculture as a solution to help mitigate climate change, suggesting that paying producers for sequestering carbon would be a game changer.
Magro said farmers already store massive amounts of carbon on their land, but if they sequester even more through monetary incentives, it would be pivotal in addressing climate change.
“Today in Canada, we’ve made carbon a new expense (the carbon tax) on the income side, but it should also be a source of revenue for growers,” Magro said, recently speaking at Canada’s Agriculture Summit, hosted by the Calgary Chamber of Commerce.
“An avenue could be that they get paid to sequester carbon that they steward.”
He said economics and policy matter. Carbon taxes might be part of it, but it shouldn’t be the only piece.
“We need to think holistically about the environment and the economy,” he said.
Paying producers to sequester carbon has been gaining momentum in Canada. Alberta farmers can already sell carbon credits when they don’t till, and the provincial government is looking at other ways it can credit growers for sequestration.
Some grower groups are also pushing the federal government to establish a national sequestration plan, meaning producers across the country could partake in the possible monetary rewards.
The tricky part, though, is figuring out how to credit producers.
Carbon levels can vary throughout a field, and it isn’t clear if already-stored amounts will be taken into account.
However, there has been talk of creating an average from numerous samples. New technology can also determine which spots are richer in carbon, making it easier to take samples.
Despite the hurdles, Magro believes it can be done.
He said for the world to succeed in improving the environment, businesses will have to be involved.
“It seems like a bad phrase, but we should think about using capitalism to help solve the climate issue,” he said. “If you can tie economic success to environmental success, that’s where you are going to make the biggest moves and biggest gains.”
He said venture capitalists and shareholders are already requesting companies outline their environmental sustainability goals.
At Nutrien, Magro said, investors frequently ask how the company is addressing climate change.
He said companies who adapt will command a premium. Companies who don’t likely won’t be in the public market because it will be difficult for them to attract capital, he said.
Canada and Europe are leading the charge in innovation and sustainable agriculture, Magro said, but other countries have more catching up to do.
Farmers in India, for example, are using more nitrogen fertilizer than necessary to grow crops, Magro said. This is largely due to government subsidies. Food security tends to either get governments elected or ejected, he said.
Other regions, like China, are also subsidized heavily. As well, farms there look much different. They are small and applications are done by hand.
However, Magro said if western technology and practices can be adopted, resulting in less fertilizer use in some regions, the world would be able to feed more people without requiring more land.
“I think Canada has a real opportunity in agriculture to go around the world and profit from our innovation and technology, and drive environmental stewardship to the next level,” he said.
But as Canada leads the way in exporting innovation, Magro said the country shouldn’t get too aggressive, especially on the carbon tax side. It could put it at a competitive disadvantage.
“Whether you like it or not, the world has decided there is going to be a price or value on carbon,” he said. “That’s OK, but we have to figure out how we make money managing that.”
The problem, he said, is it can be challenging to make money in developing nations because they don’t operate like western countries.
Trade certainty is also key, he added.
“The trade situation we’ve seen over the last two years has provided major uncertainty globally,” he said. “That has been unfriendly for everyone.”
He sees lots of opportunity in South America, especially Brazil. Nutrien recently acquired Brazilian retailer Agrosema.
Brazilian farmers are going to need more fertilizer to improve yields, he said. The government there is also committed to growing the agriculture economy and is privatizing the market.
In Canada, he said more investments in transportation infrastructure will be needed to keep up with demand.
Railway companies have made significant investments recently, but Magro suggested more is needed. Other business leaders at the conference agreed.
“I am concerned we will not get our products to market because of infrastructure,” Magro said. “I know there are many in this room who have challenges getting grain to market. That shouldn’t be happening in Canada. That investment in infrastructure is critical if you are an exporting nation.”