A more generous capital cost allowance rule within Canada’s tax laws would be a boon for the farm machinery industry and a boost for greenhouse gas reductions, a coalition of farm equipment dealers and manufacturers told MPs last week.
They said farm equipment should be subject to the same depreciation rules as equipment such as heavy trucks and recommended a 40 percent writeoff in the first year instead of the current 30 percent.
As well, the period for depreciation should be five years rather than the current seven years, they added.
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“It would encourage farmers to replace their older equipment faster,” Duane Smith of the Canada West Equipment Dealers Association told MPs on the House of Commons agriculture committee Feb. 8.
And every old tractor or combine replacement helps the environment because the newer machines are more energy efficient and less polluting.
Howard Mains, Canadian public policy adviser for the Association of Equipment Manufacturers, told MPs that equipment replacement is happening much faster now than in previous times.
“In the past, innovative farmers usually would upgrade their tractors and combines every five to seven years,” he said. “Now these same farmers are upgrading every three to five years to take advantage of technological improvements in order to reduce operating costs and increase operator efficiencies as much as possible.”
The industry will be watching finance minister Jim Flaherty’s March budget for signs that their plea for better depreciation rules is heard. It has been endorsed by the Commons industry and finance committees and likely will win the support of agriculture.
The industry representatives also told MPs that dealerships are having a difficult time finding and keeping qualified workers to service their customers, particularly technicians. John Schmeiser of the western equipment dealers’ group said at least 1,000 technician positions are open across the country.
In the West, dealers have a difficult time competing with the higher-wage oil industry for qualified trained workers.
They asked for government programs to help them attract and retain qualified staff including tax breaks on tool purchases, bursaries or scholarships and support to schools that do the training.
And they noted that Canada’s stronger dollar has been a problem for many dealers because it reduces their ability to sell used trade-ins into the American market. It means inventories of used equipment are building up on lots and the surplus cuts into resale values.
However, higher grain prices and the expected benefits of a biofuel economy have the dealers optimistic that 2007 will be a good year for the sector.
