Carbon tax called competitive disadvantage

Prime minister’s pollution comments considered an insult as producers oppose decision to increase tax to $170 per tonne

Western Canadian farm groups continue to express disappointment and outrage over a Liberal government decision to increase the federal carbon tax to $170 per tonne by 2030.

The increase, part of a federal greenhouse gas mitigation plan announced Dec. 11, represents a 465 percent increase in Canada’s default carbon tax rate in less than 10 years.

The increase could cost western Canadian farmers millions of dollars a year in extra taxes and increase costs for heating farm buildings, drying grain, moving commodities by rail and buying essential farm inputs, such as fertilizer and machinery.

“This does touch a nerve,” said Manitoba grain grower Bill Campbell.

“They are charging us a carbon tax… but they aren’t giving us any credit for the positive contributions that we’ve already made” to greenhouse gas mitigation.

“And I take great offence (to the prime minister’s comments) that there has to be a price on pollution,” Campbell added.

“To indicate to me and to our industry that we are polluters is troublesome.

“We are involved in the business of food production for the citizens of Manitoba and Canada and the world.

“I don’t consider myself a polluter. I produce food and I use the tools that are available to me. To be considered a polluter offends the agriculture industry a great deal.”

Campbell, who serves as president of Keystone Agricultural Producers, Manitoba’s general farm organization, said he has yet to calculate the financial impact that a $170 a tonne carbon tax will have on his farm.

But the costs to the industry at large “will be huge,” he suggested.

The carbon tax on farm heating costs, grain drying and electrical consumption alone could easily amount to tens of thousands of dollars a year on some farms, some observers suggest.

In Saskatchewan, the Agricultural Producers Association of Saskatchewan determined that a default tax rate of $50 per tonne in 2022 would cost a modern 5,000-acre grain farm $13,000 to $17,000 a year.

Per acre production costs would rise by an estimated $3.80 an acre, compared to pre-tax costs in 2018, the organization said .

APAS is reviewing its numbers to determine how much a $170 per tonne carbon tax would cost Saskatchewan’s primary producers.

In an email, general manager Duane Haave said without additional tax exemptions or rebates, carbon taxes could boost productions costs by as much as $13 per acre by 2030.

“This would be a major hit to farm margins and viability,” Haave wrote.

In its 2020 carbon tax assessment report, APAS identified rail freight rates as one of the inputs that could see a significant increase.

According to APAS, a $50 per tonne tax would boost average farm freight costs in Saskatchewan by nearly 2.5 cents per bushel or roughly 90 cents a tonne for wheat.

A carbon tax of $170 a tonne would increase freight costs by more than $3 per tonne of wheat shipped by rail to Vancouver.

Campbell said increased freight rates alone could put prairie farmers at a huge disadvantage to growers in other countries.

“When my grain is hauled from a local terminal to Vancouver by rail, there’s a carbon tax on the fuel that’s used to move that crop to export position,” Campbell said.

“That that cost is going to be deferred back to the elevator company and then reflected in the basis levels that I pay.

“When you look at the number of tonnes of grain that are exported out of this country every year, the carbon tax that will be borne by the farm community will be huge.”

Campbell said Ottawa needs to carefully assess the impact that the carbon tax will have on the competitiveness of Canada’s ag industry.

“What do we do when we have jeopardized farms in Canada with a $170 per tonne carbon tax and my neighbour 60 miles to the south of me (in North Dakota) pays nothing?” Campbell asked.

“How can I compete? How will I be able to stay in business?”

Alberta Federation of Agriculture president Lynn Jacobsen said the carbon tax increase highlights the need for additional carbon tax exemptions for prairie farms.

The establishment of a national carbon credit system that allows farmers to capitalize on carbon sequestering activities would go a long way toward making the tax more palatable, he added.

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