It is bewildering to read that Agriculture Minister Marie-Claude Bibeau says there is no business case to drop the carbon tax on grain drying.
Bibeau asked for, and received, input from grain farmers on the impact of the carbon tax on grain drying, yet she maintains the case has not been made.
“Weakening the pricing solution, I would have to say I don’t have the business case,” she said in an interview last week. She went so far as to say the impact on farmers is “not that significant.”
The price solution she is referring to is the argument that when the cost of fuel increases through the carbon tax, Canadians will use less, instead making smarter choices such as smaller cars, or alternative energy.
But there aren’t any obvious alternatives to grain drying and the fuel required to do it.
There is no price solution on grain drying.
The Agricultural Producers Association of Saskatchewan estimates that the carbon tax could cost a 5,000-acre farm an extra $8,000 to $10,000 this year. Extrapolating that over Saskatchewan’s 36.7 million agricultural acres, assuming for the sake of argument that they all need to dry grain, means $7.3 million is being removed from farmers this year. That means the carbon tax is taking millions of dollars out of farmers’ pockets with no environmental benefit.
By 2022, Saskatchewan farmers can expect to pay $17,000 per year in carbon tax.
Many prairie farmers faced a difficult harvest in 2019, with some leaving up to half their crop in the fields. Others who managed to harvest their crops often faced high moisture levels in their grain. Their choice is either to dry their grain and sell it at a reasonable price, or let it sit, harvest it later and get the best price they can, which is not viable in most cases.
On top of this, the federal government wants farmers to increase production to boost agri-food exports by almost $20 billion to $85 billion by 2025. That means more fuel, more fertilizer and likely more grain drying.
Some farmers are now sharing their fuel bills online. APAS President Todd Lewis said some bills show that the carbon tax is 40 percent of the commodity cost. He said it’s “comparable to having 12 percent of your paycheque disappear.”
The bills farmers are sharing appear to bear that out.
It is important to note that fuel for tractors, trucks and other machinery used on farms is exempt from the carbon tax, so why isn’t fuel for grain drying also exempt? It looks like a cognitive dissonance in government policy.
In 2018, Canadian net farm income dropped by 45 percent. Then came market and trade interruptions, a strike at Canadian National Railway, a wet-weather harvest, then railway blockades by First Nations protesters. Together with the declining effectiveness of risk management programs, it’s difficult to see what the federal government wants to achieve with a carbon tax on fuels used for grain drying.
Farmers cannot pass along the extra costs of the carbon tax to consumers because they are price takers.
Bibeau needs to look beyond the carbon tax alone to measure its effect on farmers.
It is piling on.
In the U.S., the administration of President Donald Trump handed over $28 billion to farmers to alleviate at least some of the difficulties they faced over the last two years. In Canada, farmers got the carbon tax.
In January, Bibeau’s office sent an email to Radio Canada International saying, “we have committed to do an early review of our pollution pricing system in 2020 focused on competitiveness issues in trade-exposed industries, such as agriculture.”
That’s vague enough to mean nothing, but interesting enough to see some promise.
Karen Briere, Bruce Dyck, Barb Glen, Brian MacLeod and Michael Raine collaborate in the writing of Western Producer editorials.